Does Cenovus Energy Still Offer Upside After 6% Weekly Surge in 2025?

Trying to decide what to do with Cenovus Energy stock right now? You’re definitely not alone. Over the past week, the shares have climbed 6.0%, backed up by a strong 11.7% gain in the last 30 days. The year-to-date return sits at 12.1%, and if you zoom out further, Cenovus is up more than 437% over five years. This kind of run can cause some nerves for anyone wondering if there’s more fuel left in the tank, or if the price has outpaced the company’s fundamentals.

What’s driving this momentum? Oil prices have stayed relatively robust, with renewed optimism about global demand and ongoing discipline from major energy producers. Investors seem to be warming up to Canadian energy stocks again, and Cenovus has definitely benefited from that shift in sentiment. Yet, it’s worth noting that the company's one-year return is a more modest 6.3%, hinting that risk appetite can fluctuate quickly in this sector.

This sets up the big question: how does Cenovus look on valuation today? Based on six different valuation checks, the company scores a 2, meaning it appears undervalued in just two out of six areas. That helps anchor expectations, but as you’ll see shortly, the standard valuation approaches only tell part of the story. Up next, let’s break down those valuation methods and look for an even better way to assess whether Cenovus is truly a buy, hold, or sell right now.

Cenovus Energy scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Cenovus Energy Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates a company’s value by forecasting its future cash flows and discounting them back to today’s dollars. This technique attempts to calculate what the business is really worth, based on its potential to generate cash over time.

For Cenovus Energy, the latest twelve months of Free Cash Flow (FCF) came in at CA$3.77 billion. Analyst estimates suggest strong growth ahead, with projected FCF reaching CA$6.11 billion in 2028. While analysts provide guidance for the next five years, projections out to 2035, where FCF could hit nearly CA$12.49 billion, are extrapolated by Simply Wall St rather than being based on direct analyst input.

After running these CA$ cash flows through the discounted model, Cenovus Energy’s intrinsic value is calculated to be CA$141.90 per share. This valuation implies the stock is currently trading at a steep 82.6% discount, which suggests significant undervaluation on this model.

While every valuation tool has its limits, the DCF makes a compelling case that Cenovus offers deep value for investors willing to wait for future cash flows to materialize.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Cenovus Energy.

Our Discounted Cash Flow (DCF) analysis suggests Cenovus Energy is undervalued by 82.6%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Cenovus Energy Price vs Earnings

For profitable companies like Cenovus Energy, the price-to-earnings (PE) ratio is a widely used valuation metric because it ties the market price of shares directly to how much profit the business actually generates. This helps investors gauge whether they are paying a reasonable price for each dollar of earnings.

However, what counts as a “normal” or “fair” PE ratio is not set in stone. It depends on anticipated earnings growth and perceived risk. Companies expected to grow faster or with more stable earnings usually command a higher PE, while those facing greater uncertainty or slower growth trade at lower multiples.

Cenovus is currently trading on a PE of 16.8x. That is just above the average for its direct peers (15.9x) and higher than the broader Oil and Gas industry average (12.7x). While this might look slightly rich, it is important to dig a layer deeper before drawing conclusions.

This is where Simply Wall St's “Fair Ratio” comes in. The Fair Ratio (16.4x for Cenovus) reflects a customized benchmark based on factors like the company’s earnings growth expectations, industry, profit margins, market cap, and specific risks. Unlike basic industry or peer comparisons, the Fair Ratio offers a more precise yardstick for today’s market environment and company outlook.

Comparing Cenovus’s actual PE to the Fair Ratio shows they are almost identical, suggesting the stock is priced at a level appropriate for its growth profile and risks.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Cenovus Energy Narrative

Earlier we mentioned there is an even better way to understand valuation. Let us introduce you to Narratives. A Narrative is a simple, powerful tool that lets you tie your view of Cenovus Energy’s story—what you believe about its future growth, margins, and risks—directly to a financial forecast and fair value calculation. Instead of relying only on traditional ratios or analyst targets, Narratives let users build their own story behind the numbers, connecting assumptions about revenue, earnings, and margins to a dynamic estimate of fair value.

Available on Simply Wall St’s Community page, Narratives are accessible to everyone and used by millions of investors. By comparing the fair value from your Narrative to the current stock price, you can quickly decide whether Cenovus Energy’s shares are a buy or sell for you. What makes this tool even more powerful is that Narratives adapt automatically whenever major new information, such as news or earnings, is released. Your investment thesis always reflects the latest data.

For example, some investors believe Cenovus’s long-life projects and cost discipline justify a fair value as high as CA$32.00. Others, concerned about regulatory risks and capital requirements, might estimate a fair value closer to CA$21.00. With Narratives, you can weigh both perspectives and quickly see how your expectations stack up.

Do you think there's more to the story for Cenovus Energy? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com