Wednesday, November 26, 2014

Northland Power Inc.

On my other blog I am today writing about handling my registered accounts.

I do not own this stock of Northland Power Inc. (TSX-NPI, OTC-NPIFF). This company is into generating electric power. I have a lot invested in pipelines and I would like to have more invested in electric power as my utilities investment. I read a report on this stock that said it was a good defensive stock to buy. That is, it is a good stock to hold in a stock market correction. I can certainly see the logic of using utility stocks as defensive stocks.

This is another company that used to be an income trust. It had a spotty record of dividend increases before 2008 and the dividend has been flat since then. They are still paying dividends monthly. No analyst seems to expect any dividend increase any time soon.

Part of the problem is that the company is having a hard time making a profit. It had two years of earnings losses in the last 5 years and 2014 it is also expected to have an earnings loss. The third quarterly report points this way as well. As well no analyst seems to expect the dividends to be covered by earnings in 2015 and 2016. On the other hand no one seems to think that dividends will be cut either.

The story is happier if looking at cash flow. The Dividend Payout Ratio for CFPS has a 5 year median of 91%. However, the DPR for CFPS for 2013 was 54% and the corresponding ones for 2014 to 2016 are 70%, 62% and 58%, respectively.

Shareholders have done well over the past 5 and 10 years with total returns at 15.65% and 9.09% per year over the past 5 and 10 years. The portion of this total return attributable to dividends is at 7.92% and 7.03% per year. The portion of this total return attributable to capital gain is at 7.74% and 2.06% per year. Dividends are currently at a slightly lower level at 6.23%.

Outstanding shares have increased by 16.2% and 13.6% per year over the past 5 and 10 years because of Debenture Conversions, Share Issues, DRIP, Stock Options and Exchange Shares. The company has revenue and cash flow growth, but EPS growth only over the past 10 years.

Revenue has grown at 22.7% and 19.4% per year over the past 5 and 10 years. Revenue per Share has only grown at 5.6% and 5.1% per year over the past 5 and 10 years. EPS is flat over the past 5 years and is up by 7.3% per year over the past 10 years. Cash Flow per Share is up by 6.5% and 7.5% per year over the past 5 and 10 years. If I were a shareholder, I would be more interested in per share values.

With earnings losses, it is hard to get a fix on historical Price/Earnings per Share ratios. The P/E for 2015 would be 43.33 based on a current stock price of $17.33 and 2015 EPS estimate of $0.40. This is, of course a very high P/E for a utility stock.

If you look at Price/Book Value per Share, the 10 year P/B Ratio is 1.80 and the current one is some 99% higher at 3.80 based on a BVPS of $4.86 and current stock price of $17.33. The problem here is that the BVPS is declining at around 7% per year. This stock price test suggests that the stock is expensive.

If you look at P/CF or P/S Ratios, they suggest that the stock price could be reasonable. The 10 year median P/CF is 10.83 with a current P/CF only slightly higher at 11.18. The 10 year median P/S Ratio is 4.97 and the current one at 3.09 is some 38% lower. The problem I see here is that a P/CF Ratio of 11.18 or a P/S Ratio of 3.09 is not particularly good ratios for a utility.

When I look at analysts’ recommendations, I find Strong Buy, Buy, Hold and Underperform recommendations. Most of the recommendations are a Buy and the consensus recommendation would be a buy. The 12 month consensus stock price is $19.00. This would imply a total return of 15.87% with 6.23% from dividends and 9.64% from capital gains.

Sound bit for Twitter and StockTwits is: I prefer companies that have positive EPS. See my spreadsheet at npi.htm.

I will have only one entry for this stock as I must do on some stock because I cover too many stocks to do double entries on all that I follow.

Northland Power Inc. indirectly owns interests in power projects. Northland's assets comprise facilities that produce electricity from "clean" natural gas and "green" renewable sources such as wind and biomass. Electricity generation is sold under long-term PPAs with creditworthy customers, and any fuel for natural-gas-fired projects, where required, is purchased under long-term contracts to assure stability of operating margins. This company operates in Canada, US and Germany. Its web site is here Northland Power.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Tuesday, November 25, 2014

Keyera Corp. 2

I do not own this stock of Keyera Corp. (TSX-KEY, OTC-KEYUF). I started to review some of the stock recommended by Jennifer Dowty from a column she wrote and I reviewed in February 2010 on Dividends and Special Dividends. The title of the article in Investor's Digest was Dividend Stocks: Buy, Hold and Collect. Jennifer is now a Portfolio Manager for Manulife Asset Management Limited.

When I look at insider trading, I find $0.34M of insider buying and $0.38M of insider selling. So there is a bit of net insider selling but very little. This is not much action in insider trading at all. There is some insider ownership with the CEO owing shares worth around $23.9M and an officer having share worth around $14.4M.

Shares are not increased due to stock option, but the Long Term Incentive Plan for employees seems rather high. It affects both the company's earnings and cash flow. Over the past 7 years, the median percentage of earnings is at 13.5%. In 2013, the LTIP was at 19.3% of earnings. However, this is equal to 0.56% of market cap and when shares are issued for stock options, that percentage of market cap is rather normal.

The 5 year low, median and high median Price/Earnings per Share ratios are 18.04, 22.18 and 26.32. The corresponding 10 year values are 16.63, 20.96 and 25.29. The current P/E Ratio is 29.42 based on a stock price of $91.80 and 2014 EPS estimate of $3.12. The 2015 P/E Ratio is 25.36 based on a stock price of $91.80 and 2015 EPS estimate of $3.62. All this suggests is that the current stock price is just above or at the very top end of a reasonable stock price range.

I get a current Graham price of $34.28 and the 10 year low, median and high median Price/Graham Price Ratios are 1.07, 1.34 and 1.62. The current P/GP ratio is 2.68 based on a stock price of $91.80. This stock price test suggests that the stock price is expensive.

The 10 year Price/Book Value per Share ratio is 1.98. The current P/B Ratio is 4.88 based on a stock price of $91.80 and PBPS of $16.74. Book Values on this stock have been increasing at less than 3% per year. This lack of growth in book value or shareholder value affects both this test and the one above. The current P/B Ratio is some 176% of the 10 year ratio. This stock price test suggests that the stock price is expensive.

It was expected that old income trust company's dividend yields would end up in the 4 to 5% range. This stock currently has a rather low yield of 2.8%. This is quite outside this range and the yield is lower than the previous low of 3.9%. This stock price test suggests that the stock price is expensive.

Even looking cash flow, which has had good growth you get the same sort of answer. The 10 year Price/Cash Flow per Share ratio is at 11.20 (and the 5 year median P/CF is not far at 11.83). The current P/CF Ratio at 15.99 is some 43% above the 10 year value. This stock price test suggests that the stock price is expensive.

When I look at analysts' recommendations, I find Buy and Hold recommendations. Most of the recommendations are a Buy and the consensus recommendation would be a Buy. The 12 month consensus stock price is $98.50. This implies a total return of 10.11%, with 7.30% from capital gains and 2.81% from dividends.

In early November, Keyera Corp put out the highlights of its third quarterly results over Newswire. A recent article on WKRB talks about CIBC raising their target stock price for Keyera to $103.00. The blogger Dividend Growth Investing and Retirement has this company on his All-Star List.

Sound bit for Twitter and StockTwits is: Getting a bit expensive. Everything I look at suggests that the stock price is too high. Paying too much for a stock you want to hold for the longer term really affects your overall returns on the stock. If you are doing a momentum buy, current price does not matter as much as market sentiment. The stock price trend is certainly going up and this could continue for a while.

In the end dividend growth stocks tend to have capital gains equal to the growth of the dividends. So this stock's total return should equal dividend growth plus dividends. This stock is currently growing faster than that when the increase for 2014 year to date is at 44%. See my spreadsheet at key.htm.

This is the second of two parts. The first part was posted on Monday, November 24, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

Keyera provides essential services and products to oil and gas producers in western Canada, and markets related natural gas liquids (NGLs) throughout North America. Its web site is here Keyera.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Monday, November 24, 2014

Keyera Corp.

On my other blog I am today writing about how I did in the October 2014 market correction.

I do not own this stock of Keyera Corp. (TSX-KEY, OTC-KEYUF). I started to review some of the stock recommended by Jennifer Dowty from a column she wrote and I reviewed in February 2010 on Dividends and Special Dividends. The title of the article in Investor's Digest was Dividend Stocks: Buy, Hold and Collect. Jennifer is now a Portfolio Manager for Manulife Asset Management Limited.

This company only paid one special dividend so far and that was in 2009. However, they are a dividend growth company. Dividends are moderate as are the dividend increases. The current dividend yield is 2.81%. The 5 year median dividend yield is much higher at 6%, but this is because this company was an income trust company until 2010.

Their 5 and 10 year dividend growth is at 6.2% and 7.5% per year over the past 5 and 10 years. The most recent increase was for 2014 and it was for 7.5%. The company stopped increasing the dividends in one year, 2010, when they were transiting from an income trust to a corporation. Analysts do expect dividend increases to continue.

The Dividend Payout Ratios have been a little too high for a corporation, but they are coming down. The 5 year median DPR for EPS is 99.5% and for CPFS is 53.5%. The corresponding ones for 2013 was 120% for EPS and 50% for CFPS. They are expected to move lower and the corresponding ones for 2014 is expected to be 80% for EPS and 44% for CFPS. DPRs for corporations are lower than those of income trusts.

Shareholders have done well with this stock. The 5 and 10 year total return is at 35.53% and 26.47% per year with 30.27% and 20.36% per year of this total return from capital gains and 5.26% and 6.11% per year of this total return from dividends. I would expect future total return to be lower.

It was expected that the dividend yield on income trusts companies would be lowered caused by dividend cuts and/or stock price increases. This stock used to have dividend yields north of 10% and the current one is 2.8%. The change happened wholly due to stock price increases. This reason for stock price increases is not likely to happen again. Also, the dividend portion of the total return was at 5.26% and 6.11% per year but again dividend is now 2.81%, but the dividend portion of the total return will also be lower in the future.

Outstanding shares have increased by 4.7% and 16.6% per year over the past 5 and 10 years. This makes the per share values more important to shareholders. The growth in revenue is from ok to good, the growth in cash flow is quite good but the growth in earnings is down over the past 5 years, but up quite well over the past 10 years.

Revenue is up by 8.5% and 17.9% per year over the past 5 and 9 years. The growth in Revenue per Share is up by 3.7% and 13.1% per year over the past 5 and 9 years. Earnings per share is down by 6.5% and up by 9.4% per year over the past 5 and 9 years. Net income is down by 2.4% and up by 33% per year over the past 5 and 10 years.

Analysts do expect a good increase in EPS for 2014 and the third quarterly report supports this. Analysts expect EPS to increase around 67% for 2014. If you compare the 12 month period ending in September 2014 to the 12 month period ending in December 2013, EPS is up 55%.

Cash flow has had the best growth with the cash flow up by 20.5% and 21.9% per year over the past 5 and 9 years and CFPS up by 15% and 17% per year over the past 5 and 9 years.

The Return on Equity has been over the 10% each of the past 5 years. The ROE for 2013 was at 15.9% and the 5 year median is also at 15.9%. The comprehensive income and net income has been the same since they start to report comprehensive income in 2006. Comprehensive income ROE basically suggests that ROE on net income is of good quality.

All the debt ratios have varied but have generally been good over the past 3 years with the Liquidity Ratio sometimes a bit low and the Leverage and Debt/Equity Ratios a bit high. The Liquidity Ratio for 2013 was at 1.64 and it has a 5 year median value of 1.36. The Debt Ratio for 2013 was at 1.43 and it has a 5 year median value of 1.50. The Leverage and Debt/Equity Ratios for 2013 were at 3.30 and 2.30 and these ratios have a 5 year median of 2.46 and 1.46, respectively.

Sound bit for Twitter and StockTwits is: Dividend Growth Stock. Analysts expect that 2014 will be a good year for this company and certainly the third quarter results are pointing in that direction. See my spreadsheet at key.htm.

This is the first of two parts. The second part will be posted on Tuesday, November 24, 2014 and will be available here. The first part talks about the stock and the second part talks about the stock price.

Keyera provides essential services and products to oil and gas producers in western Canada, and markets related natural gas liquids (NGLs) throughout North America. Its web site is here Keyera.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Friday, November 21, 2014

Innergex Renewable Energy 2

I do not own this stock of Innergex Renewable Energy (TSX-INE, OTC-INGXF). In 2006 I bought Innergex Power on a buy rating and favorable report from TD although it has only been going from 2003. In 2008 I sold Innergex as I did not think that it is a stock I want to hold as dividend increased less than the rate of inflation. I was just trying out this stock. For the period that I held it I lost 4.8% per year. My capital loss was 17%.

When I look at insider trading, I find no insider selling and very minor insider buying. The outstanding shares were not increased by stock options in 2013. There is some insider ownership with the CEO having shares worth around $6.5M, the CFO having shares worth around $1.3M and an officer with shares worth around $2.1M.

Since there have been a number of years with negative EPS, I can get no fix on median Price/Earnings Ratios for this stock. Since 2014 is also supposed to produce a negative EPS and the EPS for the last 12 months is also negative, there will be no current P/E Ratio for comparison.

The EPS for 2015 is expected to be positive with a value of $0.18. The current stock price is $10.72. An EPS of $0.18 and a stock price of $10.72 give a P/E of 59.56. This is a rather high P/E, especially considering the stock is a utility stock. This suggests that the stock price is expensive.

The Graham Price is $4.20. The 10 year low, median and high Price/Graham Price Ratios are 1.21, 1.35 and 1.52. The current P/GP Ratio is 2.55 based on a stock price of $10.72. This stock price test suggests that the stock price is relatively expensive.

The 10 year Price/Book Value per Share is 1.68. The current P/B Ratio at 2.46 is based on a stock price of $10.72 and BVPS of $4.36. The current P/B Ratio is some 47% higher than the 10 year ratio. This stock price test suggests that the stock price is relatively expensive.

The only tests that would suggest that the price might be relatively reasonable are P/S Ratio and P/CF Ratio tests. The current P/CF Ratio at 11.91 is some 2% below the 10 years median of 12.18. However, I think that a P/CF on a utility is any P/CF over 10.00 is rather high. The current P/S Ratio is 4.46 and this some 18% lower than the 10 year median P/S Ratio of 5.45. However, I think that any P/S over 2.00 on a utility stock is rather high.

When I look at analysts' recommendations, I find Buy and Hold recommendations. The consensus recommendation would be a Hold. Most of the recommendations are a Hold. The 12 month stock price consensus is $11.30. This implies a total return of 11.01% with 5.41% from capital gains and 5.60% from dividends.

This article on Re News talks about wind turbines being supplied to a wind farm run in a partnership between Mi'gmaq First Nations of Quebec and Innergex Renewable Energy. This article in Pique Magazine talks about a new hydro-electric facility this company is building in B. C.

Sound bit for Twitter and StockTwits is: Stock expensive and has problems. See my spreadsheet at ine.htm.

This is the second of two parts. The first part was posted on Thursday, November 20, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

Innergex is involved in Canada's renewable energy industry. The Company develops, owns and operates facilities located in North America, leveraging run-of-river hydroelectric power generating facilities, wind farms and photovoltaic solar parks. Its web site is here Innergex.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Thursday, November 20, 2014

Innergex Renewable Energy

I do not own this stock of Innergex Renewable Energy (TSX-INE, OTC-INGXF). In 2006 I bought Innergex Power on a buy rating and favorable report from TD although it has only been going from 2003. In 2008 I sold Innergex as I did not think that it is a stock I want to hold as dividend increased less than the rate of inflation. I was just trying out this stock. For the period that I held it I lost 4.8% per year. My capital loss was 17%.

This company is another income trust that has changed to a corporation. What I did not like was the low dividend growth although the dividend yield was good. Now the dividend yield is down, currently at 5.6%. The dividend growth is not any better. They had been keeping the dividend flat until this year as Dividend Payout Ratio for EPS is too high.

The Dividend Payout Ratio for 2013 was 880% for EPS and 60.3% for Cash Flow per Share. The payout ratio for CFPS is not bad; the real problem is with this company making money. The DPR for EPS for 2014 will be worse as the company is not expected to make a profit in 2014. Analysts seem to feel that DPR for CFPS will be around 66% for 2014.

They raised the dividend in 2014 by 3.4%. This is not a bad hike considering on how high the dividend yield. But I am not sure that they can keep this up as no one seems to expect the EPS to cover the dividend in the next few years.

The total return for shareholders over the past few years has been good. The 5 and 10 total return is at 15.83% and 8.50% per year. The portion of this total return from dividends is at 7% and 6.61% per year. The portion of this total return from capital is at 8.83 and 1.90% per year. The return from dividends will be lower in the future as the dividend yield decreases. This is common for old income trust companies.

The outstanding shares have been increasing by 17.4% and 13.6% per year over the past 5 and 10 years. They have increased due to Share Issues, DRIP and Stock Options. Because of the increasing number of shares, the "per share" values become important. Revenue growth is quite good, cash flow is good. The problem is the lack to earnings growth.

Revenue has grown at 27% and 25% per year over the past 5 and 10 years. Revenue per Share has grown at 8.4% and 9.8% per year over the past 5 and 10 years. Cash Flow has grown at 23% and 22% per year over the past 5 and 10 years. Cash Flow per Share has grown at 4.8% and 7.4% per year over the past 5 and 10 years.

Over the past 10 years, there has been 4 years of negative earnings. Analysts expect that 2014 will be another year of negative earnings. The third quarterly report for 2014 supports what the analysts are saying. Since exactly 5 years ago was a negative earnings year, I can only look at growth for the last 4 years and net income has grown at 14.7%. Net income has grown at 17.5% over the past 10 years.

However, EPS is down by 8.4% per year over the past 4 years and only up by 2.2% over the past 10 years. As a shareholder, I would be more interested in the EPS growth than the net income growth, because that is what is going to affect any shares I hold.

Return on Equity has been at or over 10% only 2 times in the past 5 years, and no times before 5 years ago. The ROE for 2013 was 10%. The 5 year median is just 0.3%. The comprehensive income has been equal to the net income, so there is no difference in its ROE.

The Liquidity Ratio was rather low in 2013 at 1.18. This ratio has often been low with a 5 year median of 1.31. If you add in cash flow after dividends, you get a ratio for 2013 of 1.81. This ratio has a 5 year median of 1.56.

Sound bit for Twitter and StockTwits is: Renewable Energy company with a hopeful future. At least I hope it will do well in the future. I would like to invest more in renewal energy because I think it is the wave of the future. However, this company has to first prove it can make a profit. See my spreadsheet at ine.htm.

This is the first of two parts. The second part will be posted on Friday, November 21, 2014 and will be available here. The first part talks about the stock and the second part talks about the stock price.

Innergex is involved in Canada's renewable energy industry. The Company develops, owns and operates facilities located in North America, leveraging run-of-river hydroelectric power generating facilities, wind farms and photovoltaic solar parks. Its web site is here Innergex.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Wednesday, November 19, 2014

IBI Group Inc.

On my other blog I am today writing about the presentation at the World Money Show in Toronto by David Wyss.

I do not own this stock of IBI Group Inc. (TSX-IBG, OTC-IBIBF). I have had this stock on my list to investigate for some time. What finally prompted me set up a spreadsheet on this stock was an investment report I read in March of 2011. I will continue to follow this stock to see how it all turns out.

This first thing to discuss is dividends. This firm was started in 1974 and it had its IPO in 2004, when they also started to declare dividends. At that time it was an income trust so the initial dividend yield was high with the yield being in the 9% to 11% range. They changed to a corporation in 2011 and decreased the dividend by some 31%. Unfortunately, they had negatives earnings in 2012 and 2013 and cut their dividends to zero in 2013.

Of course dividends are not the main problem. In 2013, the liabilities were higher than the assets and so this company has a negative book value. In 2014 the company renegotiated their credit facilities and revised the terms of their outstanding debentures.

On the other hand, analysts seem to feel that the company is moving forward. It is felt it will again have positive earnings. They also feel that the company will have a positive book value again in 2016. Most seem to feel by the estimates given that 2013 was the bottom for this company.

The third quarter results seem to bear this out, with rising revenue, positive earnings and cash flow. The stock price has also begun to rise with it up by some 177% this year.

This company has been beaten up. The P/E Ratio is 12.84 based on a stock price of $2.44 and 2014 earnings of $0.19. They have a good chance of getting to this EPS as the EPS so far this year , at the end of the third quarter is $0.17.The P/E Ratio for 2015 is very low at 6.10 based on a stock price of $2.44 and EPS estimate of $0.40.

At the end of their third quarter, the company has cash that equals 24% of the stock price with $0.53 cash per share and share price at $2.44. This would effectively make the stock price $1.91 with a P/E of 4.78.

The structure of this company is rather complex, but basically there is an Management Partnership that effectively holds some 40% of voting shares of the company on a partially diluted basis, assuming the exchange of the Class B partnership units for common shares of the company.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus recommendation would be a Buy. The 12 month consensus stock price is $3.42. This implies a 40% total return, all from capital gains.

On the Digital Journal site there is an announcement of IBI Group's third quarter results for 2014. According to Market Watch investors of IBI Group are organizing for the purpose of determining whether IBG's management exercised its fiduciary duty. According to Sleek Money BNS lowered their price objective on this stock.

Sound bit for Twitter and StockTwits is: Beaten up company. Anyone buying shares in this company are, of course, taking a risk. However, if all works out, there could be nice profits to have. See my spreadsheet at ibg.htm.

I will have only one entry for this stock as I must do on some stock because I cover too many stocks to do double entries on all that I follow.

IBI Group Inc. is an international, multi-disciplinary provider of a range of professional services focused on the physical development of cities. The Company through IBI Group provides professional services, including planning, design, implementation, analysis of operations and other consulting services in relation to four main areas of development (urban land, building facilities, transportation networks and systems technology.) Its web site is here IBI Group.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Tuesday, November 18, 2014

Encana Corp. 2

On my other blog I am today writing about the presentation at the World Money Show in Toronto by Iain Butler.

I do not own this stock of Encana Corp. (TSX-ECA, NYSE-ECA) but I used to. Please note that my spreadsheet following this company starts with Alberta Energy Company and follows this company into the formation of EnCana in 2002. It was in 2002 EnCana was formed with the merger of AEC and PanCanadian Energy Corporation. Company split into EnCana Corp and Cenovus Energy Inc. in 2009, Oil with Cenovus and gas with EnCana.

When I look at insider trading, there is not much happening. There is no insider selling and insider buying is at $0.6M. This is at $0.004% of market cap and so relatively very little. There seems to be little insider ownership. The CEO owns shares worth around $1.2M and the Chairman owns shares worth around $2M. Otherwise insider ownership is little.

The 5 year low, median and high median Price/Earnings per Share Ratios are 13.96, 15.91 and 17.86. The current P/E at 8.42 is based on a stock price of $20.21 and 2014 EPS estimate of $2.40. This stock price test suggests that the stock price is cheap.

I get a Graham Price of $28.08. The 10 year low, median and high median Price/Graham Price Ratios are 0.78, 1.03 and 1.19. The current P/GP Ratio is 0.72 based on a stock price of $20.21. This stock price test suggests that the stock price is cheap.

The 10 year Price/Book Value per Share Ratio is 1.96. The current one is 30% lower at 1.38 based on a stock price of $20.21 and BVPS of $14.60. This stock price test suggests that the stock price is cheap.

If you do a dividend yield stock price test you get different results. The current dividend yield 1.57% is much lower than the 5 year median dividend yield of 3.12% and the historical average of 2.99%. Interestingly it is not lower than the historical median yield of 1.45%. The yield on this stock has been quite high recently until the dividend was cut recently by some 65%.

However, they have cut the dividend to get a better Payout Ratio for EPS. Last year the DPR for EPS was 209%. In 2012 they had an earnings loss. The DPR for EPS for 2014 is expected to be around 13%.

The Motley Fool likes EnCana because they expect gas prices to heat up. On the Seeking Alpha Site Carl Surran thinks the EnCana's bullish thesis is still intact. Also on Seeking Alpha IAE Research say the company should grow after reshuffling its assets.

When I look at analysts' recommendations, I find Strong Buy, Buy, Hold and Underperform recommendations. There are a lot of analysts following this stock and most of the recommendations are a Buy or a Hold. The consensus recommendation would be a Buy. The 12 month consensus stock price is $24.30. This implies a total return of 21.81% with 20.24% from capital gains and 1.57% from dividends.

Sound bit for Twitter and StockTwits is: price is cheap. The price is rather low. However, they just also cut their dividend to a 1.6% yield. Most analysts do not see much in the way of dividend increases over the next little while. So, dividends are not likely to be very good in the near future. See my spreadsheet at eca.htm.

This is the second of two parts. The first part was posted on Monday, November 17, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

EnCana is among the largest natural gas companies in North America. They are focused on natural gas exploration and the development of resource plays. They have a diversified portfolio of assets and hold a highly competitive land and resource position in a number of North America's most promising shale and tight gas resource plays. Its web site is here EnCana.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Monday, November 17, 2014

Encana Corp.

On my other blog I am today writing about the presentation at the World Money Show in Toronto by Jimmy Mengel.

I do not own this stock of Encana Corp. (TSX-ECA, NYSE-ECA) but I used to. I had held this stock previously as Alberta Energy Company from April 2000 until August 2002 and made some 18% total returns per year. I had EnCana Corp from February 2006 to November 2009 and made a 9.54% per year total return. I sold this stock in 2009 because I only had 100 shares and the stock was going to split into two companies. I would have ended up with small investment in two companies.

As you can see I do not look on oil companies as a long term buy. Also, please note that my spreadsheet following this company starts with Alberta Energy Company and follows this company into the formation of EnCana in 2002. It was in 2002 EnCana was formed with the merger of AEC and PanCanadian Energy Corporation. Company split into EnCana Corp and Cenovus Energy Inc. in 2009, Oil with Cenovus and gas with EnCana.

Dividends on this company is paid in US$, so dividends paid will fluctuate depending on the exchange rate between US$ and CDN$. There has been another big cut in dividends for 2014 and this cut is a 65% cut. Over the past 10 years in CDN$ terms dividends are up by 9.8% and over the same period in US$ they are up by 10.5%. This includes the latest dividend cut.

Over the past 5 years, dividends are down by 17.7% in CDN$ terms and by 18.9% in US$ terms. This also includes the most recent dividend cut. Dividends on resource stocks do tend to fluctuate.

Over the past 5 and 10 years, the total return for this stock is at a negative 7.50% per year and a positive 4.57% per year. The 5 year capital loss is at 9.94% per year and the 5 year dividend is at 2.44% per year. For the past 10 years, the capital gain is at 1.38% per year and the dividend is at 3.20% per year. It has been 5 years since EnCana was split into two companies, so the 5 year values are from this split.

The outstanding shares are down by 0 and 2.2% per year over the past 5 and 10 years. Shares have increased sue to Share Issues, Stock Options and DRIP. Shares have decreased due to Buy Backs.

This stock reports in US$. The Revenue is down by 17.7% and up by 6.1% per year over the past 5 and 10 years. The Revenue per Share is down by 17.4% and up by 8.4% per year over the past 5 and 10 years. The Revenue per Share looks better because of share buy backs. Revenues hit bottom in 2012 and have been improving since. Analysts expect growth in Revenue over the next few years. If you compare the 12 month period to the end of September 2014 to the 12 month period to the end of December 2013, Revenues are up by 23%.

Net Income is down by 40% and 15% per year over the past 5 and 10 years. Net income hit bottom in 2012 and has been improving since. Analysts expect good growth in Net Income over the next few years. Net Income growth is certainly very good to the end of the third quarter of 2014. Net Income over the past 12 months to the end of the third quarter is up over a 1,000% compared to 12 month period to December 2013.

EPS is down by 41.5% and 14.5% per year over the past 5 and 10 years. These values are in US$ terms. EPS hit bottom in 2012 and has been improving since. Analysts expect good growth in EPS, especially in 2014. If you compare the 12 month period to the end of September 2014 to the 12 month period to the end of December 2013, EPS are up by 1,141%.

Cash flow is down by 12.1% and up by 0.9% per year over the past 5 and 10 years. Cash Flow per Share is down by 11.9% and up by 3.1% per year over the past 5 and 10 years. These are also in US$ terms. Cash Flow bottomed in 2011. Analysts expect good growth for 2014 at some 38%. If you compare the 12 month period to the end of September 2014 to the 12 month period to the end of December 2013, Cash Flows are up by 18.3%.

Revenue, Earnings and dividends hit peaks in 2008. The Cash Flow hit a peak in 2009. Looking at the 5 year running averages, they are bit better than just past 5 and 10 years, except in cash flow. If you look at CFPS using 5 year running averages, the growth is at 7% and 13.3% per year over the past 5 and 10 years.

In the last 4 out of 5 years, the Return on Equity has been below 10%. For the year ending in December 2013, the ROE was at 4.6%. The ROE is expected to be around 11% for 2014. If you calculate ROE for Net Income for the 12 month period ending in September 2014, it is at 31.3%. Generally the ROE on comprehensive income tends to be slightly higher than the ROE for Net Income.

The Liquidity Ratio and Debt Ratios are slightly low and the Leverage and Debt/Equity Ratios slightly high. The Liquidity Ratio has fluctuated and the one for 2013 was at 1.45, but the current ratio is 4.12 and this is higher than it has been before. The Debt Ratio for 2013 was at 1.41 and the current one is 1.80 is also rather high, but since the 5 year median is 1.93 so it is not higher than it has been in the past. It has also fluctuated.

The Leverage and Debt/Equity Ratios are generally a bit high with values of 3.43 and 2.43 for 2013 and current values of 2.25 and 1.25. The 5 year median values are 2.11 and 1.11. I prefer them to be below 2.00 and 1.00 respectively, but they are currently ok.

Sound bit for Twitter and StockTwits is: Good growth since 2012. See my spreadsheet at eca.htm.

This is the first of two parts. The second part will be posted on Tuesday, November 18, 2014 and will be available here. The first part talks about the stock and the second part talks about the stock price.

EnCana is among the largest natural gas companies in North America. They are focused on natural gas exploration and the development of resource plays. They have a diversified portfolio of assets and hold a highly competitive land and resource position in a number of North America's most promising shale and tight gas resource plays. Its web site is here EnCana.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Friday, November 14, 2014

Chesswood Group Ltd.

On my other blog I am today writing about the presentation at the World Money Show in Toronto by Money Saver Magazine with David Stanley.

I do not own this stock of Chesswood Group Ltd. (TSX-CHW, OTC-CHWWF). A reader wrote me in 2012 that he was researching and found a company that he hoped I could give me a brief outlook on. He said that the company is Chesswood Group and they are basically a financial leasing company. From 2009 to 2012 they increased their dividends from 2.5 cents to 5.5 cents per month. This is a 120% increase.

Dividends are now at 65 cents, an increase of 8.3% for 2014. The dividend growth over the past 5 years is at 5.2% per year. The dividends are down by 2.3% per year over the past 7 years. The low growth and lower dividends can be explained because this stock used to be an income trust company. When it became a corporation it decreased the dividends by some 74%.

If you look at dividend increases since they start to increase them again in 2009, dividends are up by 21.8% per year. I wonder about this dividend growth being sustainable. Earnings are growing, but revenue and cash flow are not. The current dividend yield is very good at 5.42%.

The Dividend Payout Ratio is for 2013 is at 80% and 24.1% for EPS and CFPS. The DPR for EPS is expected to be about 72% for 2014. There is not many analysts following this stock and there are noestimates for CF.

The outstanding shares have increased by 6.9% and 4.9% per year over the past 5 and 7 years. Revenue is not growing much and Revenue per Share is down. Earnings have growing very well, but cash flow has not. Without future revenue growth, EPS cannot grow. Revenue is expected to go down by 11% for 2014, but then go up 15% in 2014. This means it is expected to growth 2.7% from 2013 to 2014.

The Revenue has grown at 2.5% and 6.7% per year over the past 5 and 10 years. Revenue per Share is down by 4.2% and up by 2.5% per year over the past 5 and 7 years. Earnings per Share have grown well and EPS is up by 25% and 5% per year over the past 4 and 7 years. I use the last 4 years EPS growth because 5 years ago the EPS was negative.

Cash flow is down by 3.8% and up by 1.9% per year over the past 5 and 7 years. CFPS is down by 10% and 2.8% per year over the past 5 and 7 years.

The Liquidity Ratio is high, but the Debt Ratio is a bit low and the Leverage and Debt/Equity Ratios are a bit high. The Liquidity Ratio for 2013 is 13.15. They have very little current debt. The Debt Ratio is 1.46. The Leverage and Debt/Equity Ratios are 3.18 and 2.18. Generally speaking, Leverage and Debt/Equity Ratios are usually high for financial companies.

The 5 year low, median and high median Price/Earnings per Share are at 8.05, 10.03 and 12.01. The corresponding 7 year values are a bit lower. The current P/E Ratio is 14.54 based on a stock price of $14.43 and 2014 EPS estimate of $1.08. This stock price test suggests that the stock price is relatively expensive. However, a P/E Ratio of 14.54 is not a high one.

The 10 year Price/Book Value per Share Ratio is 0.99. The current P/B Ratio of 2.28 is some 130% higher. This stock price test suggests that the stock price is relatively expensive.

One thing I should mention that I did not like was in 2011 this company did a 1 to 100 consolidation and then a 100 to 1 split. The sole purpose of this seemed to be to get rid of small shareholders. This is not a positive sign for small investors.

Sound bit for Twitter and StockTwits is: Dividend Growth Stock, with problems. See my spreadsheet at chw.htm.

I will have only one entry for this stock as I must do on some stock because I cover too many stocks to do double entries on all that I follow.

Chesswood Group Limited is a financial services company operating primarily in the specialty finance industry. Chesswood's approach is to acquire financial services businesses. It owns Pawnee Leasing Corporation, located in Fort Collins, Colorado, is Chesswood's largest operating company. Pawnee's assets comprise approximately 75% of Chesswood's consolidated assets. Chesswood owns of one of the larger Acura dealers in Canada, Acura Sherway, in addition to Canada's only eDealer, cars4U.com. Its web site is here Chesswood Group.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Thursday, November 13, 2014

Cenovus Energy Inc. 2

On my other blog I am today writing about the presentation at the World Money Show in Toronto by Money Saver Magazine with Bruce Cappon.

I do not own this stock of Cenovus Energy Inc. (TSX-CVE, NYSE-CVE). This is another stock that was talked about at the 2010 Money Show in Toronto. There were those who liked oil companies and they mentioned both Suncor Energy Inc. (TSX-SU) and Cenovus Energy Inc. (TSX-CVE).

This company was split off from EnCana (TSX-ECA) in 2009. This was the oil part of EnCana and EnCana now is just a gas play. My spreadsheet reflects this split. I was also following Alberta Energy Co. (TSX-AEC) into EnCana. Also, between 2002 and 2008, the company was reporting in US$.

When I look at insider trading, I find $1M of insider buying and $3.3M of insider selling. Net insider selling is at $2.3M and only 0.01% of market cap and therefore a low amount. There is insider ownership with the CEO owing shares worth around $3.7M, the CFO owing shares worth around $1.1M, and officer owing shares worth around $3.4M and the Chairman owning shares worth around $3.7.

Outstanding shares were increased by 970,000 in 2013 for stock options. This is 0.13% of the outstanding shares and therefore a low amount. This book value of these shares was at $31M and this number of shares was worth some $29.5M at the end of 2013. (You can compare and contrast this with the same sort of information on CCL Industries where values were relatively much higher.)

The 5 year low, median and high median Price/Earnings per Share Ratios are 19.94, 24.54 and 29.14. The 10 year corresponding values were much lower at 12.47, 14.85 and 18.07. The current P/E Ratio is 15.06 based on a stock price of $28.62 and 2014 EPS estimate of $1.90. This stock price test suggests that the stock price is reasonable.

I get a Graham Price of $24.84. The 10 year low, median and high median Price/Graham Price Ratios are 1.08, 1.28 and 1.57. The current P/GP Ratio 1.15 based on a stock price of $28.62. This stock price test suggests that the stock price is reasonable.

The 10 year Price/Book Value per Share Ratio is 1.22. The current P/B Ratio is 2.01 based on a BVPS of $14.21 and a stock price of $28.62. The current P/B Ratio is some 9% lower than the 10 year P/B Ratio. This stock price test suggests that the stock price is reasonable.

The 5 year dividend yield is 2.76% and the current dividend yield at 3.72% is some 35% higher. I do not think that looking a historical dividend yields are appropriate because they cover EnCana not Cenovus. This stock price test suggests that the stock price is cheap.

Sound bit for Twitter and StockTwits is: Stock price is reasonable to cheap. See my spreadsheet at cve.htm. Note that there is a lot hidden in my spreadsheet, like US$ values and pre-2009 original values. Prior to 2009, reporting was in US$ and company was part of EnCana Otherwise the spreadsheet would look too confusing. However, I am willing to share my whole spreadsheet with anyone interested.

This is the second of two parts. The first part was posted on Wednesday, November 12, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

Cenovus Energy Inc. is an integrated oil company. The Company's operations include enhanced oil recovery (EOR) properties and established crude oil and natural gas production in Alberta and Saskatchewan. It also has ownership interests in two refineries in Illinois and Texas, United States. Its web site is here Cenovus.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.