Tuesday, January 6, 2009

Gaz Metro LP

In line with what I did at the end of last year, I am again looking at another pipeline stock (TSX-GZM.UN) as a possible investment. It should be noted that this stock is listed as a utility stock, as it has more than just gas pipelines. As I said in December, if there is any money to be made in the current market it is in dividends or distributions. But also heed the warning that with higher yields come higher risks. Today I will review how this stock has done in the past. Tomorrow I will look at it now and for the future.

All my following figures are for the year ending at the last annual statement of September 2008. The revenue growth for the last 5 and 10 years was 4.3% and 5.6%. Although this is not great figures, they are not terrible either. The 5 and 10 years growth for Earnings per Share (EPS) was a negative 1.6% and .3%. These are awful figures, but since this is an income trust, you would be more concerned with the growth in cash flow. The 5 and 10 year figures for cash flow is 3.3% and 3.6% for the last 5 and 10 years. Well, at least this is higher than background inflation.

There has been no growth in dividends over the 5 years and 10 years, in fact the dividends have gone down slightly. If you had held the stock over the last 5 years, you would have made a return of just 1%. Even the Accrual Ratio is rather high at 4.4%. It would seem that I can not find anything positive to say about this stock’s past performance at present. The only bright point is that it has a stability rating of SR-2 and STA-2M. However, I should point out that it used to have a stability rating of STA-1L. This is not a great report, but I do not know what I will find when I start to investigate a stock.

Gaz Metro Limited Partnership is a company whose core business is the distribution of Natural Gas in Quebec. Gas Metro is also, indirectly, the sole shareholder of the Vermont Gas System (VGS), and the Green Mountain Power Corp (GMP), the second largest electricity supplier in Vermont. The company operates in Canada and US. Its web site is www.gazmetro.com. See my spreadsheet at www.spbrunner.com/stocks/gzm.htm.

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. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets on my web site.

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