Monday, February 9, 2009

Waterfurnaces Renewable Energy 2

Today I am going to look at what analysts are saying about this stock (TSX-WFI). Is it a good buy now? The first thing I looked at was insider buying and selling. There is not much happening here. There was slightly more selling than buying, but selling occurred over $29 a share and buying occurred under $26 a share. Management has signaled that they have faith in the company by increasing the dividend. I have updated my spreadsheet for the 3rd Quarterly Report on this stock.

In looking at earnings, everyone seems to expect that this company will have good earnings for the financial years ending in 2008 and 2009. Part of the problem with the low growth in the financial year of 2007 is that this company makes a good portion of its income in US$ and reports in US$. At the end of 2007, the CDN$ and the US$ were almost on par. Currently the CDN$ is worth only $.80 of the US$.

Looking at the ratios on this stock, current P/E of 20.8 is lower than the 5 year average of 25 and this points to a current good price. The other positive thing is that the Accrual ratio is negative and it is a negative 9.2% and this point to the stock as being undervalued. However, the current yield is 3.3% against the 5 year average of 3.6%, so this would show the opposite, which is the stock, is rather high in price. It is interesting that the insiders are buying under $26. The other thing that is a negative is that the Graham price is quite a bit above the current price. This tends to occur on growth stock, where the stock is growing much faster than its underlying value. There is nothing wrong with this, but when stock are no longer growth stocks, the prices tend to fall back close to the Graham Price.

As far as the ratings go on this stock, there are Strong Buy ratings and Hold ratings on this stock. This makes the mean rating a Buy. This stock may have lots of room for both capital gain and dividends in the future, but it is a speculative buy. (See my site for information on analyst ratings.)

Looking at the charts, this stock has done better than the TSX for all periods of year-to-date to 10 years. The longer out you go, the better it has done against the TSX. I do not know of any sub index to compare it to. This stock is in the very new field of green energy.

They are a manufacturer and distributor of residential and commercial geothermal and other water source heating and cooling systems. This is an international company with 80% of its revenue from the US. It has revenue from Canada of just over 16% and the rest of the world under 3%. Its web site is See my spreadsheet at

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 for a list of the stocks for which I have put up spreadsheets on my web site.

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