Waterfurnaces Renewable Energy

I am reviewing this stock (TSX-WFI, WFI.U) as it is a stock I follow. I have updated my spreadsheet with the 2008 annual report and the 2nd quarterly report for June 2009. This is a rather small cap stock that is not heavily traded. The stock reports in US Dollars, but the stock trades mostly in Canadian funds. However, it can also be traded in US funds under the WFI.U symbol. It probably reports in US Dollars as most of its business is in the US.

If you look at the growth figures for this company, they are all very good except for the growth in Book Value. This stock pays out a high percentage of its cash flow. The Book Value is not growing as fast as the earnings and stock price. This is why there is a big discrepancy between the Graham Price and the stock price. The Graham Price depends on both Book Value and earnings.

For the growth figures that are very good, you need look not further than the earnings, which have had a growth of some 44% per year over the last 5 years. The earnings have also grown about 27% per year over the last 10 years. The total return on this stock over the last 5 years is some 36% per year. The dividends started in 2003 and have grown just over 16% per year over the past 5 years. This company has had some remarkable growth.

The Liquidity Ratio and Asset/Liability ratio are very high. What I like to see is both these ratios at 1.50 or higher. Both these ratios have been over 2.40. This is excellent. The Return on Equity (ROE) for this company is great. The 5 year average is over 44% and ROE at the end of 2008 was over 57%.

I do not own this stock. I had heard of this stock, so I did a spreadsheet. It is an interest investment as it a very green company that pays a good dividend. I am going to continue to track it for now.

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 www.waterfurnace.com. See my spreadsheet at www.spbrunner.com/stocks/wfi.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.