Canadian Utilities

I am reviewing this stock (TSX- CU) today as I received the December 2008 annual report and I have not reviewed it since I received this report. I do not own this stock, but I follow it. They are on the dividend lists that I follow of Dividend Achievers at www.indxis.com/DividendAchievers.html and Dividend Aristocrats list at www.tmxmoney.com/en/individual.html (see indices).

In looking at growth figures, this stock is still falling behind in revenue growth. I looked at and updated my spreadsheet for the third quarter of 2009 and revenue is lower on a 3 month and 9 month basis from one year ago. When you look at earnings and cash flow, the growth figures are better. The earnings have slipped in this recession, but the cash flow is not expected to. The Book Value goes up by modest amounts.

The one good growth is in dividends, which grow faster than inflation. The dividends have grown at just over and just under 5% for the last 5 and 10 years. They were increased this year by 6%. I know some growth dividend paying stock do better, but this is still very solid growth in dividends.

When you look at the Liquidity Ratio, this is very good. The current balance sheet has a Liquidity Ratio of over 3.00. Anything at or over 1.50 is good. The Asset/Liability Ratio however, is not quite as good. This ratio is current ratio at 1.49. The five year average is better at 1.51. You would like to see this ratio at 1.50 or better. So the current one is a little low, but it is not seriously low.

When I look at this company, what I do not like is lack of revenue growth and a high Accrual Ratio. The Accrual Ratio for the end of 2008 was 5.5% and now it is even higher at just over 6%. However, this company has provided its shareholders with solid stock growth and solid dividend growth. The 5 and 10 year total growth for this company is 8.8% and 10.5%. This is solid growth for a utilities company.

Canadian Utilities Limited operates in four business segments: regulated natural gas operations; regulated electric operations; technologies; and power generation. These operations provide service to industrial, residential and commercial customers. Other businesses consist of natural gas gathering, processing, storage and natural gas supply management and technical facilities management. ATCO owns 74% of this company. CU.X is voting and Class B, CU is non-voting and Class A. Its web site is www.canadian-utilities.com. See my spreadsheet at www.spbrunner.com/stocks/cu.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. Also, look at other investing notes on my website at www.spbrunner.com/investing.html.