Wednesday, March 17, 2010

Emera Inc 2

I am continuing my review of this stock (TSX-EMA) today as the annual reported for December 2009 has been published and this is a stock that I own. I bought some shares in this company in 2005 and my total return to date has been 10% per year. This is a utility stock that pays a good dividend that averages around 4.5%.

The first thing I like to look at in my second part on a stock is the Insider Buying and Insider Selling reports. At the end of 2009, the CEO exercised his stock options; that is he sold them. This amounted to just over $.5M. This is the only action in the past year. This does not really tell us much. However, the company has shown confidence in this company by raising the dividends by just over 9%.

When I look at the 5 year average P/E low and 5 year average P/E high, I find the range narrow, with the low P/E at 14.6 and the high at 18.5. Based on earnings estimates for 2010, I get a current P/E of 15.9. The sites that use the last 12 months earnings for a current P/E get a P/E of 17. The next thing to look at is the Graham Price. I get a Graham Price for 2010 of $21.54. The current stock price of $24.64 is some 14.4% above this Graham Price. When looking at these measurements, I must point out that they are based on estimates (earnings estimates).

When I look at the dividend yield, the current yield is 4.55%. The 5 year average dividend yield is 4.51%. These are almost identical. The last thing to look at is the Price/Book Value ratio. The current one is 1.85. The 10 year average P/BV is 1.61. This makes the current one some 15% higher than the long term average. What I like to see, is the current P/BV ratio below the long term average. What all this shows is that the price is a reasonable one.

When I look at the analyst recommendations, I find ones from Strong Buy to Buy to Hold. However, there are few of the Buys recommendations and lots of the Hold recommendations. The consensus recommendation would be a Hold. (See my site for information on analyst ratings.)

Looking at reports, the main reason for the Hold recommendation is that the stock price is not expected to raise much, if at all, over the next year. Others mention that this stock is a safe haven in a volatile market and has a very good dividend. The ones that say the stock is a buy mention the recent good increase in their dividends and the high dividend yield of this stock. They also think that utilities are defensive stocks with safe, predictable dividends and cash flow. They feel that this is a very good thing in a volatile market.

As I said yesterday, I am happy with my shares in this company and plan to hold them.

Emera Inc. is an energy and services company that has two wholly-owned regulated electric utility subsidiaries, of Nova Scotia Power Inc. and Bangor Hydro-Electric Company. Emera also owns 19% of St. Lucia Electricity Services Limited, and 25% of Grand Bahamas Power Company that serves 19,000 customers on the Caribbean island of Grand Bahamas. Emera also owns the Brunswick Pipeline; Bayside Power, in Saint John, New Brunswick; Emera Energy Services; a joint venture interest in Bear Swamp northern Massachusetts; a 12.9% interest in the Maritimes & Northeast Pipeline; and an 8.2% interest in Open Hydro. 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. Also, look at other investing notes on my website at Follow me on twitter.

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