Wednesday, June 8, 2011

Emera Inc 2

I own this stock (TSX-EMA). It is in my Locked-Pension Account. I bought this stock in July 2005 and I have made a return of 14.3% per year. The portion of this total return attributable to dividends would be around 4% per year.

When I look at Insider Trading, I find that the CEO has, in the past year, sold some $2.8 of shares. This looks like he sold his option compensation. There is in total some $3M in net insider selling because other officers have sold off options. There is a bit of insider buying by directors. It would appear that institutions own some 23% of this company. Within the last 3 months they have bought some 540K shares which would be valued at around $17M.

When I look at the 5 year median Price/Earnings Ratios, I get a low of 13.4 and a high of 18.7. The current one of 17.6 is just higher than the median one of 16.6. This would show a current reasonable price. I get a Graham Price of $24.60 and the current price of $31.56 is some 28% higher. Compared to last year’s difference, which ranged from 20% to 60% difference, it is not bad, but the 10 year median high difference is just 20%, so on this basis the current stock price is high.

I get a 10 year median Price/Book Value Ratio of 1.67 with a current P/B ratio of 2.10. The current one is some 25% higher than the 10 year median P/B Ratio. The problem with this ratio, as well as the Graham Price is that the book value has not grown much over the past 5 and 10 years.

The current dividend yield of 4.1% is not a bad yield, but the 5 year median dividend yield is higher at 4.4%. This would indicate a rather high current stock price. In fact, the only ratio that shows a decent current stock price is the P/E ratio.

When I look at analysts’ recommendations, I find Strong Buy, Buy and Hold. The consensus would probably be a Buy, but there are a lot of Hold recommendations. (See my site for information on analyst ratings.)

The analysts with the Hold recommendations do not see this stock increasing much within the next 12 months. They look at a stock price increase of around 2% plus 4% dividend for a total return around 6%. One with a strong buy says that this stock has its seasonal strength from the summer to November each year, so expects the stock price to shortly start to move higher. There is, of course, always a range of opinions on any stock.

I feel that this stock has been a good investment for me and I will continue to hold what shares I own. I also may, in the future buy more. The thing is that some stocks I have bought for my pension account, like Saputo (TSX-SAP) have grown a lot and are a bigger portion of my portfolio than I care to hold. At some point, I will sell some Saputo and buy something else with that money.

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 here Emera. See my spreadsheet at ema.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 for stocks followed and investment notes. Follow me on twitter.


  1. Emera is gouging the people of Nova Scotia in order to provide dividends to its stockholders. It actually disgusted me to read your blog entry on this company. Let me spell it out for you. Each time Emera raise power rates (10% increase in the near future), it is with the rationale that they need the money to improve infrastructure, yet the infastructure has crumbled in their hands as dividends have gone up. Small businesses are being forced under in order for you to make your 14 per cent. The entire populace of Nova Scotia hates this company. Eventually we will kick them out. Something to think about.

  2. I am sorry you feel that you are being gouged by this company. However, I think you are confusing total return with dividend return. My dividends are 4%.

    I live in Ontario and Ontario Hydro is own by the government. Over the past 3 years my electricity rates have increased by 4.06%, 18.26% and 18.74%.

    Perhaps you would rather the government ran your electrical companies.