I do not own this stock (TSX-ATP). Although I started to investigate this based on a favorable analyst report, I was quite surprised at the fact that that this company cannot seem to earn any money.
When I look at insider trading, I find that there is no insider selling or insider buying. Some of the directors have recently retained shares granted as options. I have found that Caisse de dépôt et placement du Québec owns some 53% of this company. Also, some 95 institutions own 18% of this company. Over the last 3 months institutions have bought and sold shares of this company, but overall they have increased their shares by 4.2%.
First, I have no 5 year median Price/Earnings Ratios because this company had only one year of profits. For that one year P/E Ratio would be between 3 and 4 (very low P/E Ratios). Currently the P/E Ratio for 2011, based on expected earnings is 32.3, a very high P/E Ratio.
As far as Graham Price goes, based on estimated earnings for 2011, I get $7.99 as a Graham Price. The Current stock price of $15.28 is some 92% above this. Because this is a utility company, you would expect the difference between the stock price and the Graham Price to move from a negative difference to a positive difference. That is, a stock price that moves around the Graham Price. The difference for this stock is much, much higher than would be expected for a utility company.
Surprisingly, this stock has grown its Book Value over the years. The 5 year median Price/Book Value is 3.28 (a high one for a utility company). The current one of 2.55 is some 77% lower than the 5 year median ratio. Normally this would be good, expect 2.55 is rather high P/B Ratio for a utility company.
The 5 year median dividend yield is 10.3% and the current one is 7.2%. This shows the current stock price to be rather high. Some people that analysis stocks, think that dividend yield is the only way to measure whether or not a stock price is a good one or not. And, by this measure, the stock price is too high.
When I look at analysts’ recommendations, I find Buy, Hold and Underperform recommendations. The consensus would be a Hold recommendation. (See my site for information on analyst ratings.)
Companies just starting out often do not have earnings. However, they also so not give out dividends. This stock still has a very high dividend yield at 7.3%. Positives are that they have revenue and they cash flow. Also, the Company says that they can maintain their present distributions until 2016.
Personally, I do not like companies with no earnings. I also do not chase high dividend yields. I think an investment in this company is risky, but they do have a great yield. Since they have no earnings analysts talk about their EBITDA. This is earnings before interest, taxes etc. It is not that I think it is invalid to talk about this, it is just it is the only thing they can talk about on this stock because it has no earnings.
Atlantic Power Corporation is an independent power producer that owns interests in a diversified fleet of power generation and transmission projects located in the United States. This company has a collection of gas-fired plants in the US and is generally in the lower cost quadrant of generation in its region. ATP owns interests in a diversified portfolio of independent, non-utility power generation projects and one transmission line situated in major U.S. markets. Its web site is here Atlantic Power. See my spreadsheet at atp.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.
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