Just Energy Group

I do not own this stock Just Energy Group (TSX-JE, NYSE-JE). I started to follow this is July 2010. It was one of the high yield income trusts that people were talking about, so I decided to check it out. At the time I first checked it out, I did not care for it. This company makes its money as an electricity and gas reseller. When I looked into it, there were a lot of complains about the company. The company is currently diversifying into other business.

Dividends were flat from 2009 until this year. In 2013 they decreased the dividends by 32%. Maybe the reason for this is that the analyst following this stock does not expect the company to make any money in 2013. No earnings estimate is given beyond next year. The current dividend is 12.48%.

I do not mind a company's earnings having some fluctuating. What I do not like about the earnings on this company is that the fluctuations are big and the 5 year running average is negative. The 5 year running average earnings have been negative since 2009 because of the big earnings loss of that year.

The revenue is growing and the 5 year running average over the past 5 and 10 years have grown at 11% and 16% per year. The cash flow is also growing and the 5 year running average growth over the past 5 and 10 years is at 5% and 9.6% per year.

The balance sheet is awful. Not only is the Liquidity Ratio very low, but even considering cash flow it cannot break 1.00. This company also has more liabilities than assets with the Debt Ratio at 0.92. Call me old fashion, but I do like a company to have a balance sheet.

When I look at analysts' recommendations, I find Buy, Hold and underperform recommendations. The consensus recommendation would be a Hold. The 12 month consensus stock price is $7.50. This implies a total return of 23.92% with 12.48% from dividends and 11.44% from capital gains. (Frankly, I am rather skeptical of this.)

There is an interesting story about Just Energy and its founder at G&M. Apparently Just Energy has been accused of unethical sales practices and airbrushing its financial situation. Interestingly, another blogger seems to have a positive spin on this company at newsblaze. It misses one small fact that there was an earnings loss of the first quarter of 2014.

Personally, I would not touch this stock. It has a bad reputation, no earnings and a negative book value. Not everyone sees it my way; I note that TD Waterhouse has issued a Buy Rating on this stock. See my spreadsheet at je.htm.

Just Energy's business involves the sale of natural gas and/or electricity to residential and commercial customers under long-term fixed-price and price-protected contracts. Just Energy derives its margin or gross profit from the difference between the fixed price at which it is able to sell the commodities to its customers and the fixed price at which it purchases the associated volumes from its suppliers. The company also offers "green" products through its Just Green program. Through its subsidiary Terra Grain Fuels, the Fund produces and sells wheat-based ethanol. Its web site is here Just Energy.

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 or StockTwits.