Tuesday, February 25, 2014

Emera Inc. 2

I own this stock of Emera Inc. (TSX-EMA, OTC-EMRAF). I own this stock of Emera Inc. (TSX-EMA, OTC-EMRAF). In 2005, I want to buy something for my Locked-in RRSP. I think that this was an appropriate stock and has good value. I was using up excess cash in my account.

Over the past year of insider trading, there has just been some insider buying. Insider buying is at $0.4M. For this company there are not only options but other option like vehicles called DSU (Deferred Share Units) and Performance Share Units. Most of the buying was done by the CFO who was keeping his options as stock. This is a positive.

Outstanding Shares were increased 60,000 Shares in 2013 with a book value of $2.2M. This is quite different from 2012 were the outstanding shares were increased by 0.69M shares with a book value of $15M.

The 5 year low, median and high median Price/Earnings per Share Ratios are 1.28, 16.77 and 20.07. The current P/E ratio is 17.69 based on a stock price of $32.90 and 2014 earnings estimates of $1.86. This stock price test suggests that the stock price is reasonable, although to the higher end of reasonable.

I get a Graham Price of $25.68. The 10 year low, median and high median P/GP Ratios are 0.94, 1.10 and 1.24. The current P/GP Ratio is 1.28 based on a share price of $32.90. This stock price test suggests that the stock price is rather high. The main reason for this test being different from the P/E Ratio tests that the low growth in book value.

The 10 year median Price/Book Value per Share Ratio is 1.66. The current P/B Ratio is 2.09 a value some 26% higher. The current P/B Ratio is based on a BVPS of $15.76 and a stock price of $32.90. This stock price test suggests that the stock price is high.

The 5 year median dividend yield is 4.25% and the current dividend yield at 4.41% is some 3.7% higher. This stock test suggests that the stock price is reasonable. If you look at an historical average dividend yield, I get a value of 5.22% a value that is some 16% higher than the current dividend yield and suggests that the stock price is reasonable but towards the higher end of a reasonable range.

I calculate a more median historical dividend yield of around 4.76%. This is a value that is still above the current dividend yield, but only by 7%. What I can say is that the stock price is not cheap. It seems to be in a reasonable range, but towards the higher end of the reasonable range.

When I look at analysts' recommendations, I find Strong Buy, Buy, Hold and Underperform recommendations. The consensus recommendation would be a Hold. The 12 month stock price is $34.70. This implies a 9.88% total return with 4.41% from dividends and 5.47% from capital gains.

The Ticker Reporter site talks about an "outperform" rating of this company by Credit Suisse. The mention of $0.332 dividend payment for February 2014 would have to be in US$. The average rating is a Hold, but Scotiabank just issued a "sector perform" rating on this stock reported at the WKRB site. (See my blog for information on analyst ratings .)

An article in the Vancouver Sun reporting on information fromJonathan Ratner at Financial Post talks about Canada doing better in 2014 and surprising to the upside. He mentions capital spending by Canadian utility companies including Emera. Emera is involved with off-shore wind development in Maine. This company is part of S&P/TSX Canadian Dividend Aristocrats Index list. The Dividend Aristocrats is part of TSX site. Go to the "TSX Market Activity" and click on "Indices and Constituents" tab. I still look at these lists for stock ideas.

This is a solid utility company that currently getting a bit pricey. See my spreadsheet at ema.htm.

This is the second of two parts. The first part was posted on Monday, February 24, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

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.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

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