Emera Inc.

On my other blog I am today writing about Market Corrections continue...

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.

I have held this stock since 2005. I have made a total return of 9.8% per year with 5% from capital gains and 4.8% per year from dividends. The current dividend yield is 4.4% and I am making a yield of 7% on my original stock purchase after 9 years. My dividends have grown at the rate of 5.9% per year.

The dividends have increased at the rate of 7.9% and 5.1% per year over the past 5 and 10 years. So this stock has a good dividend and moderate dividend increases. The most recent increase in dividends occurred in 2013 and the increase was for 3.6% per year.

The total return on this stock over the past 5 and 10 years is 10.37% and 10.07% per year with 5.59% and 5.52% per year from capital gains and 4.78% and 4.55% per year from dividends.

The outstanding shares have increased by 3.4% and 2.1% per year over the past 5 and 10 years. Outstanding shares have increased due to stock options, DRIP, Employee Plan and Share Issues. There has been growth in revenues, earnings and cash flows. Some growth is moderate and some good.

Revenues have grown at 10.9% and 5.4% per year over the past 5 and 10 years. Revenue per Share has grown at 7.2% and 3.2% per year over the past 5 and 10 years. Revenue has grown fast than Revenue per Share because of the increasing outstanding shares.

Net Income has grown at 12% and 6% per year over the past 5 and 10 years. Earnings per Share have grown at 5.4% and 3.6% per year over the past 5 and 10 years. If you look at 5 year running averages, EPS has grown at 7.5% and 4.6% per year over the past 5 and 10 years.

Cash flow has increased by 12.7% and 9.21% per year over the past 5 and 10 years. Cash Flow per Share has grown at 9% and 7% per year over the past 5 and 10 years. However, if you look at the 5 year running averages for CFPS, the growth is only 3.5% and 3.3% per year over the past 5 and 10 years. This is because exactly 5 and 10 years ago cash flow was lower than the surrounding years.

The growth in Book Value per Share is rather low, with the growth just at 2.7% for both the last 5 years and the last 10 years. This is a negative.

The 5 year median Return on Equity is good with a value over 10% at 10.7%. However, the ROE was only over 10% 3 of the past 5 years. The 5 year median ROE on comprehensive income is just 7.3%. This ROE was only over 10% 2 of the last 5 years. However, the ROE on comprehensive income for 2013 is 19.4% compared to the ROE on net income at just 8.8%. This generally means that earnings are of good quality for 2013 and probably better than they appear.

The last thing to look at today is debt ratios. The Liquidity Ratio has always been low and like a lot of utility companies they depend on cash flow to fully cover current liabilities. The current Liquidity Ratio is 0.76. This means that current assets cannot cover current liabilities. If you add in cash flow after dividends, the Liquidity Ratio gets to just 1.01. If you exclude the current portion of the long term debt, the Liquidity Ratio is still below 1.00 at 0.97. If you again add in cash flow after dividends you get 1.28.

The Debt Ratio is also low at 1.48. I prefer it to be at 1.50. The Leverage and Debt/Equity Ratios are ok and are normal for utilities at 3.06 and 2.06.

This stock is a solid performer and provides a decent dividend with a moderate growth. If you have a dividend grow portfolio, this is one sort of stock that would be worthwhile having in your portfolio. See my spreadsheet at ema.htm.

This is the first of two parts. The second part will be posted on Tuesday, February 25, 2014 and will be 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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