Monday, May 5, 2014

Veresen Inc. 2

On my other blog I am today writing about possible cheap dividend stocks continue...

I own this stock of Veresen Inc. (TSX-VSN, OTC-FCGYF). I bought this stock in 2008 as Fort Chicago Energy Partnership. At that time it was a publicly traded limited partnership with increasing and high dividends. In 2010 the company changed to a corporation.

When I look at insider trading, I find $0.9M of insider selling and net insider selling at $0.9M. This is a small amount of insider buying. Insiders have some stock options type vehicles called Deferred Share Units. There is not much in the way of insider ownership. The CFO has shares worth around $0.3M and the Chairmen has shares worth around $0.7M. Outstanding shares were not increased in 2013 due to stock options.

Because earnings has been very low, the 5 year low, median and high median Price/Earnings per Share Ratios are quite high at 37.24, 41.88 and 46.52. These are much higher than the 10 year low, median and high median Price/Earnings per Share Ratios are quite high at 17.36, 20.74 and 24.72. The current P/E Ratio is 66.92 based on a stock price of $16.06 and 2014 EPS estimate of $0.24. These P/E Ratios are very high.

I get a Graham Price of $5.16. The 10 year low, median and high median Price/Graham Price Ratios are 1.17, 1.44 and 1.70. The current P/GP Ratio is 3.11 based on a stock price of $16.06. This stock price test suggests that the stock price is very high.

The 10 year median Price/Book Value per Share Ratio is 1.92. The current P/B Ratio is 3.26 a value some 70% higher. This stock price test suggests that the stock price is very high.

I do not think that a stock price test based on dividend yield is a good one for companies that were income trusts or limited partnership and are now corporations. This is because dividend yields tend to be lower with corporations.

The 10 year Price/Cash Flow per Share Ratio is 7.20 and the current P/CF Ratio is 14.73 a value over 100% higher. This stock price test says that the stock price is very high.

When I look at analysts' recommendations, I find Strong Buy, Buy, Hold and Underperform recommendations. The consensus recommendation is a Buy. The 12 month stock price consensus is $17.00. This implies a total return of 12.08%, with 6.23% from dividends and 5.85% from capital gains.

There is an article on News Wire about this company doing a share issue for 17.5M shares. It was a bought deal. There is a Business Week article about this company getting approval for a LNG terminal. There is a recent interesting article on Midstream firms such as Veresen in the Financial Post.

I think that the stock is current very overbought and I would not buy at such a price. See my spreadsheet at vsn.htm.

This is the second of two parts. The first part was posted on Friday, May 02, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

Veresen is a leading diversified energy infrastructure company that owns and operates energy infrastructure assets across North America. We are engaged in three principal business lines of Pipelines, Midstream and Power (gas-fired and renewable facilities). Its web site is here Veresen.

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.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

No comments:

Post a Comment