Innergex Renewable Energy 2

I do not own this stock of Innergex Renewable Energy (TSX-INE, OTC-INGXF). In 2006 I bought Innergex Power on a buy rating and favorable report from TD although it has only been going from 2003. In 2008 I sold Innergex as I did not think that it is a stock I want to hold as dividend increased less than the rate of inflation. I was just trying out this stock. For the period that I held it I lost 4.8% per year. My capital loss was 17%.

When I look at insider trading, I find no insider selling and very minor insider buying. The outstanding shares were not increased by stock options in 2013. There is some insider ownership with the CEO having shares worth around $6.5M, the CFO having shares worth around $1.3M and an officer with shares worth around $2.1M.

Since there have been a number of years with negative EPS, I can get no fix on median Price/Earnings Ratios for this stock. Since 2014 is also supposed to produce a negative EPS and the EPS for the last 12 months is also negative, there will be no current P/E Ratio for comparison.

The EPS for 2015 is expected to be positive with a value of $0.18. The current stock price is $10.72. An EPS of $0.18 and a stock price of $10.72 give a P/E of 59.56. This is a rather high P/E, especially considering the stock is a utility stock. This suggests that the stock price is expensive.

The Graham Price is $4.20. The 10 year low, median and high Price/Graham Price Ratios are 1.21, 1.35 and 1.52. The current P/GP Ratio is 2.55 based on a stock price of $10.72. This stock price test suggests that the stock price is relatively expensive.

The 10 year Price/Book Value per Share is 1.68. The current P/B Ratio at 2.46 is based on a stock price of $10.72 and BVPS of $4.36. The current P/B Ratio is some 47% higher than the 10 year ratio. This stock price test suggests that the stock price is relatively expensive.

The only tests that would suggest that the price might be relatively reasonable are P/S Ratio and P/CF Ratio tests. The current P/CF Ratio at 11.91 is some 2% below the 10 years median of 12.18. However, I think that a P/CF on a utility is any P/CF over 10.00 is rather high. The current P/S Ratio is 4.46 and this some 18% lower than the 10 year median P/S Ratio of 5.45. However, I think that any P/S over 2.00 on a utility stock is rather high.

When I look at analysts' recommendations, I find Buy and Hold recommendations. The consensus recommendation would be a Hold. Most of the recommendations are a Hold. The 12 month stock price consensus is $11.30. This implies a total return of 11.01% with 5.41% from capital gains and 5.60% from dividends.

This article on Re News talks about wind turbines being supplied to a wind farm run in a partnership between Mi'gmaq First Nations of Quebec and Innergex Renewable Energy. This article in Pique Magazine talks about a new hydro-electric facility this company is building in B. C.

Sound bit for Twitter and StockTwits is: Stock expensive and has problems. See my spreadsheet at ine.htm.

This is the second of two parts. The first part was posted on Thursday, November 20, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

Innergex is involved in Canada's renewable energy industry. The Company develops, owns and operates facilities located in North America, leveraging run-of-river hydroelectric power generating facilities, wind farms and photovoltaic solar parks. Its web site is here Innergex.

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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