Friday, February 20, 2015

Emera Inc. 2

I own this stock of Emera Inc. (TSX-EMA, OTC- EMRAF). I found this company in Mike Higgs’ site for Dividend Paying Canadian Growth stocks. 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 bought more in 2011.

When I look at insider trading, I find $0.1M of insider buying and $6.1M of insider selling with net insider selling at $5.9M. This net insider selling is around 0.1% of the market cap and therefore relatively small.

The outstanding shares were increase by around 260,000 shares in 2014 for stock options. This is 0.2% of outstanding shares and therefore a relatively small amount. These shares had a book value of $7M and at the end of 2014 this number of shares was worth $7.9M.

The 5 year low, median and high Price/Earnings Ratios are 14.28, 16.77 and 20.07. They are quite close to the corresponding 10 year ratios of 14.42, 16.70 and 19.00. The current P/E Ratio is 19.79 based on a stock price of $41.76 and 2015 EPS estimate of $2.11. This stock price testing shows that the stock price is within the reasonable range, but at the top end of this range.

I get a Graham price of $29.80. The 10 year Price/Graham Price Ratios are 0.96, 1.17 and 1.32. The current P/GP Ratio is 1.40 based on a stock price of $41.76. This stock price testing shows that the stock price is relatively expensive.

The 10 year Price/Book Value per Share Ratio is 1.77. The current P/B Ratio is 2.23, a value some 26.4% higher. The current P/B Ratio is based on a BVPS of $18.70 and a stock price of $41.76. This stock price testing shows that the stock price is relatively expensive.

I get 5 year median, historical average and historical median dividend yields of 4.22%, 5.16% and 4.75%. These dividend yields are 9.1%, 25.7% and 19.34% higher than the current dividend yield based on dividend of $1.60 and a current stock price of $41.76.

If I had to choose one dividend yield for testing it would be historical median dividend yield. This stock price testing shows that the stock price is within the reasonable range, but at the top end of this range. What this testing shows is that dividend yield has been relatively high recently.

When I look at analysts' recommendations, I find Buy, Hold and Underperform recommendations. The consensus recommendation would be a Hold. The 12 month stock price consensus is $43.50. This implies a total return of 8% with 4.17% from capital gains and 3.83% from dividends.

Matt Smith of Motley Fool says that now might be the time to buy this stock. Brenda Bouw of the Globe and Mail says that some analysts expect the stock to take a breather after it dramatic run up of the recent months. Joann Alberstat of the Chronicle Herald talks about the recent rise in earnings for Emera.

Sound bite for Twitter and StockTwits is: Basically, stock is relatively expensive. I am pleased with my investment in this stock. However, now may not be the time to invest in this stock. At some point in the future it will again be at least relatively reasonable in price. See my spreadsheet at ema.htm.

This is the second of two parts. The first part was posted on Thursday, February 19, 2015 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.

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

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