Innergex Renewable Energy 2

On my other blog I am today writing about Money Show 2015 and Albrecht Weller learn more...

Sound bite for Twitter and StockTwits is: Price reasonable, risky. I think that any stock that has a hard time making a profit is risky. Even if price is relatively reasonable, I do not think it is reasonable for the risk shareholders are asked to take. The P/B Ratio test using actual values shows that the stock is expensive. See my spreadsheet on Innergex Renewable Energy.

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.

As far as insider ownership goes, the CEO owns shares worth around $6.9M, the CFO owns shares worth around $1.4M and the Chairman owns shares worth around $0.4M. Of course all their shares add up to less than 1% of the outstanding shares. There is some insider trading with a bit of insider buying and a bit of insider selling, but the amounts are extremely small.

Since there have been so many times when the company had earning losses, I am getting median Price/Earnings Ratios that are negative. You cannot do any meaningful testing of stock price using the company's P/E Ratios.

I get a Graham Price of $4.29. The 10 year low, median and high median Price/Graham Price Ratios are 1.23, 1.38 and 1.54. The current P/GP Ratio is 2.59 based on a stock price of $11.11. This stock price testing suggests that the stock price is relatively expensive. Because of the number of earning losses, you have to wonder how good this test is.

I get a 10 year Price/Book Value per Share Ratio of 1.71. The current P/B Ratio is 3.55 based on BVPS of $3.55 and a stock price of $11.11. The current P/B Ratio is some 84% higher than the 10 year median P/B Ratio. This stock price testing suggests that the stock price is relatively expensive.

In dividend yield testing, I will only use the 5 year median dividend yield as this company used to be an income trust and income trust have generally quite high dividend yields compared to other types of companies. The 5 year dividend yield is 5.81%. The current dividend yield is 5.58% based on dividends of $0.62 and a stock price of $11.11. The current dividend yield is just 3.9% lower than the 5 year median dividend yield. This stock price testing shows that the stock price is relatively reasonable, but above the relative median.

If you look at both the P/S Ratio and P/CF Ratios, both show that the stock is relatively reasonable and below the relative median. 10 year median P/S Ratio is 5.40 and the current one at 4.67 is some 13% lower. 10 year median P/CF Ratio is 13.50 and the current one at 11.34 is some 16% lower.

When I look at analysts' recommendations, I find Buy and Hold recommendations. Most of the recommendations are a Hold and this is also the consensus recommendation. The 12 month stock price is $12.50. This implies a total return of 18.09% with 12.51% from capital gains and 5.58% from dividends.

This article on OCTA Finance talks about TD Securities rating their target price to $11.50 and other analysts ratings. This article in Renewable SeeNews talks about this company turning a profit in their third quarter of 2015. An article by Martin Pelletier in the Financial Post says the way to hedge against carbon taxes is to invest in renewable-focused energy companies like Innergex. There is an article by James Glave in the National Observer talks about a stampede out west for get money to build green energy by such companies and Innergex.

This is the second of two parts. The first part was posted on Tuesday, December 01, 2015 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 Renewable Energy.

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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