EnerCare Inc.

Sound bite for Twitter and StockTwits is: Probably expensive. Some test show stock price expensive and some reasonable but above the median. It is probably not a good time to buy. See my spreadsheet on EnerCare Inc.

I do not own this stock of EnerCare Inc. (TSX-ECI, OTC-CSUWF). I started to follow this stock in 2009 when it was an income trust. This was one of a few income trusts that I followed because it was recommended by MPL communications.

One thing I noticed when I updated my spreadsheet for the second quarterly report is that accrued liabilities increased dramatically and as a result the Liquidity Ratio is just 0.90 for the second quarter. If this ratio is below 1.00 it means that current assets cannot cover current liabilities. Accounts payable and accrued liabilities were $66,536 and 73,961 for the first quarter to $159,037 in the second quarter.

The dividends are good and the increases are on the low side. The current dividend yield is 4.88% and the 5 year median is 7.35%. The growth in dividends over the past 5 and 10 years is 5.3% and a decline of 2.9% per year. This stock used to be an income trust. That is the reason for the past high dividend yield rates and the decline in dividends over the past 10 years. Dividends are paid monthly.

At the time that Income Trust companies were forced to become corporations it was felt that with the combination of dividend cuts and stock price increases that most of these companies would end up paying a dividend of around 4 to 5%. It dropped the dividend by 50% when it changed to a corporation. The dividend yield has just recently moved to the 4 to 5% yield. They have again started to raise dividends, but they have been a bit inconsistent.

I would think that it is back to being a dividend growth stock. This is also probably why the stock price has been going up recently.

Their Dividend Payout Ratio for EPS is still much too high but they seem to be moving it down. The DPR for CFPS is fine. The DPR for EPS was 150% in 2015. The last two years have seen large increases and the DPR for EPS is expected to be around 180% in 2016 before it moves south again. The DPR for CFPS was 39% in 2015 and the 5 year median is 37%.

A number of analysts are still looking at Distributable Income in the form of Funds from Operations (FFO). Since 2010 it has been in the range of 75% to 95% which is good. It is expected to be higher 107% in 2015 as analysts seem to expect a drop in FFO in 2016 of some 30%. For the 12 month period ending at the second quarter compared to the 12 month period to the end of 2015, FFO has dropped some 17%. So analysts thinking it will be lower in 2016 are probably correct.

The 5 year low, median and high median Price/Earnings per Share Ratios are 27.94, 36.97 and 46.00. The 10 years values are also high but not quite as bad at 25.64, 33.14 and 42.63. The historical values are 28.63, 35.71 and 42.87. They are high because this stock used to be an income trust and FFO counted more than EPS. The current P/E Ratio is 38.67 based on a stock price of $18.95 and 2016 EPS estimate of $0.49. This stock price test suggests that the stock price is relatively reasonable, but above the median.

The 5 year low, median and high median Price/FFO Ratios are 9.15m 10.32 and 11.49. The corresponding 10 year values are 8.12, 9.40 and 11.28. The current P/FFO Ratio is 15.75 based on 2016 FFO estimate of $0.82 and a stock price of $18.95. This stock price test suggests that the stock price is relatively expensive.

I get a Graham Price of $8.00. The 10 year low, median and high median Price/Graham Price Ratios are 1.87, 2.18 and 2.72. The current P/GP Ratio is 2.37 based on a stock price of $18.95. This stock price testing suggests that the stock price is relatively reasonable, but above the median.

I get a 10 year Price/Book Value per Share Ratio of 3.03. The current P/B Ratio is 3.26 a value some 7.8% higher. The current P/B Ratio is based on a stock price of $18.95 and BVPS of $5.81. This stock price testing suggests that the stock price is relatively reasonable, but above the median.

I get a 10 year Price/Cash Flow per Share Ratio of 5.02. The current P/CF Ratio is 11.55 based on a stock price of $18.95 and 2016 CFPS estimate of $1.64. The current P/CF Ratio is some 130% above the 10 year median ratio. This stock price test suggests that the stock price is relatively expensive.

When I look at analysts' recommendations, I find Buy and Hold. The consensus recommendation would be a Buy. The 12 month stock price is $19.90. This implies a total return of $9.895 with 5.01% from capital gains and 4.83% from dividends.

Renee Jackson on The Cerbat Gem talk about some analysts increasing their 12 month stock price target for this company. This company put out a Market Wired Press Release about acquiring a Service Experts firm. See what analysts are saying about this company at Stock Chase.

I will have only one entry for this stock this year. However, I did a more complete report on this company in 2015 and you can see that report here.

The last stock I wrote about was about was Newfoundland Capital Corp. (TSX-NCC, OTC-none)... learn more . The next stock I will write about will be BlackBerry Ltd. (TSX-BB, NASDAQ-BBRY)... learn more on Friday, August 19, 2016 around 5 pm. Tomorrow on my other blog I will write about FFO, AFFO.. learn more on Thursday, August 18, 2016 around 10 am.

EnerCare Inc. owns a portfolio of waterheaters and other portfolio assets, which they rent to primarily residential customers. They rent out waterheaters in the GTA and southern Ontario. EnerCare also owns EnerCare Connections Inc., a leading sub-metering company, with metering contracts for condominium and apartment suites in Ontario, Alberta and elsewhere in Canada. Its web site is here EnerCare Inc.

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. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits.