I own this stock of Emera Inc. (TSX-EMA, OTC-EMRA). I found this company in Mike Higg’s site. Mike’s site had a spreadsheet showing Dividend Paying Canadian Growth stocks. In 2005, I wanted 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.
When I was updating my spreadsheet, I noticed the debt ratios were not nice. There are none that I like. Their Long Term Debt/Market Cap ratios are over 1.00 with the one for 2018 at 1.40. The Liquidity Ratio for 2018 is 0.62. This means that the current asses cannot cover current liabilities. It is only adding back in the current portion of the long term debt and cash value after dividends that it just gets over 1.00 at 1.01. This is a big vulnerability. What if in a recession they cannot roll over their current portion of the long term debt?
The Debt Ratio is low at just 1.35. The 5 year median is 1.40. I like this at 1.50 at least. Leverage and Debt/Equity Ratios are 4.44 and 3.29 respectively and these are too high. The debt ratios have basically not been good since 2015.
Dividends are currently good with current moderate growth. The current dividend yield is 5.06% with growth over the last 5 years are 10.07% per year. The yield used to be in the moderate range with 5, 10 and historical yield at 4.35%, 4.26% and 4.82%. The last 10 year’s growth in dividend was good at 8.99% per year, but the years prior, growth was less than 8% per year. See the chart below. The last dividend increase occurred in 2018 and it was for 4%.
The Dividend Payout Ratio for 2018 is 75% with 5 year coverage at 86%. The DPR for CFPS is 42% with 5 year coverage at 38%. These are a little high, but not by much. The last two years of 2016 and 2018 the DPR for EPS was above 100%. The TD Bank looks also a DPR for AFFO which has a 2018 payout of 51% with 5 year coverage at 59%.
I covered the debt ratios above and I was not pleased with them. However, Emera is selling some assets and so this will probably help this situation. See a Business Wire item on the Financial post.
The Total Return per year is shown below for years of 5 to 26 to the end of 2018. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See charts below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 10.07% | 12.75% | 7.41% | 5.34% |
| 2008 | 10 | 8.99% | 12.08% | 7.01% | 5.07% |
| 2003 | 15 | 6.72% | 10.87% | 6.16% | 4.71% |
| 1998 | 20 | 5.25% | 8.70% | 4.51% | 4.19% |
| 1993 | 25 | 4.55% | 9.72% | 4.97% | 4.75% |
| 1992 | 26 | 10.87% | 5.54% | 5.32% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 14.34, 15.88 and 17.42. The corresponding 10 year ratios are 14.31, 16.32 and 18.75. The corresponding historical ratios are 13.06, 15.5 and 16.96. The current P/E Ratio is 16.31 based on a stock price of $46.47 and 2019 EPS estimate of $2.85. This stock price testing suggests that the stock price is relatively reasonable and around the median.
I get a Graham Price of $44.66. The 10 year low, median, and high median Price/Graham Price Ratios are 1.11, 1.28 and 1.44. The current P/GP Ratio is 1.04 based on a stock price of $46.47. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median Price/Book Value per Share Ratio of 1.84. The current P/B Ratio is 1.49 based on a Book Value of $7.283, Book Value per Share of $31.11 and a stock price of $46.47. The current ratio is 19% below the 10 year ratios. This stock price testing suggests that the stock price is relatively reasonable but below the median.
I get an historical median dividend yield of 4.82%. The current dividend yield is 5.06% based on dividends of $2.35 and a stock price of $46.47. The current yield is 5% above the historical median yield. This stock price testing suggests that the stock price is relatively reasonable but below the median.
The 10 year median Price/Sales (Revenue) Ratio is 1.90. The current P/S Ratio is 1.62 based on 2019 Revenue estimate of $6,710M, Revenue per Share of $28.66 and a stock price of $46.47. The current ratio is 15% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but below the median.
Results of stock price testing is showing up as suggesting that the stock price is relatively reasonable but below the median. The Graham Price testing says the stock price is relatively cheap. For the P/B Ratio testing, if the difference in ratios was 20%, not 19%, the stock would be considered cheap.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (5), Hold (7) and Underperform (10. The consensus would be a Buy. The 12 month stock price is $48.57. This implies a total return of 9.58% with 4.52% from capital gains and 5.06% from dividends based on a current price of 46.47.
See what analysts are saying at Stock Chase. An analyst has said they plan to cut dividend growth probably to 3 to 4% per year. Most analysts like the company. Andrew Button on Motley Fool thinks this stock is a wise investment. Kyle Sanford on Simply Wall Street thinks that this is a top dividend stock. Adrian McCoy on What’s on Thorold says some analysts are positive about this stock.
Emera is geographically diverse energy and services company investing in electricity generation, transmission, and distribution as well as gas transmission and utility energy services. Emera has operations throughout North America and in four Caribbean countries. Its web site is here Emera Inc .
The last stock I wrote about was about was Atrium Mortgage Investment Corp (TSX-AI, OTC-AMIVF) ... learn more. The next stock I will write about will be Home Capital Group (TSX-HCG, OTC-HMCBF) ... learn more on Wednesday, February 27, 2019 around 5 pm. Tomorrow on my other blog I will write about Four Advisor Stocks.... learn more on Tuesday, February 26, 2019 around 5 pm.
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. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
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