I do not own this stock of Just Energy Group Inc (TSX-JE, NYSE-JE). I started to follow this is July 2010. It was one of the high yield income trusts that people were talking about, so I decided to check it out.
When I was updating my spreadsheet, I noticed none of the sites I looked at for estimates were agreeing on what the EPS was in 2019. They do agree on EPS for 2018. For example, Market Screener says for 2019 the EPS was -$0.88 and the Thomson Reuters Report says -$0.62. The Financial Statements says -$1.68. According to the annual statement notes the EPS for 2019 was adjusted and restated from -$0.88 to -$1.68. Sometimes also, when FFO is involved, as in this stock, sites confuse FFO and EPS.
The company announced in August 2019 that the dividend was being suspended. The other thing is that there was lots of insider buying within the last year, but all prior to the latest decline in the stock that started at the end of July 2019. Note that this stock has a financial year ending at March 31 each year.
This is an old income trust company and it stopped increasing the dividends when it became a corporation. In 2014 it started to reduce the dividends, they became flat in 2017 and now in 2019 they have suspended them. Income Trust always had high dividends and this company was no exception reaching over 20% at one point. Just below the recent suspension the yield reached almost 30% because of falling stock price. The historical median was 8.17%.
The Dividend Payout Ratios are too high. Cutting the dividend is an appropriate move until they can start again to have some earnings. The DPR for EPS for 2019 is not calculable because of negative returns. Even the 5 year coverage is non calculable because of EPS losses. Prior to the dividend cut the DPR for 2020 was expected at 119%. It is now 30% for 2020. The DPR for CFPS for 2019 was 47% with 5 year coverage at 44%.
Debt Ratios are a vulnerability. The Long Term Debt/Market Cap ratio for 2019 is 1.02. Far too high. It is high because long term debt went up 63% between 2018 and 2019. Also, the stock price did fall. The current ratio is 2.95. The debt has gone up 7% and the stock price fell 63% since the end of the 2019 financial year. The Liquidity Ratio is low at 1.14. If you add back in the current portion of the long term debt you get 1.32. There is no sense in adding in cash flow after dividends as the cash flow is negative.
The Debt Ratio is 0.95. This means that the assets cannot cover the liabilities and we have a negative book value. The Leverage (A/BK) and Debt/Equity Ratios cannot be calculated because of the negative book value.
The Total Return per year is shown below for years of 5 to 17 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 chart below.
As you can see from the chart below, any money made was in the dividends. Now that dividends are suspended, will shareholders make any money at all?
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | -9.86% | -1.60% | -9.91% | 8.31% |
| 2008 | 10 | -8.63% | 17.69% | -2.00% | 19.69% |
| 2003 | 15 | -2.40% | 3.62% | -7.25% | 10.86% |
| 2001 | 17 | 3.05% | 20.01% | -0.13% | 20.14% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 2.01, 10.34 and 3.27. The corresponding 10 year ratios are 2.34, -3.64 and 3.56. The corresponding historical ratio or 5.64, 6.85 and 8.06. The current P/E Ratio is 3.98 based on a stock price of $1.67 and 2020 EPS estimate of $0.42. Most of this makes no sense because of all the years at earning losses.
I get a Graham Price of $2.27. The 10 year low, median, and high median Price/Graham Price Ratios are 0.92, 1.11 and 1.33. The current P/GP Ratio is 0.74 based on a stock price of $1.67. This stock price testing suggests that the stock price is relatively cheap.
I cannot do a Price/Book Value per Share Ratio test as the Book Value is negative. I also cannot do an historical median dividend yield test because the dividends have been suspended.
The 10 year median Price/Sales (Revenue) Ratio is 0.33. The current P/S Ratio is 0.08 based on 2020 Revenue estimate of $3,153M, Revenue per Share of $21.08 and a stock price of $1.67. The current ratio is 76% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
Results of stock price testing is that the stock price is that the stock price is probably cheap. Really, the only good test is the P/S Ratio test. It is hard to know how good the Graham Price is because of all the EPS losses and the negative book value.
Is it a good company at a reasonable price? I personally would not buy a stock with a negative Book Value. I like dividend growth stocks, but this stock does not have a good dividend paying history.
When I look at analysts’ recommendations, I find Strong Buy (2) and Hold (3). The consensus would be a Buy. The 12 month stock price consensus is $3.25. This implies a total return of 94.6% all from capital gains.
See what analysts are saying on Stock Chase. It is not well covered and not liked. David Jagielski on Motley Fool talks about this company’s recent problems. A writer on Simply Wall Street talks about insider buying over the past year. A writer on Simply Wall Street talks about the past and future EPS. The company put out a press release on Glove Newswire commenting on a recent Globe and Mail article station that the founder of the company is looking to bail out of the struggling company.
Just Energy Group Inc is a Canadian-based electricity and natural gas company that operates in various Canadian provinces, the United States, and the United Kingdom. The company mainly sells its products to residential and small community customers through its Consumer segment and to mid-sized commercial customers through its Commercial segment. Its web site is here Just Energy Group Inc.
The last stock I wrote about was about was SmartCentres REIT (TSX-SRU.UN, OTC-CWYUF) ... learn more. The next stock I will write about will be Accord Financial Corp (TSX-ACD, OTC-ACCFF) ... learn more on Wednesday, September 11, 2019 around 5 pm. Tomorrow on my other blog I will write about Brookfield Renewable Energy Partners.... learn more on Tuesday, September 10, 2019 around 5 pm.
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