I do not own this stock of Atlantic Power Corp (TSX-ATP, NYSE-AT). I am following this stock because I like utility companies and in 2010, I have read two columns that recommended this particular utility company (TSX-ATP), I decided to investigate it. This company has converted from an income trust to a corporation.
When I was updating my spreadsheet, I noticed since it was issued in 2004, this stock has only had a profit in one year and that was 2018. Revenue hit a high in 2014 and has been falling ever since. AFFO has been calculated since 2011, but it has been falling ever since 2011.
On a positive note, the Free Cash Flow has been positive and rising at 21.64% per year over the past 5 year and 5.56% per year over the past 9 years. Cash flow has been rising by 11.31% per year over the past 5 year and 5.56% per year over the past 10 years.
Dividends have gone up and down, but mostly down and were finally cut in 2015. It is hard to say whether or not this stock will become a dividend payer again or not.
Debt Ratios could be improved. The Long Term Debt/Market Cap Ratio for 2019 is 1.86 and therefore much too high. When this ratio is over 1.00, it means that long term debt is higher than the stock’s Market Cap. The current ratio is lower at 1.47, but this is still too high. The Liquidity Ratio for 2019 is 1.24. If you add in cash flow it is 2.42. I prefer this ratio to be 1.50 or higher. The Debt Ratio is 1.17 and this is too low. I prefer this to be 1.50 or higher. Because the book value is negative, the Leverage and Debt/Equity Ratios cannot be calculated.
The Total Return per year is shown below for years of 5 to 16 to the end of 2019 in CDN$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2014 | 5 | 0.00% | -0.07% | -0.84% | 0.77% |
| 2009 | 10 | 0.00% | -6.89% | -12.49% | 5.60% |
| 2004 | 15 | 0.00% | 2.31% | -8.12% | 10.42% |
| 2003 | 16 | 0.00% | 3.12% | -7.20% | 10.32% |
The Total Return per year is shown below for years of 5 to 16 to the end of 2019 in US$. 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.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2014 | 5 | 0.00% | -2.25% | -2.89% | 0.65% |
| 2009 | 10 | 0.00% | -9.63% | -15.08% | 5.46% |
| 2004 | 15 | 0.00% | -1.76% | -10.77% | 9.02% |
| 2003 | 16 | 0.00% | -1.44% | -10.12% | 8.69% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are negative. The corresponding 10 year ratios are also all negative. The corresponding historical ratios are also all negative. Therefore, P/E Ratio test cannot be done.
I have AFFO figures, so we can do a P/AFFO Ratio test. The 5 year low, median, and high median Price/AFFO are 5.37, 6.18 and 6.98. The 9 year corresponding ratios are 7.66, 11.48 and 13.40. The current P/AFFO ratio is 5.00. This stock price testing suggests that the stock price is relatively cheap. This test is in CDN$.
I get a Graham Price of $2.26. But this is just a guess as this stock has a negative book value. The 10 year low, median, and high median Price/Graham Price Ratios are 0.92, 1.05 and 1.21. The current P/GP Ratio is 1.21. This stock price testing suggests that the stock price is relatively reasonable but above the median. This test is in CDN$.
I cannot do a Price/Book Ratio test as the Book Value is negative. I cannot do any dividend yield tests because dividends have been suspended.
I get a 10 year median Price/Cash Flow per Share Ratio of 4.22. The current P/CF is 2.18 based on a stock price of $2.73, CFPS of $1.25 ($0.92 US$) and Cash Flow of $136.2M. The current P/CF Ratio is 48% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This test is in CDN$.
The 10 year median Price/Sales (Revenue) Ratio is 0.80. The current P/S Ratio is 0.78 based on a stock price of $2.73, 2020 Revenue estimate of $380.6M ($280M US$) and Revenue per Share of $3.50. The current ratio is 2% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. This test is in CDN$.
Results of stock price testing is that the stock price is relatively reasonable. There are three tests I cannot do and the Graham Price test is suspect because it cannot be calculated accurately when the book value is negative. The main test I like just shows that stock price as reasonable. The substitute P/AFFO ratio test shows the stock as cheap, but not that cheap. The P/CF Ratio test says the stock is relatively cheap.
Is it a good company at a reasonable price? The price seems reasonable. However, I cannot recommend a stock which has a negative book Value. I personally like dividend growth companies and this is certainly not one.
When I look at analysts’ recommendations, I find Buy (1) and Hold (2). The consensus would be a Hold. This stock price testing suggests that the stock price is relatively reasonable but above the median. The 12 month stock price is $3.41 ($2.51 US$). This stock price testing suggests that the stock price is relatively reasonable but above the median. His implies a total return of 24.99% all from capital gains.
An analysts in 2017 on Stock Chase was saying do not buy. There are few entries and analysts have lost interest in this stock. Debra Ray on Motley Fool talks about this company being into biomass plants for renewable energy. A writer on Simply Wall Street thinks this company’s debt is a problem. A writer on Simply Wall Street talks about who owns this company’s shares. Catie Powers on Smarter Analyst talks about insider buying at this company.
Atlantic Power Corp is an independent power producer that owns power generation assets in the United States and Canada. It has four reportable segments: Solid Fuel, Natural Gas, Hydroelectric and Corporate. A vast majority of the revenues are generated from the natural gas segment. Its web site is here Atlantic Power Corp.
The last stock I wrote about was about was Obsidian Energy Ltd (TSX-OBE, NYSE-OBE) ... learn more. The next stock I will write about will be Artis REIT (TSX-AX.UN, OTC-ARESF) ... learn more on Monday, July 20, 2020 around 5 pm.
Also, on my book blog I have put a review of the book Talking to Strangers by Malcolm Gladwell learn more...
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.
No comments:
Post a Comment