I do not own this stock of Capital Power Corp (TSX-CPX, OTC-CPRHF). I found this utility on the Aristocrat list. It produces mainly green energy.
When I was updating my spreadsheet, I noticed that all the financial statements from 2009 to present reduce all value to millions of dollars. They are giving the bare minimum values that they need to. Not my favourite way for company to report.
It also does not have the result that I would like for a Utility. There is too much red in the spreadsheet. The per share figures are not good. Revenue has increased in the past 5 and 10 years by 6.9% and 5.5%, but Revenue per Share is up by 2% for the past 5 years, but down by 10% for the past 10 years. This is because outstanding shares have increased by 4.8% and 17% per year over the past 5 and 10 years.
The only bright spot appears to be the dividends paid and their increases. However, in 2019 they are paying out 258% of their EPS and the 5 year coverage is 144%. They cannot afford the dividends. This is a disappointment. Although, the dividends are covered adequately by the cash flow.
The dividend yields are good with dividend growth moderate. The current dividend yield is good (5% and 6% ranges) at 6.99%. The 5, 10 and historical dividend yields are good at 6.33%, 5.99% and 5.95%. The dividend growth for the past 5 years is at 7.2% per year. The last dividend increase was in 2020 and it was for 6.8%. See chart below.
The Dividend Payout Ratios (DPR) need improving, especially the DPR for EPS. The DPR for EPS for 2019 is 258% with 5 year coverage at 144%. Analysts do not expect this DPR to get below 100% until 2022. The DPR for Cash Flow per Share is 26% and 31%. The DPR for 2019 for Free Cash Flow is 280% with 5 year coverage at 136%. Analysts expect this DPR to be 46% in 2020.
Debt Ratios could be improved. The Long Term Debt/Market Cap Ratio is 0.71. This is fine. The Liquidity Ratio for 2019 is 0.60. If you add in Cash Flow after dividends you only get to 0.97. If you also add in the current portion of the long term debt, the ratio is 2.04. The Debt Ratio is 1.56. The Leverage and Debt/Equity Ratios are 4.09 and 2.62, respectively. The Leverage Ratio is too high, but the Debt/Equity Ratio is fine.
The Total Return per year is shown below for years of 5 to 10 to the end of 2019. 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.|
The 5 year low, median, and high median Price/Earnings per Share Ratios are 21.73, 23.18 and 26.77. The corresponding 10 year ratios are 21.89, 25.43 and 28.67. The corresponding historical ratios are 21.73, 23.44 and 26.77. The current P/E Ratio is 28.76 based on a stock price of $29.34 and 2020 EPS estimate of $1.02. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $21.09. The 10 year low, median, and high median Price/Graham Price Ratios are 0.89, 1.10 and 1.19. The current P/GP Ratio is 1.39 based on a stock price of $29.34. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median Price/Book Value per Share Ratio of 1.02. The current P/B Ratio is 1.51 based on a Book Value of $2,034, Book Value per Share of $19.39 and a stock price of $29.34. The current ratio is 49% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median Price/Cash Flow per Share Ratio of 5.08. The current P/CF Ratio is 4.81 based on 2020 Cash Flow per Share estimate of $6.10, Cash Flow of $640M and a stock price of $29.34. The current ratio is 5% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 5.95%. The current dividend yield is 6.99% based on dividends of $2.03 and a stock price of $29.34. The current dividend yield is 17.4% above the historical dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 5.99%. The current dividend yield is 6.99% based on dividends of $2.03 and a stock price of $29.34. The current dividend yield is 16.6% above the historical dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10 year median Price/Sales (Revenue) Ratio is 1.63. The current P/S Ratio is 1.71 based on 2020 Revenue estimate of $1,798M, Revenue per Share of $17.14 and a stock price of $29.34. The current ratio is 5% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
Results of stock price testing is that the stock price is probably reasonable. Both the dividend yield tests say the stock price testing suggests that the stock price is relatively reasonable and below the median with the P/S Test showing that the stock price is relatively reasonable but above the median. The P/CF Ratio test shows the stock price below the median. The problem with the P/B Ratio tests is that the Book Values are declining due to the issuance of new shares. This is a problem. I do not see any problem in the other tests and both the P/E Ratio and the P/GP Ratio tests say the stock is expensive.
Is it a good company at a reasonable price? The stock price is probably reasonable. This is a dividend growth stocks and probably will continue to be one. It is getting into green energy and this is a positive for some stock holders. I am currently happy with the utilities I hold and will not be buying this one.
When I look at analysts’ recommendations, I find Strong Buy (4), Buy (4) and Hold (4). The consensus would be a Buy. The 12 month stock price consensus is $34.46. This would imply a total return of 24.44% with 6.99% from dividends and $17.45% from capital gains.
Analysts on Stock Chase really like or dislike this stock. One said it was a good company with growth and another one said that they were nothing about this company that interests him. Christopher Liew on Motley Fool thinks this company is crash proof. A writer on Simply Wall Street says the CEO's compensation for this company is comparable to CEO compensations with other companies of this size. A writer on Simply Wall Street says the ROCE of this is the same as the average for Renewable Energy Industry. The Blogger Dividend Earner recently reviewed this stock. The Blogger Wealth Simple in June 2020 name this stock in his list of Best Dividend Stocks in Canada.
Capital Power Corp is a North American power producer whose principal activities are developing, acquiring, and operating power plants. Through its subsidiary, Capital Power owns and operates a portfolio of natural gas, coal, wind, solar, and solid fuel energy generating facilities. These are located throughout Western and Central Canada and the U.S. Its web site is here Capital Power Corp.
The last stock I wrote about was about was ATCO Ltd (TSX-ACO.X, OTC-ACLLF) ... learn more. The next stock I will write about will be High Liner Foods (TSX-HLF, OTC-HLNFF) ... learn more on Friday, September 4, 2020 around 5 pm. Tomorrow on my other blog I will write about Something to Buy September 2020.... learn more on Thursday, August 03, 2020 around 5 pm.
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