Wednesday, September 9, 2020

Just Energy Group Inc

Sound bite for Twitter and StockTwits is: Utility Company in Trouble. Stock price seems to be cheap. It has cut its dividend. It is planning on a 33 to 1 consolidation and a recapitalization. I will probably stop following this stock. See my spreadsheet on Just Energy Group Inc.

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 that this company was doing poorly for the last couple of years, but analysts expect the company to make a profit this year. They hit a peak in 2012 and has been performing poorly since then.

This company is no longer paying dividends. On their site they say they are paying some dividends in September 2020, but it is unclear exactly what they are doing. They are recapitalizing the company. Tt appears there will be a consolidation and preferred shares and Convertible Debentures will be given shares, and some other investment entities will be the major shareholders. I will see how this works out next year, but I might decide then not to follow this stock anymore.

Debt Ratios are awful. The Long Term Debt/Market Cap Ratio in 2019 is 4.91 and 9.01 now. This is very high. The Intangible Goodwill/Market Cap Ratio is also very high at 3.45 in 2019 and 6.29 now. The Liquidity Ratio for 2019 is 0.69. If you add in cash flow and current portion of long term debt it is just 0.85. With the same calculation now, it is 0.96. When this is under 1.00 it means current liabilities cannot be covered by current assets. The Debt Ratio for 2019 is 0.71 and is now 0.73. This stock has a negative breakup value. Leverage and Debt/Equity Ratios cannot be calculated because of a negative book value.

The Total Return per year is shown below for years of 5 to 18 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.
2014 5 -26.56% -8.41% -18.55% 10.13%
2009 10 -20.50% -6.81% -17.15% 10.34%
2004 15 -11.93% -2.14% -13.34% 11.21%
2001 18 -4.75% 19.49% -4.08% 23.57%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 2.01, 2.64 and 3.27. The corresponding 10 year ratios are 1.85, 2.63 and 3.42. The corresponding historical ratios are 5.49, 6.78 and 8.06. The current P/E Ratio is 2.71 based on a stock price of $0.38 and 2020 EPS estimate of $0.14. This stock price testing suggests that the stock price is relatively reasonable but above the median.

The best Graham Price that I can calculate is of $1.31. The 10 year low, median, and high median Price/Graham Price Ratios are 0.84, 1.33 and 1.11. The current P/GP Ratio is 0.29 based on a stock price of $0.38. 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 get a 10 year median Price/Cash Flow per Share Ratio of 8.97. The current P/CF Ratio is 3.17 based on 2020 Cash Flow per Share estimate of $0.12 and Cash Flow of $18.2M and a stock price of $0.38. The current ratio is 65% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap

They have cancelled the dividends, so I cannot do any dividend yield test.

The 10 year median Price/Sales (Revenue) Ratio is 0.30. The current P/S Ratio is 0.02 based on 2020 Revenue estimate of $2,431M, Revenue per Share of $16.03 and a stock price of $0.38. The current ratio is 92% 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 probably relatively cheap. This is what the P/S Ratio testing is showing. The P/CF Ratio testing is saying this too. You have to wonder if the other testing is valid because of earning losses, and a negative book value.

Is it a good company at a reasonable price? The price is cheap. However, they are going to do a stock consolidation and a recapitalization. Shareholders will probably not fair well in this.

When I look at analysts’ recommendations, I find Hold (1), and Underperform (1). The consensus would be a Hold. The 12 month stock price is $0.40. This implies a total return of 5.26%, all from capital gains.

Analysts on Stock Chase last left entries dated in 2018 and they did not care for this company then. Vishesh Raisinghani on Motley Fool says this company has a dangerous level of debt. Nelson Smith on Motley Fool talks about when you should consider selling a stock and uses Just Energy to illustrate this. A writer on Simply Wall Street says this stock is selling at a fair value. He points out there are 5 warning signs for this company that are a bit concerning. News Release from the company talking about their recapitalization plans.

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 Friday, September 11, 2020 around 5 pm. Tomorrow on my other blog I will write about Utilities and Dividends.... learn more on Thursday, September 10, 2020 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.

1 comment:

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