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. Their financial year ends March 31 each year.
When I was updating my spreadsheet, I noticed this first statement on the site that said on March 9, 2021, Just Energy filed for protection under the Companies’ Creditors Arrangement Act (Canada) and under Chapter 15 of the Bankruptcy Code in the United States.
The second thing is they changed how they reported last year’s results because of the consolidation of the stocks and the fact that they exchanged the Preferred Shares into common shares in 2021. The results of 2020 in the 2021 report showed the Preferred Shares number as part of the outstanding shares and the basic and diluted share number. This, of course, among other things, changed the EPS for 2020 in the 2021 report. This very much complicates updating my spreadsheets.
The people holding debt also got shares in the company to replace their debt. The current shareholders were also able to buy more shares at a low price. As often happens in bankruptcy, the debt holders end up with shares in the company and current shareholders can lose out.
Dividends are no longer being paid under this company. They were cancelled in 2020. The company started as an income fund and as such paid out a lot in dividends. Dividend yields were often very high which was usual with income trusts (or funds). It became a corporation in 2011. All income trust had to be converted to corporation.
The Dividend Payout Ratios (DPR) have been too high. They did not cut the dividends on becoming a corporation, but did start cutting dividends in 2014. They never got the DPRs under control. Income Trusts can pay out a bigger portion of their funds than Corporation can. Income Trust pay out based on Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO). Corporation can only pay out dividends based on EPS and Cash Flow and some say Free Cash Flow. The last year of dividend payments, the DPR for EPS for 5 years ending in March 2021 was 191%. The DPR for Cash Flow for 5 years ending in March 2021 was 74%. Also, for the financial year ending March 2021, only 2 dividend payments were made.
Debt Ratios are awful. The Long Term Debt/Market Cap Ratio in March 2020 was 4.91. The Long Term Debt/Market Cap Ratio in March 2021 is 0.02. The creditor got shares in the company for their debts. The Liquidity Ratio for 2021 is 0.47. This cannot be improved to 1.00. Even after the consolidation and recapitalization of this stock, the Debt Ratio is just 0.65. They have a negative book value.
The Total Return per year is shown below for years of 5 to 19 to the end of 2020. 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. |
|---|---|---|---|---|---|
| 2015 | 5 | -34.43% | -42.31% | -55.07% | 12.76% |
| 2010 | 10 | -26.05% | -16.89% | -35.70% | 18.81% |
| 2005 | 15 | -16.46% | -5.62% | -26.59% | 20.97% |
| 2001 | 19 | -8.07% | 19.13% | -15.67% | 34.80% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are all negative and so useless. The corresponding 10 year ratios are 0.71, 0.57 and 0.52. These are so low as to be useless also. The corresponding historical ratios are 4.32, 5.23 and 6.14. These are also quite low. The current P/E Ratio is negative and so useless for testing. The P/E Ratio for 2023 is 1.17 based on a stock price of $1.19 and EPS share of $1.02. This is a really low P/E Ratio. This stock price testing suggests that the stock price is cheap.
I estimate a Graham Price of $0.48. The 10 year low, median, and high median Price/Graham Price Ratios are 0.92, 1.17 and 1.42. However, most of the Graham Prices I have, have been estimates. The current P/GP is 2.48. This stock price testing suggests that the stock price is relatively expensive. However, this is not a good test as there are so many estimate points.
I cannot get a 10 year median Price/Book Value per Share Ratio because of the negative book value. So, this test cannot be done.
I get a 10 year median Price/Cash Flow per Share Ratio of 8.97. The current P/CF Ratio is 1.67 based a stock price of $1.19, Cash Flow for last 12 months of $34.3M, and Cash Flow per Share of $0.71. The current P/CF Ratio is 81% below the 10 year median ratio. This stock price testing suggests that the stock price is cheap.
I cannot do a dividend yield test because the dividends have been cancelled or suspended.
The 10 year median Price/Sales (Revenue) Ratio is 0.25. The current P/S Ratio is 0.02 based on Revenue estimate for 2022 of $2756M, Revenue per Share of $57.31 and a stock price of $1.19. 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 cheap. There are a few tests that cannot be done, but P/S Ratio test is good and it says the stock price is cheap. The P/CF test is a good test and it also says the stock price is cheap.
Is it a good company at a reasonable price? The stock price is cheap. However, this is a high risk stock because it is in bankruptcy protection. Shareholders are losers because the creditors have now been given shares to replace their debts. It remains to be seen if the company will recover.
When I look at analysts’ recommendations, I find Sell (1) recommendation. The consensus would be a Sell. The 12 month stock price consensus is $1.38. This implies a total return of $15.97 based on a stock price of $1.19, all from capital gains.
There was a number of entries in 2018 on Stock Chase saying Do Not Buy. Amy Legate-Wolfe on Motley Fool says that this company is a risky choice at present but she sees a turnaround in a year to two. The executive summary on Simply Wall Street gives this stock one star out of 5 and list 4 risks. In February 2021, a writer on Simply Wall Street talks about insider buying. A Reuters article published by the Globe and Mail says the company hopes to collect $100-million in costs related to the Texas winter storm.
Just Energy Group Inc is a retail energy provider specializing in electricity and natural gas commodities and bringing energy efficient solutions and renewable energy options to customers. Geographically, the company is operating in the United States and Canada, Just Energy serves residential and commercial customers. 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 Tuesday, September 7, 2021 around 5 pm.
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