Sound bite for Twitter and StockTwits is: Dividend Growth Utility. Stock price would seem to be currently expensive. Debt Ratios could be improved. Some Dividend Payout Ratios (DPR) are too high (like the DPR for AEPS), but analysts expect DPRs to drop in 2022. The company has a lot of debt. See my spreadsheet on Capital Power Corp.
Is it a good company at a reasonable price? I think this stock price is on the expensive side, so now would not be a good time to buy. This is a utility stock with a history of good returns to shareholders for the short time it has been on the TSX. It would have a risk rating of low. Dividend growth portfolios should have some utility stocks in these.
I do not own this stock of Capital Power Corp (TSX-CPX, OTC-CPRHF). Capital power Corp is in John Heinzl's yield Hog model portfolio. In Money Sense annual list of the 100 best dividend stocks or 2021, this stock was rated an A. In the latest Money Sense list of 2022, it is rated a B.
When I was updating my spreadsheet, I noticed Analyst expected the EPS to go to $1.99 in 2021, a 158.44% increase. Instead, the EPS dropped to $0.39, a 49% decrease. For 2022, analysts expect an EPS of $2.96, a 659% increase over 2021. EPS for 2023 is lower at $2.26 and then an increase for 2024 to $3.44.
I noticed that Canadian Stock Channel has this stock on their weekly interesting buy list of August 27, 2022.
If you had invested in this company in December 2011, $1,004.80 you would have bought 40 shares at $25.12 per share. In December 2021, after 10 years you would have received $639.50 in dividends. The stock would be worth $1,578.40. Your total return would have been $2,217.50.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $25.12 | $1,004.80 | 40 | 10 | $639.50 | $1,578.40 | $2,217.90 |
The dividend yields are moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 4.30%. The 5, 10 and historical dividend yields are good (5% and 6% ranges) at 6.51%, 6.27% and 5.95%. The dividend growth is low (below 8% per year) at 6.7% per year over the past 5 years. The last dividend increase was in 2021 and it was for 6.8%.
Some Dividend Payout Ratios (DPR) are too high (like the DPR for AEPS), but analysts expect DPRs to drop in 2022. The DPR for EPS for 2021 is 535% with 5 year coverage at 178%. Analysts expect this DPR to drop to 74% in 2022. The DPR for Adjusted Earnings per Share (AEPS) is 106% with 5 year coverage at 143%. Analysts expect this DPR to drop to 69% in 2022. The DPR for Adjusted Funds from Operations (AFFO) for 2021 is 39% with 5 year coverage at 41%. The DPR for Cash Flow per Share for 2021 is 28% with 5 year coverage at 29%. For CFPS, a DPR of 40% or lower is a good one. The DPR for Free Cash Flow (FCF) for 2021 is 89% with 5 year coverage at 126%. Analysts expect this DPR to drop to 45% in 2022.
Debt Ratios could be improved. The company has a lot of debt. The Long Term Debt/Market Cap Ratio for 2021 is 0.71. This is a rather high. The current ratio is good at 0.49. The Liquidity Ratio for 2021 is 0.98 and if you add in cash flow after dividends it is 1.42. I prefer this to be 1.50 or high. The Debt Ratio is 1.46. I prefer this also to be 1.50 or higher. The 5 year median ratio is good at 1.56. The Leverage and Debt/Equity Ratios for 2021 is 4.35 and 2.98. The Leverage ratio is too high at 4.35 and I prefer this to be under 3.00.
The Total Return per year is shown below for years of 5 to 12 to the end of 2021. 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. |
|---|---|---|---|---|---|
| 2016 | 5 | 6.67% | 17.63% | 11.18% | 6.45% |
| 2011 | 10 | 5.17% | 9.71% | 4.62% | 5.09% |
| 2009 | 12 | 4.29% | 10.61% | 5.24% | 5.37% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 26.49, 38.42 and 48.72. The corresponding 10 year ratios are 23.42, 28.95 and 34.47. The corresponding historical ratios are 22.06, 27.68 and 30.57. The current P/E Ratio is 17.22 based on a stock price $50.97 and EPS estimate for 2022 of $2.96. The current ratio is below the low of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap. However, these are very high P/E Ratios for a Utility.
I also have Adjusted Funds from Operations (AFFO) data. The 5-year low, median, and high median P/AFFO are 5.85, 6.78 and 7.70. The corresponding 10 year ratios are 5.07, 5.97 and $6.98. The current P/AFFO ratio is 8.16 based on a stock price of $50.97 and AFFO estimate for 2022 of 6.25. The current ratio is above the high of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive. However, these are very low P/AFFO Ratios for a utility or any stock.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median P/AEPS Ratios are 19.72, 23.29 and 26.18. The corresponding 10 year ratios are 16.92, 21.40 and 24.08. The current P/AEPS ratio is 16.13 based on a stock price of $50.97 and AEPS estimate for 2022 of $3.16. The current ratio is below the low of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $35.73. The 10-year low, median, and high median Price/Graham Price Ratios are 1.01, 1.10 and 1.31. The current P/GP Ratio is 1.43 based on a stock price of $50.97. The current P/GP Ratio is above the high of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
If I used in the Graham Price calculation, the AEPS, instead of EPS the Graham Price would be 36.91. The 10-year low, median, and high median Price/Graham Price Ratios are 0.93, 1.11 and 1.22. The current P/GP Ratio is 1.38 based on a stock price of $50.97. The current P/GP Ratio is above the high of the 10 year median ratios. 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 1.10. The current P/B Ratio is 2.66 based on a stock price of $50.97, Book Value of $2,232M and Book Value per Share of $19.16. The current P/B Ratio is 141% 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 5.24. The current P/CF Ratio is 5.54 based on a stock price of $50.97, Cash Flow per Share estimate of $9.20, and Cash Flow of $1072M. The current ratio is 6% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get an historical median dividend yield of 5.95%. The current dividend yield is 4.30% based on dividends of $2.19 and a stock price of $50.97. The current dividend yield is 28% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median dividend yield of 6.27%. The current dividend yield is 4.30% based on dividends of $2.19 and a stock price of $50.97. The current dividend yield is 31% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10-year median Price/Sales (Revenue) Ratio is 1.65. The current P/S Ratio is 2.74 based on Revenue estimate for 2022 of $2,167M, Revenue per Share of $18.61 and a stock price of $50.97. The current P/S Ratio is 66% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
Results of stock price testing is that the stock price is probably expensive. Both the dividend yield tests and the P/S Ratio tests say the same thing, that the stock is relatively expensive. Some of the other tests say the same thing. The P/E Ratio and P/AEPS Ratio tests say the stock is cheap. In both these cases, the ratios are on the high side.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (4) and Hold (8). The consensus is a Buy. The consensus 12 month stock price is $50.81. This implies a total return of 3.98% with a 0.31% from a capital loss and 4.30% from dividends based on a current stock price of $50.97.
There are only two analysts’ reports for 2020 on Stock Chase. Analyst seem to like this stock. Stock Chase gives this stock 4 stars out of 5. Money Sense gives this stock a B rating. Adam Othman on Motley Fool includes this stock in three that are beating the market. Christopher Liew on Motley Fool thinks this stock is a safe place to park your money. The company in a Press Release talk about their fourth quarter. The company in a Press Release talk about their second quarter of 2022 results.
Simply Wall Street on Yahoo Finance reviews this stock. They have 3 warnings of interest payments are not well covered by earnings; dividend of 4.53% is not well covered by earnings; and profit margins (6.4%) are lower than last year (10.4%).
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 September 2, 2022 around 5 pm. Tomorrow on my other blog I will write about Buy Defensive and Quality.... learn more on Thursday, September 1, 2022 around 5 pm.
Also, on my book blog I have put a review of the book Medieval World by Susan Wise Bauer 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.
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