Is it a good company at a reasonable price? The stock price is probably cheap to reasonable. I do not particularly like companies that do not make a profit. It would not be a utility I am interested in anymore. Some analysts still like it and others do not.
I do not own this stock of Innergex Renewable Energy (TSX-INE, OTC-INGXF). In 2006 I bought Innergex Power on a buy rating and favorable report from TD although it has only been going from 2003. In 2008 I sold Innergex as I did not think that it is a stock I want to hold as dividend increased less than the rate of inflation.
When I was updating my spreadsheet, I noticed that they have earnings losses, even the Adjusted EPS has losses. I can still calculate the 5 year coverage of dividend by AEPS and it is 233%. I cannot even calculate the 5 year coverage for EPS as the 5 year average EPS is negative.
Analysts keep thinking that this company is going to make a profit and it has not. EPS has been negative since 2019 with earnings losses of $0.25, $0.23, $1.09 for 2019, 2020 and 2021. In 2019, analysts thought that there would be earnings of $0.11. In 2020, analysts thought there would a loss of $0.24, but that in 2021, there would be earnings of $0.34. Last year analysts thought there would be a loss of $0.85 in 2021, but that there would be earnings of $0.40 in 2022. Now analysts are saying there will be a loss of $0.01 in 2022, but that in 2023 there will be earnings of $0.41.
If you had invested in this company in December 2011, for $1,009.40 you would have bought 98 shares at $10.30 per share. In December 2021, after 10 years you would have received $633.57 in dividends. The stock would be worth $1,822.80. Your total return would have been $1,456.37.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $10.30 | $1,009.40 | 98 | 10 | $633.57 | $1,822.80 | $2,456.37 |
The dividend yields are moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 4.83%. The 5 year median dividend yield is also moderate at 4.50%. The 10 year and historical median dividend yield is good (5% to 6% ranges) at 5.04% and 5.90%. The dividend increases are low (below 8% per year) at 2.5% per year over the past 5 years. The last dividend increase was for 2.9% and it occurred in 2020. Analysts do not expect any increases anytime soon.
The Dividend Payout Ratios (DPR) are not good. The DPR for EPS for 2021 cannot be calculated because of earning losses. I cannot calculate the 5 year coverage because of the same reason. The DPR for Adjusted Earnings per Share (AEPS) for 2021 cannot be calculated due to earning losses. The 5 year coverage is 233%. The DPR for Cash Flow per Share is good at 30% with 5 year coverage at 32%. Here a DPR of 40% or less is good. The DPR for Free Cash Flow (FCF) for 2021 is 876%. The 5 year coverage cannot be calculated due to negative FCF.
Debt Ratios are not good. The Long Term Debt/Market Cap Ratio is high at 1.25. It means that long term debt is higher the market value of this company. The Debt Ratio is too low at 1.23. It is better at 1.50 or higher. The Leverage and Debt/Equity Ratios at 5.44 and 4.44 are too high and are better when below 3.00 and 2.00.
The Liquidity Ratio is very low at 0.53. That means that current assets cannot coverage current liabilities. Even if you add in cash flow after Dividends, the ratio is still under 1.00 at 0.70. You only get an acceptable ratio if you add back the current portion of the long term debt. However, you would be betting in bad times, the company can still rollover their debt.
The Total Return per year is shown below for years of 5 to 18 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 | 2.54% | 10.22% | 5.80% | 4.42% |
| 2011 | 10 | 2.19% | 10.96% | 6.09% | 4.87% |
| 2006 | 15 | 0.57% | 10.25% | 4.90% | 5.35% |
| 2003 | 18 | 0.80% | 10.37% | 4.60% | 5.77% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are negative and therefore unusable. The corresponding 10 year historical P/E Ratios are also negative and unusable.
I have Adjusted Earnings per Share data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 56.48, 62.05 and 67.62. The corresponding 10 year ratios are 46.40, 54.12 and 61.85. The current P/AEPS Ratio is 145.08. 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. The problem, of course, is that these P/AEPS ratios are very high. There was a lot of earnings losses for this company. The AEPS were better, but very low and so you get very high P/AESP ratios.
I calculated a Graham Price as best as I could of $4.09. The 10-year low, median, and high median Price/Graham Price Ratios are 3.12, 3.47 and 3.86. The current P/GP Ratio is 3.65 based on a stock price of $14.92. The current ratio is between the median and high of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10-year median Price/Book Value per Share Ratio of 3.86. The current P/B Ratio is 2.41 based on a Book Value of $1,193M, Book Value per Share of $6.20 and a stock price of $14.92. The current ratio is 38% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. However, the P/B Ratios for this stock are much higher than normal.
I get a 10-year median Price/Cash Flow per Share Ratio of 13.67. The current P/CF Ratio is 8.38 based on Cash Flow per Share (CFPS) estimate for 2022 of $1.78, Cash Flow of $343M and a stock price of $14.92. The current ratio is 39% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 5.90%. The current dividend yield is 4.83% based on dividends of $0.72 and a stock price of $14.92. The current dividend yield is 18% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10 year median dividend yield of 5.04%. The current dividend yield is 4.83% based on dividends of $0.72 and a stock price of $14.92. The current dividend yield is 4% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
The 10-year median Price/Sales (Revenue) Ratio is 4.63. The current P/S Ratio is 3.14 based on a Revenue estimate for 2022 of $914M, Revenue per Share of $4.75, and a Stock Price of $14.92. The current P/S Ratio is 38% 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 to reasonable. The Dividend Yield tests says it is reasonable and the P/S Ratio test says it is cheap. It is a problem in pricing a stock where it has earnings losses. However, Revenue and Cash Flow is growing. The P/CF Ratio and P/B Ratio are good tests, but not P/E Ratio, P/ASPS Ratio and P/GP Ratio tests are questionable.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (4), Hold (4) and Sell (1). The consensus would be a Buy. The 12 month stock price consensus is $20.92. This implies a total return of 45.04% with 40.21% from capital gains and 4.83% from dividends based on a current stock price of $14.92.
Analyst’s recommendations on Stock Chase are two Buys and one Do Not Buy. Stock Chase gives this stock 3 stars out of 5. It is not on Money Sense List. Adam Othman on Motley Fool says wait for the perfect moment to buy this company. Adam Othman on Motley Fool in December 2021 says to buy if there is a correction. There is a Press Release on Newswire about this company’s 2021 results. There is a press release by the company on Newswire about their second quarter results.
Simply Wall Street via Yahoo Finance talks about who owns shares in this company. They talk about institutional Ownership which is about 40% and Private companies at 20%. Simply Wall Street has two warnings of Dividend of 4.74% is not well covered by earnings or cash flows and shareholders have been diluted in the past year.
Innergex Renewable Energy Inc is an independent Canadian renewable power producer. It develops, acquires, owns, and operates hydroelectric, wind, and solar facilities in Canada, the United States, France, and Chile. Innergex Renewable Energy primarily generates revenue through the sale of electricity from its hydroelectric sites. The company's wind farms also generate substantial amounts of energy and revenue. Its web site is here Innergex Renewable Energy.
The last stock I wrote about was about was Johnson and Johnson (NYSE-JNJ) ... learn more. The next stock I will write about will be Crescent Point Energy Corp (TSX-CPG, NYSE-CPG) ... learn more on Tuesday, November 9, 2022 around 5 pm. Tomorrow on my other blog I will write about TFSA vs RRSP .... learn more on Tuesday, November 8, 2022 around 5 pm.
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