Is it a good company at a reasonable price? This stock is probably cheap, but that does not make it a good buy. Dividends were recently cut. The company is not expected to have much in earnings anytime soon. Personally, I like companies that have earnings and increasing dividends. It was probably wise for the company to cut their dividends. This is not the sort of company I would be interested in.
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 there has been little growth over the past 5 and 10 years for this stock. You have a bit of Revenue growth and some Stock Price growth and that is it. See below.
In the chart below, I am showing 5 and 10 year total growth and per year growth in columns 3 and 4. Column 5 shows growth expected over 12 months to the first quarter in 2024 and expected growth over this year.
| Yr | Item | Tot. Gwth | Per Year | Gwth | Coverage |
|---|---|---|---|---|---|
| 5 | Revenue Growth | 68.20% | 10.96% | 1.30% | <-12 mths |
| 5 | AEPS Growth | -104.76% | N/C | -1200.00% | <-12 mths |
| 5 | Net Income Growth | -401.15% | N/C | -26.83% | <-12 mths |
| 5 | Cash Flow Growth | 42.25% | 7.30% | -13.89% | <-12 mths |
| 5 | Dividend Growth | 6.67% | 1.30% | -37.50% | <-12 mths |
| 5 | Stock Price Growth | -26.71% | -6.03% | 3.48% | <-12 mths |
| 10 | Revenue Growth | 389.20% | 17.21% | 7.02% | <-this year |
| 10 | AEPS Growth | -102.33% | N/C | -1700.00% | <-this year |
| 10 | Net Income Growth | -316.70% | N/C | -78.47% | <-this year |
| 10 | Cash Flow Growth | 143.57% | 9.31% | -9.83% | <-this year |
| 10 | Dividend Growth | 24.14% | 2.19% | -50.00% | <-this year |
| 10 | Stock Price Growth | -13.30% | -1.42% | 30.58% | <-this year |
The current dividend yield is moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 4.04%. The 5 and 10 year median dividend yields are also moderate at 4.14% and 4.76%. The historical median dividend yield is good (5% to 6% ranges) at 5.74%. This company used to be an income trust and these companies have much higher dividend yields than corporations. Dividend did drop when this company became a corporation. The dividends are increase at a low rate (below 8% per year) at 1.30% per year over the past 5 years. The last dividend change was in 2024 and dividends were decreased by 50%.
The Dividend Payout Ratios (DPR) are only positive for Cash Flow, but are really showing that dividends are not well covered. The DPR for 2023 for Earnings per Share (EPS) is cannot be calculated because of earning losses. The DPR for 2023 for Adjusted Earnings per Share (AEPS) cannot be calculated because of Adjusted EPS losses with 5 year coverage high at 109%. The DPR for 2023 for Cash Flow per Share (CFPS) is good at 24% with 5 year coverage at 32%. The DPR for 2023 for Free Cash Flow (FCF) is not valid because both the FCF is negative. There is no agreement on what the FCF is, but all say it is negative.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | N/C | N/C |
| AEPS | N/C | 109.15% |
| CFPS | 24.40% | 31.65% |
| FCF | -38.53% | -165.93% |
Debt Ratios are generally awful and debt it way too high. The Long Term Debt/Market Cap Ratio for 2023 is very high at 3.21and currently at 2.93. Investors do not seem to think that the The Liquidity Ratio for 2023 is good at 1.55 and 1.50 currently. If you added in Cash Flow after dividends, the ratios are fine at 1.53 and currently at 1.76. The Debt Ratio for 2023 is good at 1.68 and 1.68 currently. The Leverage and Debt/Equity Ratios for 2023 are good at 1.47 and 0.47 and currently at 1.46 and 0.46.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 3.21 | 2.93 |
| Intang/GW | 0.77 | 0.72 |
| Liquidity | 0.91 | 0.57 |
| Liq. + CF | 0.56 | 0.75 |
| Liq. CF DB | 2.45 | 2.29 |
| Debt Ratio | 1.16 | 1.19 |
| Leverage | 7.42 | 6.14 |
| D/E Ratio | 6.42 | 5.14 |
The Total Return per year is shown below for years of 5 to 20 to the end of 2023. 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. |
|---|---|---|---|---|---|
| 2018 | 5 | 1.30% | 0.39% | -6.03% | 6.42% |
| 2013 | 10 | 2.19% | 5.26% | -1.42% | 6.67% |
| 2008 | 15 | 0.33% | 11.27% | 2.55% | 8.72% |
| 2003 | 20 | 0.72% | 8.02% | 0.52% | 7.49% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are negative and useless. The corresponding 10 year ratios are also negative and useless. The corresponding historical ratios are negative and useless. I can do not stock price testing here.
I also have Adjusted Earnings per Share (AEPS) data. However, the 10 year P/AEPS Ratios are negative and useless. There are 10 year ratios, but they are very high. The current ratio is negative because the AEPS is expected to be negative again this year. I can do not stock price testing here.
Because the EPS and AEPS are negative, I cannot do any Graham Price testing.
I get a 10-year median Price/Book Value per Share Ratio of 3.81. The current P/B Ratio is 1.35 based on a Book Value of $1,339M, Book Value per Share of $6.58 and a stock price of $8.92. The current ratio is 62% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I also have a Book Value per Share estimate for 2024 of $4.06. This implies a ratio of 2.20 based on a stock price of $8.92 and Book Value of $826M. This ratio is 23% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a 10-year median Price/Cash Flow per Share Ratio of 10.52. The current ratio is 6.76 based on Cash Flow per Share estimate for 2024 of $1.32, Cash Flow of $269M and a stock price of $8.92. The current ratio is 36% 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 5.74%. The current dividend yield is 4.04% based on dividends of $0.36 and a stock price of $8.92. The current dividend yield is 30% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. The problem with this test is that dividends have recently been cut.
I get a 10 year median dividend yield of 4.76%. The current dividend yield is 4.04% based on dividends of $0.36 and a stock price of $8.92. The current dividend yield is 15% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median. The problem with this test is that dividends have recently been cut.
The 10-year median Price/Sales (Revenue) Ratio is 4.26. The current P/S Ratio is 1.75 based on Revenue estimate for 2024 of $1,038M, Revenue per Share of $5.10 and a stock price of $8.92. The current ratio is 63% 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. The 10 year dividend yield test says that the stock price is reasonable, but above the median. However, the dividends were recently cut. This is, of course, a bad sign. The P/S Ratio testing is saying that the stock price is relatively cheap. Since the stock has not much in the way of earnings, testing for earnings cannot be done. Other testing I can do shows that the stock price is relatively cheap.
When I look at analysts’ recommendations, I find Buy (4), and Hold (5). The consensus would be a Buy. The 12 months consensus stock price is $12.00 with a high of $17.00 and low of $10.00. The consensus stock price of $12.00 implies a total return of 38.57% with 34.53% from capital gains and 4.04% from dividends based on a current stock price of $8.92.
There are few analysts on Stock Chase following this stock. In past years there were Do Not Buy recommendations. The worries are operating weakness and high debt. Stock Chase gives this stock 3 stars out of 5. Adam Othman on Motley Fool thinks you should buy this stock as it is incredibly cheap. Amy Legate-Wolfe on Motley Fool also thinks you should be buy this because it is cheap. The company put out a press release via Newswire on their fourth quarter of 2024 results. The company put out a press release via Newswire about their second quarter of 2024.
Simply Wall Street via Yahoo Finance reviews this stock. They have two warnings of dividend of 3.96% is not well covered by earnings or free cash flows; and has less than 1 year of cash runway. Simply Wall Street gives this stock 2 and one half stars out of 5.
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. 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 Veren Inc (TSX-VRN, NYSE-VRN) ... learn more on Wednesday, November 6, 2024 around 5 pm. Tomorrow on my other blog I will write about Dividend Stocks November 2024 learn more on Tuesday, November 5, 2024 around 5 pm.
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