I do not own this stock (TSX-GS). I started to review some of the stock recommended by Jennifer Dowty from a column she wrote and I reviewed in February 2010. See Dividends and Special Dividends. I sort of gave up after reviewing this stock. I started to review this stock yesterday and today I would talk about if it at a good price and what analysts say.
When I look at the insider trading report, I find lots of insider selling and little insider buying. The insider selling is of $12.8M, which is about 2.5% of the current market of this stock. Most insiders, except for the directors, have substantial shares in this company, but mostly of the multiple voting kind. It is only the directors that have more options than shares. There are 28 institutions that own just under 28% of this company’s outstanding shares. They have increased their holdings by 15% over the past 3 months.
I get a 5 year low median Price/Earnings Ratio of 11.35. The current P/E of 11.21 therefore shows a relatively good stock price. I get a Graham Price of $9.77 and the stock price of $17.37 is some 78% higher. The median difference between the Graham Price and stock price is 112%, so this shows a better than median stock price.
The current dividend yield is 3.2% and the 5 year median dividend yield is 2.2%. I get a 10 year median Price/Book Value Ratio of 9.96 and a current P/B ratio of 6.35. The current P/B ratio is some 63% below the 10 year median Ratio. Both these items also show a relatively good current stock price.
When I look at analysts’ recommendations, I find Strong Buy, Buy, Hold and Underperform. The consensus recommendations would be a Hold recommendation. There are lots of Hold recommendations. (See my site for information on analyst ratings.) Some analysts seem to be negative because this is an investment firm and with the current market turmoil, they wonder where will money come from for investing purposes.
This is a small company and the risk rating would be high. There is also some concern about the fact that both the CEO (Gerald Sheff) and CFO (Valerie Barker) have recently stepped down these positions. The other co-founder, Ira Gluskin seems to have step away from his position as Chief Investment Officer before the end of 2010.
I am not currently interested in having this firm in my investment portfolio. As I said yesterday, they seem to have hit a high in 2006/7 that they have not yet come back too. They are also not growing their revenue. They do give dividends and special dividends that do account for 4% of the return on this company. The problem is that you may not have made any money or very little money over all if you had invested in the company over the past 5 years.
Gluskin Sheff is an independent investment firm that manages portfolios for high net-worth individuals and institutional clients. Its web site is here Gluskin& Sheff. See my spreadsheet at gs.htm.
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. See my website for stocks followed and investment notes. Follow me on twitter.
Monday, August 15, 2011
Friday, August 12, 2011
Gluskin Sheff + Associates Inc
I do not own this stock (TSX-GS). I started to review some of the stock recommended by Jennifer Dowty from a column she wrote and I reviewed in February 2010. See Dividends and Special Dividends.
I sort of gave up after reviewing the first stock she talked about which was this stock. I decided to again review this stock to see if I thought better of it. In giving up after just reviewing one stock, I did miss a good one that I later found and bought. That was Computer Modelling Group (TSX-CMG). I haven’t yet reviewed all the stocks she talked about.
What I did not like about this stock last year is the same I do not like about it this year. It seemed to hit a peak in 2006 and then go downhill. This includes Revenues, Earnings and Book Value. The Stock Price and Cash Flow peaked in 2007. In the most recent annual report, dated June 2009 they were recovering and analysts do expect that recovery to continue in 2011.
Because this stock only went public in 2006, I have limited data on how well it has done and only data going back 4 years. For anyone that invested in this company in 2006, they would not have made any money. There are also two levels of shares, but it is only the subordinate shares that are sold on the stock market.
In regards to dividends, they have been very good. The stock has a 5 year median yield of 2.2% on basic dividends. However, if you include the special dividends, the 5 year median yield is 4%. The increases in the regular dividend have also been very good at 17% per year. (Dividends have only been paid since 2006.)
As far as Dividend Payout Ratios goes, they look fine if you look at the 4 year median rates, which are 75% for earnings and 51% for cash flow. However, in both 2007 and 2008, the company paid out in regular and special dividends more than 100% of their earnings and I do not care for this.
One good thing about this stock is the debt ratios. The current Liquidity Ratio is 5.38 and the current Asset/Liability Ratio is 4.08. These are both quite high. The current leverage Ratio and Debt Equity Ratios are also very good and are currently at 1.32 and 0.32. This company basically has no debt.
On Monday, I will look to see what analysts are saying about this stock and what my spreadsheet says about the current stock price.
Gluskin Sheff is an independent investment firm that manages portfolios for high net-worth individuals and institutional clients. Its web site is here Gluskin& Sheff. See my spreadsheet at gs.htm.
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. See my website for stocks followed and investment notes. Follow me on twitter.
I sort of gave up after reviewing the first stock she talked about which was this stock. I decided to again review this stock to see if I thought better of it. In giving up after just reviewing one stock, I did miss a good one that I later found and bought. That was Computer Modelling Group (TSX-CMG). I haven’t yet reviewed all the stocks she talked about.
What I did not like about this stock last year is the same I do not like about it this year. It seemed to hit a peak in 2006 and then go downhill. This includes Revenues, Earnings and Book Value. The Stock Price and Cash Flow peaked in 2007. In the most recent annual report, dated June 2009 they were recovering and analysts do expect that recovery to continue in 2011.
Because this stock only went public in 2006, I have limited data on how well it has done and only data going back 4 years. For anyone that invested in this company in 2006, they would not have made any money. There are also two levels of shares, but it is only the subordinate shares that are sold on the stock market.
In regards to dividends, they have been very good. The stock has a 5 year median yield of 2.2% on basic dividends. However, if you include the special dividends, the 5 year median yield is 4%. The increases in the regular dividend have also been very good at 17% per year. (Dividends have only been paid since 2006.)
As far as Dividend Payout Ratios goes, they look fine if you look at the 4 year median rates, which are 75% for earnings and 51% for cash flow. However, in both 2007 and 2008, the company paid out in regular and special dividends more than 100% of their earnings and I do not care for this.
One good thing about this stock is the debt ratios. The current Liquidity Ratio is 5.38 and the current Asset/Liability Ratio is 4.08. These are both quite high. The current leverage Ratio and Debt Equity Ratios are also very good and are currently at 1.32 and 0.32. This company basically has no debt.
On Monday, I will look to see what analysts are saying about this stock and what my spreadsheet says about the current stock price.
Gluskin Sheff is an independent investment firm that manages portfolios for high net-worth individuals and institutional clients. Its web site is here Gluskin& Sheff. See my spreadsheet at gs.htm.
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. See my website for stocks followed and investment notes. Follow me on twitter.
Thursday, August 11, 2011
My Utility Stocks 2
The stocks I want to talk about today are Enbridge (TSX-TNB), Pembina (TSX-PPL), TransCanada (TSX-TRP) and Veresen (TSX-VSN) that are my Pipeline Stocks. By and large, pipelines utility stocks tend to provide a better return than power generation utility stocks
First of all, I would like to mention that the Globe and Mail today had a video called Like dividends but hate market volatility?. I cover all the stocks mentioned on this video in my entries of yesterday and today.
I have had Enbridge Inc. (TSX-ENB) since 2005 and I have made a total return on this stock of 17% per year. Enbridge recently split their shares are a 2 for 1 basis. At first, as what usually happens, this had the effect of increasing the share price. However, since then, the stock price has come down as has the whole market.
The Dividend Payout Ratio (DPR) for this stock is good. The 5 year median DPR for earnings is 63% and for cash flow is 33%. This is always an important measure for dividend paying stock. The dividend growth rates for this stock are around 10%. The current dividend yield is a healthy 3.2%. The 5 year median dividend yield is 3.3%. See my spreadsheet at enb.htm.
The only one of the lot that I am concerned about is Pembina Pipelines Corp (TSX-PPL). That is because The Dividend Payout Ratios are high. The 5 year median DPR for earnings is 138% and the 5 year median DPR for Cash Flow is 97%. The ratios for 2010 were 138% for earnings and 102% for cash flow. The DRPs for 2011 are expected to be 162% for earnings and 95% for cash flow. (See my site for information on Dividend Payout Ratios).
However, there are a couple of things to mention in this regard. First of all this company used to be an income trust and payouts were then based on Distributable Cash. However, even using Distributable Cash, The 5 year median DPR was still high at 97%. The other thing is that the corporation has a tax pool and they will not have to actually pay taxes until 2014 or 2015. They have until that time to get their DPRs down to a more reasonable level.
The company did not decrease its dividend on the switch to a corporation. Before they had to switch to a corporation they had a good record of dividend increases. However, since 2009 there has been no dividend increases and it would appear that there cannot be for some time. However, their current yield of 6.1% is good.
I have had this stock since 2001 and have made a total return of 18% per year. Probably just over 10% of that return would be attributable to dividends. I still feel that this was a good investment for me, but I will keep an eye on stock for possible future problems. See my spreadsheet at ppl.htm.
The next stock to talk about is TransCanada Corp (TSX-TRP). This has a higher dividend yield than Enbridge, but a lower dividend growth rate. The current dividend yield is 4.1% and the dividend has grown over the past 5 and 10 years at 5.3% and 7% per year. The most recent increase was at 5%.
Trans Canada Corp also has good Dividend Payout Ratios. The 5 year median DPR on earnings is 59% and the on cash flow is 31%. This stock has been hit by the recent bear market, but is recovering nicely. It is up around 6% so far this year, so this is good. I have bought this stock in 2000 and 2006 and have made a total return of 11.7% per year. See my spreadsheet at trp.htm.
Also Dividend Girl is talking about this stock today. See her blog.
The last stock to talk about is Veresen Inc. (TSX-VSN). This is my most recent pipeline stock purchase and I bought it, as Fort Chicago Energy Partners in 2008. Because I got it for a good price, I have a total return on this stock of 45% per year. The dividend portion of this return is probably over 10% per year.
This company also did not lower their distributions on the change to a corporation. Because of this they do have very high Dividend Payout Ratios based on earnings. The 5 year median DPR on earnings is 181% and on cash flow is 60%. The expected DPR for 2011 is 179% for earnings and 72% for cash Flow. Their DPR for cash flow is ok, but it is too high for earnings.
No one expects their DPR from earnings to come into line anytime soon. They have not raised their dividends since 2008 and although the dividend yield is very good at 7.5%, they are unlikely to raise their distributions anytime soon. The company has stated that they prefer to grow cash flow rather than raise distributions in the near term. See my spreadsheet at vsn.htm.
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. See my website for stocks followed and investment notes. Follow me on twitter.
First of all, I would like to mention that the Globe and Mail today had a video called Like dividends but hate market volatility?. I cover all the stocks mentioned on this video in my entries of yesterday and today.
I have had Enbridge Inc. (TSX-ENB) since 2005 and I have made a total return on this stock of 17% per year. Enbridge recently split their shares are a 2 for 1 basis. At first, as what usually happens, this had the effect of increasing the share price. However, since then, the stock price has come down as has the whole market.
The Dividend Payout Ratio (DPR) for this stock is good. The 5 year median DPR for earnings is 63% and for cash flow is 33%. This is always an important measure for dividend paying stock. The dividend growth rates for this stock are around 10%. The current dividend yield is a healthy 3.2%. The 5 year median dividend yield is 3.3%. See my spreadsheet at enb.htm.
The only one of the lot that I am concerned about is Pembina Pipelines Corp (TSX-PPL). That is because The Dividend Payout Ratios are high. The 5 year median DPR for earnings is 138% and the 5 year median DPR for Cash Flow is 97%. The ratios for 2010 were 138% for earnings and 102% for cash flow. The DRPs for 2011 are expected to be 162% for earnings and 95% for cash flow. (See my site for information on Dividend Payout Ratios).
However, there are a couple of things to mention in this regard. First of all this company used to be an income trust and payouts were then based on Distributable Cash. However, even using Distributable Cash, The 5 year median DPR was still high at 97%. The other thing is that the corporation has a tax pool and they will not have to actually pay taxes until 2014 or 2015. They have until that time to get their DPRs down to a more reasonable level.
The company did not decrease its dividend on the switch to a corporation. Before they had to switch to a corporation they had a good record of dividend increases. However, since 2009 there has been no dividend increases and it would appear that there cannot be for some time. However, their current yield of 6.1% is good.
I have had this stock since 2001 and have made a total return of 18% per year. Probably just over 10% of that return would be attributable to dividends. I still feel that this was a good investment for me, but I will keep an eye on stock for possible future problems. See my spreadsheet at ppl.htm.
The next stock to talk about is TransCanada Corp (TSX-TRP). This has a higher dividend yield than Enbridge, but a lower dividend growth rate. The current dividend yield is 4.1% and the dividend has grown over the past 5 and 10 years at 5.3% and 7% per year. The most recent increase was at 5%.
Trans Canada Corp also has good Dividend Payout Ratios. The 5 year median DPR on earnings is 59% and the on cash flow is 31%. This stock has been hit by the recent bear market, but is recovering nicely. It is up around 6% so far this year, so this is good. I have bought this stock in 2000 and 2006 and have made a total return of 11.7% per year. See my spreadsheet at trp.htm.
Also Dividend Girl is talking about this stock today. See her blog.
The last stock to talk about is Veresen Inc. (TSX-VSN). This is my most recent pipeline stock purchase and I bought it, as Fort Chicago Energy Partners in 2008. Because I got it for a good price, I have a total return on this stock of 45% per year. The dividend portion of this return is probably over 10% per year.
This company also did not lower their distributions on the change to a corporation. Because of this they do have very high Dividend Payout Ratios based on earnings. The 5 year median DPR on earnings is 181% and on cash flow is 60%. The expected DPR for 2011 is 179% for earnings and 72% for cash Flow. Their DPR for cash flow is ok, but it is too high for earnings.
No one expects their DPR from earnings to come into line anytime soon. They have not raised their dividends since 2008 and although the dividend yield is very good at 7.5%, they are unlikely to raise their distributions anytime soon. The company has stated that they prefer to grow cash flow rather than raise distributions in the near term. See my spreadsheet at vsn.htm.
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. See my website for stocks followed and investment notes. Follow me on twitter.
Wednesday, August 10, 2011
My Utility Stocks
I have recently been talking about a lot of power generating stocks that I do not own. Most of the ones I reviewed, I did not care to own. So today, I thought I would talk about the power generating stocks that I do own. Emera (TSX-EMA), Fortis (TSX-FTS), and TransAlta (TSX-TA) are my power generating stocks.
I have had investments in both Fortis and TransAlta for a long time, dating back to 1987. My investment in Emera started much later, in 2005. I felt in 2005 that I had sufficient investments in both Fortis and TransAlta and that it would be wise to start investing in another power generation company.
I had been looking to buy some Emera (TSX-EMA) stock recently because I want to sell some of my CMG stock, but I felt that the price in the $32 range was too high, both by P/E Ratio and by dividend yield. This stock, in the end, was hit by the recent market turmoil and I finally bought some at $28.85. At this price, the Dividend yield was at 4.5% (higher than the 5 year median of 4.4%) and the expected P/E for 2011 was 16.12 (which was about the 5 year median P/E Ratio).
I have been planning selling CMG and buying Emera for a while. I waited until the Bid for CMG and the Ask for Emera was to my liking. I put in the Bid price for CMG and the Ask price of Emera, and limited the buy and sell to one day. I was usually checking on these prices in the morning so I would have a good part of the day to deal with a sell and a buy.
This is a rather unremarkable stock. It has decent payout ratios of 70% for earnings and 32% for cash flow as median payout ratios over the past 5 years. Dividend growth over the past couple of years has been very good with the most recent increase at 15%. These are much higher rates than is typical of this stock. Over the past 6 years, I have had a total return on this stock of 12% per year. See my spreadsheet at ema.htm.
My next power generation stock is Fortis (TSX-FTS), which I have had since 1987. Since I have bought this stock, I have made a total return per year of 13.4%. Personally, I like Fortis better than the other two stocks I have, but I am unwilling, even for a great stock, to be too much of my portfolio. Its payout ratios are very good at 65% for earnings and 27% for Cash Flow as median payout ratios over the past 5 years.
The recent dividend increases have been lower recently, with the most recent increase at only 3.6%. However, the 5 year growth in dividends is 14% per year. Over the years, this stock has had good and consistent growth in revenues, earnings, dividends, total return and book value. See my spreadsheet at fts.htm.
The last stock to talk about today is TransAlta (TSX-TA). My earnings on this stock has been much lower than the above two stocks, coming in at 7.9% per year since I bought it. Their last dividend increase was in 2009 and past dividend increases has been around the background inflation. Since they have stopped increasing the dividends, this stock has not grown in capital gains.
The dividend increases stopped when it could not earn enough to cover the dividend payments. The 5 year median Payout Ratio for earnings is currently at 117%. The 5 year median Payout Ratios for Cash Flow is good at 31%. The best that can be said of this stock lately is that all the analysts seem to have raised the earnings estimates for this stock for 2011 and 2012.
Analysts look at this stock as a good dividend payer and this is indeed the case. It has a current dividend yield of 5.7%. It is a stable company and it is a low risk investment. What you can probably expect from this company is a long term total return of 8% per year, with 5% from dividends and 3% from capital gain. It is not an exciting stock, but it is a good dividend payer and it can provide stability to your portfolio. See my spreadsheet at ta.htm.
Tomorrow, I will talk about my pipeline stocks.
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. See my website for stocks followed and investment notes. Follow me on twitter.
I have had investments in both Fortis and TransAlta for a long time, dating back to 1987. My investment in Emera started much later, in 2005. I felt in 2005 that I had sufficient investments in both Fortis and TransAlta and that it would be wise to start investing in another power generation company.
I had been looking to buy some Emera (TSX-EMA) stock recently because I want to sell some of my CMG stock, but I felt that the price in the $32 range was too high, both by P/E Ratio and by dividend yield. This stock, in the end, was hit by the recent market turmoil and I finally bought some at $28.85. At this price, the Dividend yield was at 4.5% (higher than the 5 year median of 4.4%) and the expected P/E for 2011 was 16.12 (which was about the 5 year median P/E Ratio).
I have been planning selling CMG and buying Emera for a while. I waited until the Bid for CMG and the Ask for Emera was to my liking. I put in the Bid price for CMG and the Ask price of Emera, and limited the buy and sell to one day. I was usually checking on these prices in the morning so I would have a good part of the day to deal with a sell and a buy.
This is a rather unremarkable stock. It has decent payout ratios of 70% for earnings and 32% for cash flow as median payout ratios over the past 5 years. Dividend growth over the past couple of years has been very good with the most recent increase at 15%. These are much higher rates than is typical of this stock. Over the past 6 years, I have had a total return on this stock of 12% per year. See my spreadsheet at ema.htm.
My next power generation stock is Fortis (TSX-FTS), which I have had since 1987. Since I have bought this stock, I have made a total return per year of 13.4%. Personally, I like Fortis better than the other two stocks I have, but I am unwilling, even for a great stock, to be too much of my portfolio. Its payout ratios are very good at 65% for earnings and 27% for Cash Flow as median payout ratios over the past 5 years.
The recent dividend increases have been lower recently, with the most recent increase at only 3.6%. However, the 5 year growth in dividends is 14% per year. Over the years, this stock has had good and consistent growth in revenues, earnings, dividends, total return and book value. See my spreadsheet at fts.htm.
The last stock to talk about today is TransAlta (TSX-TA). My earnings on this stock has been much lower than the above two stocks, coming in at 7.9% per year since I bought it. Their last dividend increase was in 2009 and past dividend increases has been around the background inflation. Since they have stopped increasing the dividends, this stock has not grown in capital gains.
The dividend increases stopped when it could not earn enough to cover the dividend payments. The 5 year median Payout Ratio for earnings is currently at 117%. The 5 year median Payout Ratios for Cash Flow is good at 31%. The best that can be said of this stock lately is that all the analysts seem to have raised the earnings estimates for this stock for 2011 and 2012.
Analysts look at this stock as a good dividend payer and this is indeed the case. It has a current dividend yield of 5.7%. It is a stable company and it is a low risk investment. What you can probably expect from this company is a long term total return of 8% per year, with 5% from dividends and 3% from capital gain. It is not an exciting stock, but it is a good dividend payer and it can provide stability to your portfolio. See my spreadsheet at ta.htm.
Tomorrow, I will talk about my pipeline stocks.
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. See my website for stocks followed and investment notes. Follow me on twitter.
Tuesday, August 9, 2011
Innergex Renewable Energy 2
I do not own this stock (TSX-INE). When looking at this spreadsheet, please realize I am coming from the Innergex Power Income Fund (TSX-IEF.UN) to the Innergex Renewable Energy stock (TSX-INE). This can make a big difference in past performance for a stock.
When I look at the insider trading report, I find that there has been a minimal amount of insider buying during the past year. There was no insider selling. The entire insider buying was by directors of the company. There are 26 institutional investors in this company and they own some 35% of this company. They have increased their stake in this company by 6.6% over the past 3 months.
The real problem I find with this company is that no one seems to expect it to earning much in the way of income over the next couple of years. At the current 2011 estimates, the P/E is at 105.33, a ridiculously high figure. I get a Graham Price of only $3.46, so the current stock price of $9.48 is some 173% higher.
The 10 year median Price/Book Value Ratio is 1.50 and the current one is 1.60. The current one is some 7% above the 10 year median P/B Ratio. For a good stock price, you would want to see the current P/B Ratio lower than the 10 year Median P/B Ratio. However, a P/B Ratio of 1.60 is a reasonable one.
The current dividend yield is 6.12%. This is lower than the 5 year median dividend yield of 8.14%. What you would want is the current dividend yield to be higher than the 5 year median dividend yield. The lowering of the dividend accounts for part of this discrepancy.
When I look at analysts’ recommendations, I see Strong Buy, Buy and Hold recommendations. The consensus recommendations would be a Buy recommendation. This is rather a common recommendation on a lot of stocks. I can find only very little in comments on this stock. One analyst with a Hold recommendation thinks that the 12 month stock price will be the same as the stock price today.
Personally, I do not like the fact of low or non-existent earnings. Also, analysts do not seem to think that even the Distributable Cash for 2011 and 2012 will cover the dividends. I tried to find out where in 2011 the company thinks the Distributable Cash is. All I could find was that they said they did better than expected. However, there was no indication what that was. Another point to make is that earnings estimates have a notorious reputation for being wrong.
One bright point is that analysts expect the revenues to grow. Personally, I would like to see a few years of solid growth in earnings and cash flow to even consider this company. However, as with other utility companies, this stock has not fallen as much as the market in the recent market drop. This is probably a good sign.
I had mentioned before that I plan to sell of some Computer Modelling Group (TSX-CMG) equal to what I paid for the stock and keep the remaining shares. This is so, on this fast growing Tech company, I can at least ensure I do not lose money. I was waiting for a time when I would get a reasonable price for CMG and also buy Emera (TSX-EMA) for a reasonable price. My Emera purchase was to replace the CMG shares sold. Emera has a slightly better dividend and, being a utility, was a more stable and long term stock purchase.
I sold CMG today and bought Emera today because I could both sell CMG at a reasonable price and buy Emera at a reasonable price. Because the market was quite volatile, I did put in a market price limited to today. I noticed that the utility stocks were finally moving down. In the initial market drop, there was not much change in utility stock prices.
Innergex is involved in Canada’s renewable energy industry. The Company develops, owns and operates facilities located in North America, leveraging run-of-river hydroelectric power generating facilities, wind farms and photovoltaic solar parks. Its web site is here Innergex Renewable Energy . See my spreadsheet at ine.htm.
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. See my website for stocks followed and investment notes. Follow me on twitter.
When I look at the insider trading report, I find that there has been a minimal amount of insider buying during the past year. There was no insider selling. The entire insider buying was by directors of the company. There are 26 institutional investors in this company and they own some 35% of this company. They have increased their stake in this company by 6.6% over the past 3 months.
The real problem I find with this company is that no one seems to expect it to earning much in the way of income over the next couple of years. At the current 2011 estimates, the P/E is at 105.33, a ridiculously high figure. I get a Graham Price of only $3.46, so the current stock price of $9.48 is some 173% higher.
The 10 year median Price/Book Value Ratio is 1.50 and the current one is 1.60. The current one is some 7% above the 10 year median P/B Ratio. For a good stock price, you would want to see the current P/B Ratio lower than the 10 year Median P/B Ratio. However, a P/B Ratio of 1.60 is a reasonable one.
The current dividend yield is 6.12%. This is lower than the 5 year median dividend yield of 8.14%. What you would want is the current dividend yield to be higher than the 5 year median dividend yield. The lowering of the dividend accounts for part of this discrepancy.
When I look at analysts’ recommendations, I see Strong Buy, Buy and Hold recommendations. The consensus recommendations would be a Buy recommendation. This is rather a common recommendation on a lot of stocks. I can find only very little in comments on this stock. One analyst with a Hold recommendation thinks that the 12 month stock price will be the same as the stock price today.
Personally, I do not like the fact of low or non-existent earnings. Also, analysts do not seem to think that even the Distributable Cash for 2011 and 2012 will cover the dividends. I tried to find out where in 2011 the company thinks the Distributable Cash is. All I could find was that they said they did better than expected. However, there was no indication what that was. Another point to make is that earnings estimates have a notorious reputation for being wrong.
One bright point is that analysts expect the revenues to grow. Personally, I would like to see a few years of solid growth in earnings and cash flow to even consider this company. However, as with other utility companies, this stock has not fallen as much as the market in the recent market drop. This is probably a good sign.
I had mentioned before that I plan to sell of some Computer Modelling Group (TSX-CMG) equal to what I paid for the stock and keep the remaining shares. This is so, on this fast growing Tech company, I can at least ensure I do not lose money. I was waiting for a time when I would get a reasonable price for CMG and also buy Emera (TSX-EMA) for a reasonable price. My Emera purchase was to replace the CMG shares sold. Emera has a slightly better dividend and, being a utility, was a more stable and long term stock purchase.
I sold CMG today and bought Emera today because I could both sell CMG at a reasonable price and buy Emera at a reasonable price. Because the market was quite volatile, I did put in a market price limited to today. I noticed that the utility stocks were finally moving down. In the initial market drop, there was not much change in utility stock prices.
Innergex is involved in Canada’s renewable energy industry. The Company develops, owns and operates facilities located in North America, leveraging run-of-river hydroelectric power generating facilities, wind farms and photovoltaic solar parks. Its web site is here Innergex Renewable Energy . See my spreadsheet at ine.htm.
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. See my website for stocks followed and investment notes. Follow me on twitter.
Monday, August 8, 2011
Innergex Renewable Energy
I do not own this stock (TSX-INE). The Innergex Power Income Fund has amalgamated with Innergex Renewable Energy Inc. to form Innergex Renewable Energy. When looking at this spreadsheet, please realize I am coming from the Innergex Power Income Fund (TSX-IEF.UN) to the Innergex Renewable Energy stock (TSX-INE). This can make a big difference in past performance for a stock. For a stock that amalgamates, you have to come from one of the stocks to show long term performance. The other thing to note is that the unit holders from Innergex Power Income Fund received 1.46 shares for each of their shares. I have adjusted my spreadsheet accordingly.
Currently, shareholders are getting a good dividend yield of 6.1%. This is lower than the 5 year average of 8.1%, but the distributions have probably now stabilized after the change of this company to a corporation. The dividends on this company had never increased much. They now have decreased almost 15% as the income trust is changed into a corporation. A lot of Income Trust companies had to decrease distributions when changing to corporations.
Over the last 5 and 7 years, the total return on this company was probably around 9%, with all but 2% of this return in distributions. Although the 5 year median distribution from Adjusted Cash Flow is 91%, the one for 2010 was a much more sustainable 65%. A problem I see that that no one seems to expect much in the way of earnings over the next two years and that puts the Payout Ratio for Earnings way out of any acceptable value. (See my site for information on Dividend Payout Ratios).
A couple of points in the favor of this stock is that revenues are growing nicely, with revenues per share growing at the rate of 12.4% and 9.1% per year over the past 5 and 7 years, respectively. Revenue growth is important if you are going to have future earnings and cash flow growth. The Adjust Cash Flow is also growing nicely at around 8% per year over the past 5 and 7 years. The Book Value hasn’t been growing but this is a common problem with income trust companies.
The Liquidity Ratio is a bit low at a current 1.08, but the Asset/Liability Ratio is much better at 1.61. Both the Leverage Ratio and the Debt/Equity Ratio are fine at a current level of 2.66 and 1.65, respectively.
I have reviewed a number of utility stocks involved in the renewable energy industry lately and I do not see any that I would currently like to buy, including this stock.
Innergex is involved in Canada’s renewable energy industry. The Company develops, owns and operates facilities located in North America, leveraging run-of-river hydroelectric power generating facilities, wind farms and photovoltaic solar parks. Its web site is here Innergex Renewable Energy . See my spreadsheet at ine.htm.
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. See my website for stocks followed and investment notes. Follow me on twitter.
Currently, shareholders are getting a good dividend yield of 6.1%. This is lower than the 5 year average of 8.1%, but the distributions have probably now stabilized after the change of this company to a corporation. The dividends on this company had never increased much. They now have decreased almost 15% as the income trust is changed into a corporation. A lot of Income Trust companies had to decrease distributions when changing to corporations.
Over the last 5 and 7 years, the total return on this company was probably around 9%, with all but 2% of this return in distributions. Although the 5 year median distribution from Adjusted Cash Flow is 91%, the one for 2010 was a much more sustainable 65%. A problem I see that that no one seems to expect much in the way of earnings over the next two years and that puts the Payout Ratio for Earnings way out of any acceptable value. (See my site for information on Dividend Payout Ratios).
A couple of points in the favor of this stock is that revenues are growing nicely, with revenues per share growing at the rate of 12.4% and 9.1% per year over the past 5 and 7 years, respectively. Revenue growth is important if you are going to have future earnings and cash flow growth. The Adjust Cash Flow is also growing nicely at around 8% per year over the past 5 and 7 years. The Book Value hasn’t been growing but this is a common problem with income trust companies.
The Liquidity Ratio is a bit low at a current 1.08, but the Asset/Liability Ratio is much better at 1.61. Both the Leverage Ratio and the Debt/Equity Ratio are fine at a current level of 2.66 and 1.65, respectively.
I have reviewed a number of utility stocks involved in the renewable energy industry lately and I do not see any that I would currently like to buy, including this stock.
Innergex is involved in Canada’s renewable energy industry. The Company develops, owns and operates facilities located in North America, leveraging run-of-river hydroelectric power generating facilities, wind farms and photovoltaic solar parks. Its web site is here Innergex Renewable Energy . See my spreadsheet at ine.htm.
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. See my website for stocks followed and investment notes. Follow me on twitter.
Friday, August 5, 2011
Canadian Utilities Ltd 2
I do not own this stock (TSX-CU). You would not want to own this company and ATCO because of their close relationship. This is another utility company and it is considered to be well-managed. The Dividend Yield is at 3%. The Dividend Payout Ratios (DPRs) are good on this stock at 41% of earnings and 23% of cash flow.
When I look at insider trading, I find some $4.6M of insider selling with a net insider selling of $4.3M. All insider selling occurred last year. The bit of insider buying occurred this year. Insider selling was by CEO, Officers and Directors. CU is also in the process of buying non-voting shares for cancellation.
Both the CEO and CFO have more options than shares. Also, The ATCO holdings in this company are half in voting shares and half in non-voting shares. The own just over 50% of this company. There are only 5 institutions owners in shares of this company and they own around 4.5% of the company. Over the past 3 months, they are marginally increased their shares.
I went to check the share price today because of this big drop in the markets of yesterday and today. I did not update my spreadsheet as the price marginally increased. Sometimes utility stocks hold up well in downturns and they are thought of as safe and stable.
I get a 5 year median Price/Earnings Ratios of 12.25 for the low and 15.79 for this high. The current P/E Ratio of 15.45 is close to the high. I get a Graham Price of $44.04 and a current stock price of $55.63. The current stock price is some 26% above the Graham Price. The average high difference between the Graham Price and the Stock price is 21%, so by this measure, the stock price is high.
The current dividend yield is 2.89 and the 5 year median dividend yield is 3.12 and this also points to a relatively high price. The last thing to look at is the Price/Book Value Ratio. The 10 year median P/B Ratio is 1.90 and the current one is 2.32, some 22% high. I note that the Book Value under the new account rules decrease by 8%. If we use the Book Value from the end of 2010, under the old accounting rules, the P/B ratio would still be higher at 2.14 by 12%. This also shows a relatively high current stock price.
When I look at analysts’ recommendations, I see Strong Buy, Buy and Hold. The consensus recommendation would be a Buy recommendation. (See my site for information on analyst ratings.) I note that Buy recommendations come with a 12 month stock price of $60.25 and the Strong Buy comes with one of $66.00.
One analyst sees strong growth ahead for this stock. One analyst points out this is a safe and steady stock. Another analyst likes that this company is in Alberta and it should revive as Alberta does. This is considered to be a Blue Chip stock. The 2nd Quarterly results are in, but not the full accounting records. The 2nd Quarterly earnings were higher than analyst’s estimates.
As you can see from the results today, that this stock holds up quite well in bear markets. One analyst remarked that it should be the corner stone of a value portfolio and I agree. This is a good utility stock. I will not be buying it as I already have enough utility stocks. Over the years, I have made most of my money from utility stocks and bank stocks.
Canadian Utilities Limited operates in four business segments: regulated natural gas operations; regulated electric operations; technologies; and power generation. These operations provide service to industrial, residential and commercial customers. Other businesses consist of natural gas gathering, processing, storage and natural gas supply management and technical facilities management. ATCO (ACO.X) owns just over 50% of this company. CU.X is voting and Class B, CU is non-voting and Class A. Its web site is here CU. See my spreadsheet at cu.htm.
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. See my website for stocks followed and investment notes. Follow me on twitter.
When I look at insider trading, I find some $4.6M of insider selling with a net insider selling of $4.3M. All insider selling occurred last year. The bit of insider buying occurred this year. Insider selling was by CEO, Officers and Directors. CU is also in the process of buying non-voting shares for cancellation.
Both the CEO and CFO have more options than shares. Also, The ATCO holdings in this company are half in voting shares and half in non-voting shares. The own just over 50% of this company. There are only 5 institutions owners in shares of this company and they own around 4.5% of the company. Over the past 3 months, they are marginally increased their shares.
I went to check the share price today because of this big drop in the markets of yesterday and today. I did not update my spreadsheet as the price marginally increased. Sometimes utility stocks hold up well in downturns and they are thought of as safe and stable.
I get a 5 year median Price/Earnings Ratios of 12.25 for the low and 15.79 for this high. The current P/E Ratio of 15.45 is close to the high. I get a Graham Price of $44.04 and a current stock price of $55.63. The current stock price is some 26% above the Graham Price. The average high difference between the Graham Price and the Stock price is 21%, so by this measure, the stock price is high.
The current dividend yield is 2.89 and the 5 year median dividend yield is 3.12 and this also points to a relatively high price. The last thing to look at is the Price/Book Value Ratio. The 10 year median P/B Ratio is 1.90 and the current one is 2.32, some 22% high. I note that the Book Value under the new account rules decrease by 8%. If we use the Book Value from the end of 2010, under the old accounting rules, the P/B ratio would still be higher at 2.14 by 12%. This also shows a relatively high current stock price.
When I look at analysts’ recommendations, I see Strong Buy, Buy and Hold. The consensus recommendation would be a Buy recommendation. (See my site for information on analyst ratings.) I note that Buy recommendations come with a 12 month stock price of $60.25 and the Strong Buy comes with one of $66.00.
One analyst sees strong growth ahead for this stock. One analyst points out this is a safe and steady stock. Another analyst likes that this company is in Alberta and it should revive as Alberta does. This is considered to be a Blue Chip stock. The 2nd Quarterly results are in, but not the full accounting records. The 2nd Quarterly earnings were higher than analyst’s estimates.
As you can see from the results today, that this stock holds up quite well in bear markets. One analyst remarked that it should be the corner stone of a value portfolio and I agree. This is a good utility stock. I will not be buying it as I already have enough utility stocks. Over the years, I have made most of my money from utility stocks and bank stocks.
Canadian Utilities Limited operates in four business segments: regulated natural gas operations; regulated electric operations; technologies; and power generation. These operations provide service to industrial, residential and commercial customers. Other businesses consist of natural gas gathering, processing, storage and natural gas supply management and technical facilities management. ATCO (ACO.X) owns just over 50% of this company. CU.X is voting and Class B, CU is non-voting and Class A. Its web site is here CU. See my spreadsheet at cu.htm.
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. See my website for stocks followed and investment notes. Follow me on twitter.
Thursday, August 4, 2011
Canadian Utilities Ltd
I do not own this stock (TSX-CU). You would not want to own this company and ATCO because of their close relationship. This is another utility company and it is considered to be well-managed. The Dividends, at 3% on this stock is higher than on ATCO that has a current dividend at 1.8%. The Dividend Payout Ratios (DPR) is higher on this stock at 41% of earnings and 23% of cash flow. However, these are still good DPRs.
Dividend increases have been good. The 5 and 10 year growth in dividends runs at 6.5% and 5.3% per year respectively. The most recent dividend was a bit higher at 6.6%. Total return over the past 5 and 10 years was at 8% and 11.5% per year, respectively. Of this total return, dividends account for just over 3% of return.
From past performance you can probably expect a 3% dividend and a 6.5% capital gain, for a total average annual return of 9.5%. What you generally look for in a utility stock is 4% dividends and 4% capital gain. For this stock you get a bit less in dividends and a bit more in capital gain. On dividend growth stock, you expect that, over the long term, dividend increases will drive the stock price.
The Earnings per Share are not bad for this utility running at 10.7% and 6.8% per year, over the past 5 and 10 years. Earnings have been growing over the past few years. What hasn’t been growing is Revenue and Cash Flow. The worst of these is revenues per share and over the past 5 and 10 years this has grown at 1.3% and 0% per year. A good thing to point out is that the 1st Quarterly revenue for 2011 is up some 6.6% from the 1st Quarter of 2010.
Cash Flow per share has been a bit better, growing over the past 5 and 10 years at 2.4% and 4.2% per year respectively. Analysts seem to expect better growth for 2011 and 2012 with growth at 11.8% for 2011 and 8.9% for 2012. Book Value is growing nicely at 8% per year over the past 5 and 10 years. Return on Equity has always been good and this stock has a 5 year median ROE of 14.6%.
When looking at debt ratios involving assets and liabilities, these ratios have always been quite good. The Liquidity Ratio is current at 1.90 and has a 5 year median rate of 2.83. The Asset/Liability Ratio is currently at 1.68 and has a 5 year median of 1.75.
The other debt ratios of Leverage and Asset/Equity are high, but better than for ATCO. The current ones are 3.16 for the Leverage Ratio and 1.88 for the Asset/Equity Ratio. Utility companies tend to have a lot of debt compared with equity. See my site for further information on Debt Ratios. )
When buying dividend growth stock there is a trade off in between dividend yield and dividend increases. Generally speaking, the higher the yield the lower the dividend increases. This can show up in what is called “yield on cost”. That is if you bought the stock today, what would your yield be on today’s stock price in 10 or 15 years’ time? For this stock, the YOC would be 5% and 6.5% in 10 and 15 years’ time if dividend increases were 5.5% per year.
Canadian Utilities Limited operates in four business segments: regulated natural gas operations; regulated electric operations; technologies; and power generation. These operations provide service to industrial, residential and commercial customers. Other businesses consist of natural gas gathering, processing, storage and natural gas supply management and technical facilities management. CU.X is voting and Class B, CU is non-voting and Class A. Its web site is here CU. See my spreadsheet at cu.htm.
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. See my website for stocks followed and investment notes. Follow me on twitter.
Dividend increases have been good. The 5 and 10 year growth in dividends runs at 6.5% and 5.3% per year respectively. The most recent dividend was a bit higher at 6.6%. Total return over the past 5 and 10 years was at 8% and 11.5% per year, respectively. Of this total return, dividends account for just over 3% of return.
From past performance you can probably expect a 3% dividend and a 6.5% capital gain, for a total average annual return of 9.5%. What you generally look for in a utility stock is 4% dividends and 4% capital gain. For this stock you get a bit less in dividends and a bit more in capital gain. On dividend growth stock, you expect that, over the long term, dividend increases will drive the stock price.
The Earnings per Share are not bad for this utility running at 10.7% and 6.8% per year, over the past 5 and 10 years. Earnings have been growing over the past few years. What hasn’t been growing is Revenue and Cash Flow. The worst of these is revenues per share and over the past 5 and 10 years this has grown at 1.3% and 0% per year. A good thing to point out is that the 1st Quarterly revenue for 2011 is up some 6.6% from the 1st Quarter of 2010.
Cash Flow per share has been a bit better, growing over the past 5 and 10 years at 2.4% and 4.2% per year respectively. Analysts seem to expect better growth for 2011 and 2012 with growth at 11.8% for 2011 and 8.9% for 2012. Book Value is growing nicely at 8% per year over the past 5 and 10 years. Return on Equity has always been good and this stock has a 5 year median ROE of 14.6%.
When looking at debt ratios involving assets and liabilities, these ratios have always been quite good. The Liquidity Ratio is current at 1.90 and has a 5 year median rate of 2.83. The Asset/Liability Ratio is currently at 1.68 and has a 5 year median of 1.75.
The other debt ratios of Leverage and Asset/Equity are high, but better than for ATCO. The current ones are 3.16 for the Leverage Ratio and 1.88 for the Asset/Equity Ratio. Utility companies tend to have a lot of debt compared with equity. See my site for further information on Debt Ratios. )
When buying dividend growth stock there is a trade off in between dividend yield and dividend increases. Generally speaking, the higher the yield the lower the dividend increases. This can show up in what is called “yield on cost”. That is if you bought the stock today, what would your yield be on today’s stock price in 10 or 15 years’ time? For this stock, the YOC would be 5% and 6.5% in 10 and 15 years’ time if dividend increases were 5.5% per year.
Canadian Utilities Limited operates in four business segments: regulated natural gas operations; regulated electric operations; technologies; and power generation. These operations provide service to industrial, residential and commercial customers. Other businesses consist of natural gas gathering, processing, storage and natural gas supply management and technical facilities management. CU.X is voting and Class B, CU is non-voting and Class A. Its web site is here CU. See my spreadsheet at cu.htm.
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. See my website for stocks followed and investment notes. Follow me on twitter.
Wednesday, August 3, 2011
ATCO Ltd 2
I do not own this stock (TSX-ACO.X). This would be the sort of stock to buy for dividend income and capital gain. You should also be interested in the dividend growth, as this is what will push up the long term capital gain. The 5 and 10 year dividend growth rate is 6.8% and 8.7%. The 5 and 10 year growth in the stock price is 8.2% and 9.8% per year, respectively. Your total return would be stock price growth, plus dividends. For this stock, dividends would add about 2% per year.
Since the growth in stock price over the past 5 and 10 years is higher than the growth in dividends, this would suggest that the current stock price is currently a bit high and this is shown by a rather high P/E ratios and low dividend yield. In theory, the market prices a stock based on future expectations, and not what has happened in the past.
The 5 year medina Price/Earnings Ratios has a low of 8.94 and a high of 12.05. The current P/E Ratio of 11.62 would be towards the high side. I get a Graham Price of 65.42 and the current stock price of $62.30 is 5% lower. However, for this stock, the stock price is usually lower than the Graham Price. Over the past 10 years this stock’s high price, usually been below the Graham Price by 5.79%. Both these items would suggest that the stock price is towards a high price.
The 10 year median Price/Book Value Ratio is 1.47 and the current P/B Ratio is 1.76. That would mean that the current ratio is some 20% higher than the 10 year median ratio and this also suggests a high current stock price. The last thing to look at is dividend yield. The current yield is 1.83 and the 5 year median yield is 2.01. This too suggests a rather high current stock price.
When I look at insider trading, what I find is insider selling at $1.2M and no insider buying. The insider selling is all by officers of the company and this was all done last year. The other thing to note is that the company is buying back non-voting shares (TSX-ACO.X). Also, 57 institutions own some 25% of this company. There has been both buying and selling over the past 3 months. There has been a net decreased in institutional holdings of 3.4% over this period.
When I look at analysts’ recommendations, I find Strong Buy, Buy and Hold recommendations. However, there are very few analysts following this stock. The Buy recommendation comes with a 12 month stock price of $69.50 which is an 11.6% increase and with dividend would be a total return of 13.4% over the next year. The Strong Buy comes with a 12 months stock price of $75. This would be a 20.4% increase and with dividends would work out to a total return of 22.2% over the next year.
The consensus recommendation on this stock is a Buy. One analyst said that the company should have strong earnings over the next few years in a low-risk regulated environment. Another said it is a diversified performer with a compatible set of businesses. This company has a very good record of increasing its dividends each year. An analyst remarked that the company gets most of its earnings from Canadian Utilities (TSX-CU).
There is an Wikipedia entry for this company. There is an article about this company in the Calgary Herald. The blogger GypsyTown had an entry on his blog about this company. Another blogger talks about the recent Australian purchase of Western Australia Gas Networks by ATCO.
ATCO LTD. is a management holding company with operating subsidiaries in electric and natural gas utility operations, independent power operations, production, storage, processing, gathering, delivery of natural gas, technical facilities management for the industrial, defense and transportation sectors, the manufacture, sale and leasing of industrial shelters and industrial noise abatement technologies. ATCO has just over a 50% stake in Canadian Utilities Ltd. The company utilizes a dual share structure of voting (ACO.Y) and non-voting shares (ACO.X). Its web site is here ATCO. See my spreadsheet at aco.htm.
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. See my website for stocks followed and investment notes. Follow me on twitter.
Since the growth in stock price over the past 5 and 10 years is higher than the growth in dividends, this would suggest that the current stock price is currently a bit high and this is shown by a rather high P/E ratios and low dividend yield. In theory, the market prices a stock based on future expectations, and not what has happened in the past.
The 5 year medina Price/Earnings Ratios has a low of 8.94 and a high of 12.05. The current P/E Ratio of 11.62 would be towards the high side. I get a Graham Price of 65.42 and the current stock price of $62.30 is 5% lower. However, for this stock, the stock price is usually lower than the Graham Price. Over the past 10 years this stock’s high price, usually been below the Graham Price by 5.79%. Both these items would suggest that the stock price is towards a high price.
The 10 year median Price/Book Value Ratio is 1.47 and the current P/B Ratio is 1.76. That would mean that the current ratio is some 20% higher than the 10 year median ratio and this also suggests a high current stock price. The last thing to look at is dividend yield. The current yield is 1.83 and the 5 year median yield is 2.01. This too suggests a rather high current stock price.
When I look at insider trading, what I find is insider selling at $1.2M and no insider buying. The insider selling is all by officers of the company and this was all done last year. The other thing to note is that the company is buying back non-voting shares (TSX-ACO.X). Also, 57 institutions own some 25% of this company. There has been both buying and selling over the past 3 months. There has been a net decreased in institutional holdings of 3.4% over this period.
When I look at analysts’ recommendations, I find Strong Buy, Buy and Hold recommendations. However, there are very few analysts following this stock. The Buy recommendation comes with a 12 month stock price of $69.50 which is an 11.6% increase and with dividend would be a total return of 13.4% over the next year. The Strong Buy comes with a 12 months stock price of $75. This would be a 20.4% increase and with dividends would work out to a total return of 22.2% over the next year.
The consensus recommendation on this stock is a Buy. One analyst said that the company should have strong earnings over the next few years in a low-risk regulated environment. Another said it is a diversified performer with a compatible set of businesses. This company has a very good record of increasing its dividends each year. An analyst remarked that the company gets most of its earnings from Canadian Utilities (TSX-CU).
There is an Wikipedia entry for this company. There is an article about this company in the Calgary Herald. The blogger GypsyTown had an entry on his blog about this company. Another blogger talks about the recent Australian purchase of Western Australia Gas Networks by ATCO.
ATCO LTD. is a management holding company with operating subsidiaries in electric and natural gas utility operations, independent power operations, production, storage, processing, gathering, delivery of natural gas, technical facilities management for the industrial, defense and transportation sectors, the manufacture, sale and leasing of industrial shelters and industrial noise abatement technologies. ATCO has just over a 50% stake in Canadian Utilities Ltd. The company utilizes a dual share structure of voting (ACO.Y) and non-voting shares (ACO.X). Its web site is here ATCO. See my spreadsheet at aco.htm.
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. See my website for stocks followed and investment notes. Follow me on twitter.
Tuesday, August 2, 2011
ATCO Ltd
I do not own this stock (TSX-ACO.X). However, it is a well-respected utility company. This company would be considered to be a dividend growth company. They are on one of the dividend lists that I follow of Dividend Aristocrats (see indices).
The dividend yield is rather low with a 5 year median dividend yield of just 2% and a current dividend yield even lower at 1.8%. Although the latest dividend increase was 7.5%, the dividend has grown over the past 5 years at around 6.8%. If bought today at the same rate of increase your dividends on cost would be around 3.5% in 10 years’ time.
This stock has rather low Dividend Payout Ratios. The 5 year median DPR on earning is just 21% and the 5 year DPR on Cash Flow is just 6.5%. The current DPR is currently around these same values. (See my site for information Dividend Payout Ratios). The Earnings per share (EPS) has been growing quite nicely lately with the 5 and 10 year growth in EPS at 15% and 10% per year, respectively.
Unfortunately, the cash flow has been growing slower with the 5 and 10 year growth rate at 5.5% and 6.3% per year respectively. The Revenue per Share has also been growing rather slowly lately with the 5 and 10 year growth rate at 4.5% and just 1.4% per year, respectively. Because they pay out a rather low percentage of the cash flow, there will be no trouble paying the dividend, nor increasing it over the next few years.
However, over the long term I would like to see better revenue growth. I might add there was a turnaround in revenue in 2010 with revenue growing a healthy 11%. Unfortunately, cash flow per share did not grow last year.
There are other good things to mentions, and one is the Book Value has increased over the past 5 and 10 years at 11.5% and 10.7% per year, respectively. The other thing is the Return on Equity. This has always been quite good. The 5 year median ROE is 14.5% and the one for the end of 2010 is 13.2%.
One good thing about this company is their assets cover their liabilities quite well. The Liquidity Ratio is currently at 1.96 and the Asset/Liability Ratio is at 1.72. Both these ratios are very good. Most utility companies have lots of debt and this company is no exception. The other two debt ratios that I follow of Leverage and Debt/Equity are a bit high, even for a utility company. At the end of the last quarterly report they were 5.00 and 2.90. They heavily finance their assets through debt rather than equity.
This is a well-managed company and its latest press release shows that it has a very good 2nd quarter. Tomorrow, I will look at what my spreadsheet ratios say about the current price and what analysts have to say about this stock.
ATCO LTD. is a management holding company with operating subsidiaries in electric and natural gas utility operations, independent power operations, production, storage, processing, gathering, delivery of natural gas, technical facilities management for the industrial, defense and transportation sectors, the manufacture, sale and leasing of industrial shelters and industrial noise abatement technologies. ATCO has just over a 50% stake in Canadian Utilities Ltd. The company utilizes a dual share structure of voting (ACO.Y) and non-voting shares (ACO.X). Its web site is here ATCO. See my spreadsheet at aco.htm.
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. See my website for stocks followed and investment notes. Follow me on twitter.
The dividend yield is rather low with a 5 year median dividend yield of just 2% and a current dividend yield even lower at 1.8%. Although the latest dividend increase was 7.5%, the dividend has grown over the past 5 years at around 6.8%. If bought today at the same rate of increase your dividends on cost would be around 3.5% in 10 years’ time.
This stock has rather low Dividend Payout Ratios. The 5 year median DPR on earning is just 21% and the 5 year DPR on Cash Flow is just 6.5%. The current DPR is currently around these same values. (See my site for information Dividend Payout Ratios). The Earnings per share (EPS) has been growing quite nicely lately with the 5 and 10 year growth in EPS at 15% and 10% per year, respectively.
Unfortunately, the cash flow has been growing slower with the 5 and 10 year growth rate at 5.5% and 6.3% per year respectively. The Revenue per Share has also been growing rather slowly lately with the 5 and 10 year growth rate at 4.5% and just 1.4% per year, respectively. Because they pay out a rather low percentage of the cash flow, there will be no trouble paying the dividend, nor increasing it over the next few years.
However, over the long term I would like to see better revenue growth. I might add there was a turnaround in revenue in 2010 with revenue growing a healthy 11%. Unfortunately, cash flow per share did not grow last year.
There are other good things to mentions, and one is the Book Value has increased over the past 5 and 10 years at 11.5% and 10.7% per year, respectively. The other thing is the Return on Equity. This has always been quite good. The 5 year median ROE is 14.5% and the one for the end of 2010 is 13.2%.
One good thing about this company is their assets cover their liabilities quite well. The Liquidity Ratio is currently at 1.96 and the Asset/Liability Ratio is at 1.72. Both these ratios are very good. Most utility companies have lots of debt and this company is no exception. The other two debt ratios that I follow of Leverage and Debt/Equity are a bit high, even for a utility company. At the end of the last quarterly report they were 5.00 and 2.90. They heavily finance their assets through debt rather than equity.
This is a well-managed company and its latest press release shows that it has a very good 2nd quarter. Tomorrow, I will look at what my spreadsheet ratios say about the current price and what analysts have to say about this stock.
ATCO LTD. is a management holding company with operating subsidiaries in electric and natural gas utility operations, independent power operations, production, storage, processing, gathering, delivery of natural gas, technical facilities management for the industrial, defense and transportation sectors, the manufacture, sale and leasing of industrial shelters and industrial noise abatement technologies. ATCO has just over a 50% stake in Canadian Utilities Ltd. The company utilizes a dual share structure of voting (ACO.Y) and non-voting shares (ACO.X). Its web site is here ATCO. See my spreadsheet at aco.htm.
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. See my website for stocks followed and investment notes. Follow me on twitter.
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