On my other blog I am today writing about why I think austerity measures do not work...continue...
I do not own this stock (TSX-BAM.A, NYSE-BAM). First of all, I should mention that this company has a long history of name changes. I bought it as Hees International between 1987 and 1990. I sold it as Edperbrascan in 1999. I made a return of 3.7% per year. I sold it as I felt the company was going nowhere. The company started to have problems in 1989 and I am glad a sold when I did.
When I look at insider trading I find no insider buying and $16.5M of insider selling. Not only are there options, but insiders have Deferred Share Units, Restricted Share Units, Restricted Shares-CDN and Restricted Shares-US.
I must admit that insiders do have a lot of shares, some in the $100M area. For example the CEO has stock worth $470M. However, since he has over 3M options and option like vehicles, it would not take that long to acquire his 14M shares via stock options. Insiders seem to have more shares than options, but there are millions and millions of options outstanding. A million shares are worth around $33M with today's share price.
It is only directors that have a more modest amount of options and option like vehicles. Director's options are worth more in line with $2M or less. There is also Subsidiary Executives who have shares and options and other options like vehicles for this company. Management is paying itself very well indeed.
There seems to be around 420 Institutions that hold some 62.51% of the outstanding shares of this company. Over the past 3 months they have increased their exposure marginally by 1.12%. This is for the Canadian market. On the US market, there is very low ownership, around 0.13% with 7 institutional holders and they have increased their exposure by 11%. However, overall increase by institutions is just 1.14%.
The 5 year low median and high median Price/Earnings ratios are 12.54, 20.21 and 27.89. The current P/E ratio is 28.47 based on a stock price of $33.15 CDN$ and 2012 earnings of 1.16 CDN$. This shows that the current stock price is relatively high.
I get a current Graham Price of $27.06 CDN$. The 10 year low, median and high median Price/Graham Price Ratios are 0.89, 1.28 and 1.59. The current P/GP Ratio based on $33.15CDN$ is 1.23. This ratio says that the current stock price is reasonable.
The 10 year median Price/Book Value is 1.89. The current P/B Ratio is 1.19 and this ratio is only some 62% of the 10 year median. This ratio suggests that the current stock price is low.
The 5 year median dividend yield is 1.89%. The current dividend yield is 1.73 a value that is 9% lower. This yield suggests that the stock price is on the high side, but it is not unreasonable. (The 10 year low dividend yield is 1.58%.)
The stock price tests results are rather mixed, but overall and giving preference to dividend yield and P/B Ratios, it would seem that the stock price is probably reasonable.
When I look at the analysts' recommendations, I find Strong Buy, Buy and Hold. The most recommendations are for Buy and the consensus recommendation is a Buy recommendation. The 12 months stock price is $38.57 CDN$. This suggests total returns of 18.08% with 1.73 from dividends and 16.35% from capital gains.
One analysts with a Buy recommendation suggested that institutional investments will go more strongly to real estate over the next 10 years because of the low yields on government bonds. The BAM management seems to be admired. Some analysts consider this company to be a REIT.
One analyst thought that if you wanted to buy this stock, you should get it at a better entry point (i.e. wait until it is relatively cheaper). Another thought the current yield was too low to be attractive. Another thought it was the biggest real estate name on the TSX, although it has a lot property in the US. Canaccord recently downgraded Brookfield Asset Management to a Hold in an article in the G&M. John Reese considers this stock one to beat the market, along with 9 others.
The management of this company certainly pays itself very well. The stock price seems to be currently reasonable on a number of different levels, but it is not cheap
This Canadian Asset Managing company invests in and operates a variety of assets on its own behalf as well as co-investors. It is focused on property, power and infrastructure assets. It operates in Canada, US and internationally. The subsidiaries of the Company are Brookfield Homes Corporation, Brookfield Properties Corporation, BPO Properties Limited, Multiplex, Brookfield Power Inc., Great Lakes Hydro Income Fund, Brascan Brasil, S.A., Brascan Residential Properties, S.A. and Brookfield Investments Corporation. Partners Ltd owns 17%. Its web site is here Brookfield. See my spreadsheet at bam.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 or StockTwits.
Monday, October 15, 2012
Friday, October 12, 2012
Brookfield Asset Management
First of all, I will be going to the Money Show next week on Thursday, Friday and Saturday. I will not be posting on all of these days. If I post, it will be on what I learn at this show.
I do not own this stock (TSX-BAM.A, NYSE-BAM). First of all, I should mention that this company has a long history of name changes. I bought it as Hees International between 1987 and 1990. I sold it as Edperbrascan in 1999. I made a return of 3.7% per year. I sold it as I felt the company was going nowhere. The company started to have problems in 1989 and I am glad a sold when I did.
Dividends are low (5 year median dividend yield at 1.89%, current yield is 1.73%) and growth is rather low at 5 and 10 year rates of 3.17% and 5.64% per year in CDN$ terms The growth is better in US$ terms at 5.92% and 10.44% over the past 5 and 10 years. However, if you are a Canadian, the growth in CDN$ terms is what you are really interested in. Still growth is not good in US$ terms considering that the dividend yield is lower than 2%.
Dividend Payout Ratios are good at 37.01% for earnings and 25.35% for cash for 5 year median values. The dividend yields are low, so low DPRs are expected. Earnings are expected to drop in 2012, so DPR for earnings in 2012 is expected to be around 48%.
Dividends were flat in 2010 and 2011. However, they were raised some 7.7% in US$ for 2012. The raise in CDN$ terms is lower at 5.7%. Canadian investors have not done as well as US investors as far as dividends are concerned. The other problems Canadians have in investing in this stock is that the dividends are paid in US$, so dividends will fluctuate constantly, depending on current exchange rate.
Total return for Canadian investors would be a negative return of 3.41% per year over the past 5 years and a positive 16.19% per year over the past 10 years. The dividend portions of the 5 and 10 year return would be 2.27% and 3.54% per year over these periods. The 5 year capital loss would be 5.68% per year. The 10 year capital gain would be 12.65%.
Total return for US investors would be a negative return of 0.77% per year over the past 5 years and a positive 21.76 per year over the past 10 years. The dividend portions of the 5 and 10 year return would be 2.30% and 3.91% per year over these periods. The 5 year capital loss would be 3.07% per year. The 10 year capital gain would be 17.84% per year.
The outstanding shares have increased marginally over the past 5 and 10 years at the rate of 1.26% per year and 0.78% per year, respectively. (The company has been buying back shares for cancellation.)
The company has had good revenue growth with growth over the past 5 and 10 years at 18.21% and 18.42% per year, respectively. Revenue per share growth is also good and over the past 5 and 10 years has increased by 16.75% and 17.50% per year, respectively. This growth is in US$. In CDN$ terms growth would be less.
The Earnings per Share growth is also good at 8.19% and 26.19% per year over the past 5 and 10 years. This growth is in US$ terms. In CDN$ terms growth is less. Also, EPS has fluctuated somewhat in the past and EPS is expected to be some 60% lower in 2012. The EPS over the past 12 months to June 2012 would seem to confirm this. So earnings growth is a lot less than it appears. The EPS for 2013 is expected to be better, but not that much better.
Cash Flow per Share has also fluctuated and it is down 8.54% per year over the past 5 years. However, it is up some 11.63% per year over the past 10 years. This growth is in US$ terms and growth in CDN$ terms is lower.
Book Value per Share growth looks very good. However, book value increased substantially because of the new accounting rules of IFRS. Book value growth is 23.88% and 19.20% per year over the past 5 and 10 years in US$ terms. It has grown at 20.65% and 14.02% per year over the past 5 and 10 years in CDN$ terms.
Return on Equity has been quite high over the past two years, with ROE for the financial year ending in December 2012 at 43.9%. The 5 year median is 14.2%. However, the ROE based on comprehensive income while also quite good also is a lot lower at 27.5% for the financial year ending in 2011. This implies that the earnings are not as good as they might appear. (ROE is the same in US$ and CDN$.)
Also, the EPS/CF Ratio is above 1.00 at 1.87 for the financial year of 2011. This ratio is also currently above 1.00 at 1.48. While this does not point to any particular problems, companies that have this ratio consistently over 1.00 tend to do worse than companies with this ratio under 1.00. (When this ratio is over 1.00, it says you should maybe caution.)
The current Liquidity Ratio is a bit low at 1.17. This ratio seems to fluctuate a lot, but is ok. The Debt Ratios have often been low, but the current ratio at 1.67 is good. The current Leverage and Debt/Equity Ratios are a bit high at 5.74 and 3.44, respectively, but have been higher.
It is not unusual today for companies reporting in US$ to do better in US$ than in CDN$ terms. Canadians have not done badly with this stock. However, it does have a low dividend yield with a rather lower dividend growth. So I think that Canadians could do better looking elsewhere.
This Canadian Asset Managing company invests in and operates a variety of assets on its own behalf as well as co-investors. It is focused on property, power and infrastructure assets. It operates in Canada, US and internationally. The subsidiaries of the Company are Brookfield Homes Corporation, Brookfield Properties Corporation, BPO Properties Limited, Multiplex, Brookfield Power Inc., Great Lakes Hydro Income Fund, Brascan Brasil, S.A., Brascan Residential Properties, S.A. and Brookfield Investments Corporation. Partners Ltd owns 17%. Its web site is here Brookfield. See my spreadsheet at bam.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 or StockTwits.
I do not own this stock (TSX-BAM.A, NYSE-BAM). First of all, I should mention that this company has a long history of name changes. I bought it as Hees International between 1987 and 1990. I sold it as Edperbrascan in 1999. I made a return of 3.7% per year. I sold it as I felt the company was going nowhere. The company started to have problems in 1989 and I am glad a sold when I did.
Dividends are low (5 year median dividend yield at 1.89%, current yield is 1.73%) and growth is rather low at 5 and 10 year rates of 3.17% and 5.64% per year in CDN$ terms The growth is better in US$ terms at 5.92% and 10.44% over the past 5 and 10 years. However, if you are a Canadian, the growth in CDN$ terms is what you are really interested in. Still growth is not good in US$ terms considering that the dividend yield is lower than 2%.
Dividend Payout Ratios are good at 37.01% for earnings and 25.35% for cash for 5 year median values. The dividend yields are low, so low DPRs are expected. Earnings are expected to drop in 2012, so DPR for earnings in 2012 is expected to be around 48%.
Dividends were flat in 2010 and 2011. However, they were raised some 7.7% in US$ for 2012. The raise in CDN$ terms is lower at 5.7%. Canadian investors have not done as well as US investors as far as dividends are concerned. The other problems Canadians have in investing in this stock is that the dividends are paid in US$, so dividends will fluctuate constantly, depending on current exchange rate.
Total return for Canadian investors would be a negative return of 3.41% per year over the past 5 years and a positive 16.19% per year over the past 10 years. The dividend portions of the 5 and 10 year return would be 2.27% and 3.54% per year over these periods. The 5 year capital loss would be 5.68% per year. The 10 year capital gain would be 12.65%.
Total return for US investors would be a negative return of 0.77% per year over the past 5 years and a positive 21.76 per year over the past 10 years. The dividend portions of the 5 and 10 year return would be 2.30% and 3.91% per year over these periods. The 5 year capital loss would be 3.07% per year. The 10 year capital gain would be 17.84% per year.
The outstanding shares have increased marginally over the past 5 and 10 years at the rate of 1.26% per year and 0.78% per year, respectively. (The company has been buying back shares for cancellation.)
The company has had good revenue growth with growth over the past 5 and 10 years at 18.21% and 18.42% per year, respectively. Revenue per share growth is also good and over the past 5 and 10 years has increased by 16.75% and 17.50% per year, respectively. This growth is in US$. In CDN$ terms growth would be less.
The Earnings per Share growth is also good at 8.19% and 26.19% per year over the past 5 and 10 years. This growth is in US$ terms. In CDN$ terms growth is less. Also, EPS has fluctuated somewhat in the past and EPS is expected to be some 60% lower in 2012. The EPS over the past 12 months to June 2012 would seem to confirm this. So earnings growth is a lot less than it appears. The EPS for 2013 is expected to be better, but not that much better.
Cash Flow per Share has also fluctuated and it is down 8.54% per year over the past 5 years. However, it is up some 11.63% per year over the past 10 years. This growth is in US$ terms and growth in CDN$ terms is lower.
Book Value per Share growth looks very good. However, book value increased substantially because of the new accounting rules of IFRS. Book value growth is 23.88% and 19.20% per year over the past 5 and 10 years in US$ terms. It has grown at 20.65% and 14.02% per year over the past 5 and 10 years in CDN$ terms.
Return on Equity has been quite high over the past two years, with ROE for the financial year ending in December 2012 at 43.9%. The 5 year median is 14.2%. However, the ROE based on comprehensive income while also quite good also is a lot lower at 27.5% for the financial year ending in 2011. This implies that the earnings are not as good as they might appear. (ROE is the same in US$ and CDN$.)
Also, the EPS/CF Ratio is above 1.00 at 1.87 for the financial year of 2011. This ratio is also currently above 1.00 at 1.48. While this does not point to any particular problems, companies that have this ratio consistently over 1.00 tend to do worse than companies with this ratio under 1.00. (When this ratio is over 1.00, it says you should maybe caution.)
The current Liquidity Ratio is a bit low at 1.17. This ratio seems to fluctuate a lot, but is ok. The Debt Ratios have often been low, but the current ratio at 1.67 is good. The current Leverage and Debt/Equity Ratios are a bit high at 5.74 and 3.44, respectively, but have been higher.
It is not unusual today for companies reporting in US$ to do better in US$ than in CDN$ terms. Canadians have not done badly with this stock. However, it does have a low dividend yield with a rather lower dividend growth. So I think that Canadians could do better looking elsewhere.
This Canadian Asset Managing company invests in and operates a variety of assets on its own behalf as well as co-investors. It is focused on property, power and infrastructure assets. It operates in Canada, US and internationally. The subsidiaries of the Company are Brookfield Homes Corporation, Brookfield Properties Corporation, BPO Properties Limited, Multiplex, Brookfield Power Inc., Great Lakes Hydro Income Fund, Brascan Brasil, S.A., Brascan Residential Properties, S.A. and Brookfield Investments Corporation. Partners Ltd owns 17%. Its web site is here Brookfield. See my spreadsheet at bam.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 or StockTwits.
Thursday, October 11, 2012
ATCO Ltd 2
On my other blog I am today writing about what I think of a U of T lecture series a friend of my mine wanted to go to. The lecture series seemed to be a series about conspiracy theories galore... continue...
I do not own this stock (TSX-ACO.X). I have followed this stock for some time. It is a utility stock that has been and is still on the dividend lists that I follow of Dividend Achievers (see resources) and Dividend Aristocrats (see indices). Some consider this stock to be a dividend growth stock.
When I look at insider trading I find $1.4M of insider buying and $0.9M of insider selling with a net of insider buying of $0.5M. This company not only has options but also Share Appreciation Rights (SARs). There seems to be an awful lot of options and rights outstanding.
Both the CEO and CFO have lots of these options and rights and far more of these than actual shares. However, they both own shares worth in the millions (5 to 7 million). There are also lots of officers with options and rights. As a group, officers have lots more options and rights than shares. There are also subsidiary Executives who have rights and options. They seem to have more options and rights than actual shares. It is only the directors who have no options or rights, but they do not own much in shares either.
There are voting shares (TSX-ACO.Y) and non-voting shares (TSX-ACO.X). Ronald Southern owns around 84% of the voting shares and therefore controls the company. There only seems to be minimal amount of institutional ownership of shares.
The 5 year low, median and high median Price/Earnings Ratios are 8.94, 10.49 and 11.73. The current P/E Ratio of 12.09 on stock price of $75.17 and 2012 Earnings of 6.22 show a relatively high stock price, but not excessively high stock price. (Note 10 year median P/E Ratios are similar to the 5 year median ratios.)
I get a Graham Price of $74.38. The 10 year low, median and high median Price/Graham Price Ratios are 0.69, 0.79 and 0.97. The current ratio of 1.01 again shows a relatively high current stock price, but not an excessively high stock price.
I get a 10 year Price/Book Value per share Ratio of 1.48 and a current P/B Ratio of 1.90. The current ratio is some 29% higher than the 10 year ratio. This shows a relatively high stock price.
The 5 year median dividend yield is 2.01% and the current dividend yield is 1.74%. The current one is almost 14% lower than the 5 year median yield. This shows that the current stock price is relatively high. (Note that the 10 year median low dividend yield is 1.77%.)
All my stock tests show the same trend and that is a current relatively high stock price.
When I look at analysts' recommendations, I find Buy and Hold recommendations. Most recommendations are a Hold. The consensus 12 months stock price is $80.80. This implies a total return of $9.23, with 7.49% from capital gain and 1.74% from dividend income.
One Analyst with a Buy recommendation gives a 12 month stock price of $87.00. (This implies a 17.48% total return with 15.74% from capital gain.) They considered this stock to be a low risk stock. Another with a buy recommendation said it was a "Great western Canadian success story".
Globe Investor Number Cruncher on September 17 mentioned this stock in their story on "In the value hunt, these bargain stocks measure up". They were looking for stock with P/E lower than the market average. (I always look at P/E relative to this stock and also consider P/E on similar stocks. In my experience the P/E for utilities tend to be relatively lower than the market average. See the MacLeod Gazette for an item on the historical background of this company.
I still think this is a good company. However, along with a lot of Canadian utility stocks, the stock price is relatively high.
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 50% stake in Canadian Utilities Ltd. The company utilizes a dual share structure of voting and non-voting shares. 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 or StockTwits.
I do not own this stock (TSX-ACO.X). I have followed this stock for some time. It is a utility stock that has been and is still on the dividend lists that I follow of Dividend Achievers (see resources) and Dividend Aristocrats (see indices). Some consider this stock to be a dividend growth stock.
When I look at insider trading I find $1.4M of insider buying and $0.9M of insider selling with a net of insider buying of $0.5M. This company not only has options but also Share Appreciation Rights (SARs). There seems to be an awful lot of options and rights outstanding.
Both the CEO and CFO have lots of these options and rights and far more of these than actual shares. However, they both own shares worth in the millions (5 to 7 million). There are also lots of officers with options and rights. As a group, officers have lots more options and rights than shares. There are also subsidiary Executives who have rights and options. They seem to have more options and rights than actual shares. It is only the directors who have no options or rights, but they do not own much in shares either.
There are voting shares (TSX-ACO.Y) and non-voting shares (TSX-ACO.X). Ronald Southern owns around 84% of the voting shares and therefore controls the company. There only seems to be minimal amount of institutional ownership of shares.
The 5 year low, median and high median Price/Earnings Ratios are 8.94, 10.49 and 11.73. The current P/E Ratio of 12.09 on stock price of $75.17 and 2012 Earnings of 6.22 show a relatively high stock price, but not excessively high stock price. (Note 10 year median P/E Ratios are similar to the 5 year median ratios.)
I get a Graham Price of $74.38. The 10 year low, median and high median Price/Graham Price Ratios are 0.69, 0.79 and 0.97. The current ratio of 1.01 again shows a relatively high current stock price, but not an excessively high stock price.
I get a 10 year Price/Book Value per share Ratio of 1.48 and a current P/B Ratio of 1.90. The current ratio is some 29% higher than the 10 year ratio. This shows a relatively high stock price.
The 5 year median dividend yield is 2.01% and the current dividend yield is 1.74%. The current one is almost 14% lower than the 5 year median yield. This shows that the current stock price is relatively high. (Note that the 10 year median low dividend yield is 1.77%.)
All my stock tests show the same trend and that is a current relatively high stock price.
When I look at analysts' recommendations, I find Buy and Hold recommendations. Most recommendations are a Hold. The consensus 12 months stock price is $80.80. This implies a total return of $9.23, with 7.49% from capital gain and 1.74% from dividend income.
One Analyst with a Buy recommendation gives a 12 month stock price of $87.00. (This implies a 17.48% total return with 15.74% from capital gain.) They considered this stock to be a low risk stock. Another with a buy recommendation said it was a "Great western Canadian success story".
Globe Investor Number Cruncher on September 17 mentioned this stock in their story on "In the value hunt, these bargain stocks measure up". They were looking for stock with P/E lower than the market average. (I always look at P/E relative to this stock and also consider P/E on similar stocks. In my experience the P/E for utilities tend to be relatively lower than the market average. See the MacLeod Gazette for an item on the historical background of this company.
I still think this is a good company. However, along with a lot of Canadian utility stocks, the stock price is relatively high.
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 50% stake in Canadian Utilities Ltd. The company utilizes a dual share structure of voting and non-voting shares. 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 or StockTwits.
Wednesday, October 10, 2012
ATCO Ltd
I do not own this stock (TSX-ACO.X). I have followed this stock for some time. It is a utility stock that has been and is still on the dividend lists that I follow of Dividend Achievers (see resources) and Dividend Aristocrats (see indices). Some consider this stock to be a dividend growth stock.
The dividend has always been quite low with a 5 year median dividend yield of just 2%. The 5 and 10 year growth in dividends is at 6.8% and 8.2% per year, respectively. So dividend is low and the increases are also low to moderate. The exception is the increase for 2012, and this increase is at 14.9%. However, before 2001, especially in the 1990's, dividend increases were higher around 14% per year.
Dividend increases mean a lot for the future income to long term investors. In 15 years' time using current dividend of 1.74% and current 5 year growth of 6.81% would get you a 4.68% return on your original stock purchase. However, if you look at what people are getting who invested in this company 15 years ago, the current yield on your original investment would be 9% to 13%.
The Dividend Payout Ratios are quite good with the 5 year median DPR for earnings at 20.49% and for cash flow at 6.17%. The DPRs for 2011 financial year were comparable at 20.21% and 4.44%. The DPRs for 2012 are expected to be slightly higher at 21.06 and 9.11%. These are all quite low DPRs. Their policy provides decent dividends to shareholders and leaves money for the company to grow.
Total return over the past 5 and 10 years is at 5.54% and 12.27% per year. The portion of this growth attributable to dividends is 1.85% and 2.34% per year over the past 5 and 10 years. Dividends make up 33% and 19% of the total return over these periods. The portion of the total return attributable to capital gain was 3.69% and 9.93% per year over these periods.
The shares outstanding have gone down slightly over the past 5 and 10 years, with the decline at 0.25% and 0.30% per year over the past 5 and 10 years, respectively. Basically the company has purchased back enough shares to cover stock options exercised.
Over the last 5 and 10 years, revenue has grown at 6.9% and 0.6% per year, respectively. Over the last 5 and 10 years revenue per share has grown at the rate of 7.2% and 0.9% per year, respectively.
The Earnings per Share has done quite a bit better with growth at 10.3% and 10.6% per year over the past 5 and 10 years. Cash flow is even better at 15% and 11% per year over the past 5 and 10 years. Even book value per share has grown not badly at 8.8% and 9.4% per year over the past 5 and 10 years.
Last year was a very good year for Return on Equity. The ROE was extremely good at 27.6%. However, the ROE based on comprehensive income was lower by some 18% coming in at 22.7%. Mind you, 22.7% is still a very good number. However, it points to the fact that the net income may not be quite as good as it first looks like.
The 5 year median ROE based on net income is 15.3%. The 5 year median ROE based on comprehensive income is not far off at 14.3%. These are also good values.
The current Liquidity Ratio at 1.33 is rather low and it is much lower than the 5 year median Liquidity Ratio of 2.24. The Liquidity Ratio for the end of the financial year of 2011 was better at 1.62. The current Debt Ratio was also lower at 1.57. The Debt Ratio for the financial year of 2011 was also better at 1.60. The 5 year median Debt Ratio is also higher at 1.74. In the first half of 2012 the company took out $309M of long term debt to finance capital expenditures.
The Leverage Ratio is rather high at 5.76. Although, I must admit that this company has always had a high Leverage Ratio. The 10 year median Leverage Ratio is 5.49. The Debt/Equity Ratio is also high at 3.60. However, other utilities have Debt/Equity Ratios in this range.
Bye and large, this company has done well considering what the economic climate has been over the past few years. It is holding its own and making money for its shareholders. It has a long record of dividend increases. The management obviously expects 2012 to be a good year as it raised its dividend 14.9%. This is a lot higher than the recent years of 7 to 8% increases.
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 50% stake in Canadian Utilities Ltd. The company utilizes a dual share structure of voting and non-voting shares. 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 or StockTwits.
The dividend has always been quite low with a 5 year median dividend yield of just 2%. The 5 and 10 year growth in dividends is at 6.8% and 8.2% per year, respectively. So dividend is low and the increases are also low to moderate. The exception is the increase for 2012, and this increase is at 14.9%. However, before 2001, especially in the 1990's, dividend increases were higher around 14% per year.
Dividend increases mean a lot for the future income to long term investors. In 15 years' time using current dividend of 1.74% and current 5 year growth of 6.81% would get you a 4.68% return on your original stock purchase. However, if you look at what people are getting who invested in this company 15 years ago, the current yield on your original investment would be 9% to 13%.
The Dividend Payout Ratios are quite good with the 5 year median DPR for earnings at 20.49% and for cash flow at 6.17%. The DPRs for 2011 financial year were comparable at 20.21% and 4.44%. The DPRs for 2012 are expected to be slightly higher at 21.06 and 9.11%. These are all quite low DPRs. Their policy provides decent dividends to shareholders and leaves money for the company to grow.
Total return over the past 5 and 10 years is at 5.54% and 12.27% per year. The portion of this growth attributable to dividends is 1.85% and 2.34% per year over the past 5 and 10 years. Dividends make up 33% and 19% of the total return over these periods. The portion of the total return attributable to capital gain was 3.69% and 9.93% per year over these periods.
The shares outstanding have gone down slightly over the past 5 and 10 years, with the decline at 0.25% and 0.30% per year over the past 5 and 10 years, respectively. Basically the company has purchased back enough shares to cover stock options exercised.
Over the last 5 and 10 years, revenue has grown at 6.9% and 0.6% per year, respectively. Over the last 5 and 10 years revenue per share has grown at the rate of 7.2% and 0.9% per year, respectively.
The Earnings per Share has done quite a bit better with growth at 10.3% and 10.6% per year over the past 5 and 10 years. Cash flow is even better at 15% and 11% per year over the past 5 and 10 years. Even book value per share has grown not badly at 8.8% and 9.4% per year over the past 5 and 10 years.
Last year was a very good year for Return on Equity. The ROE was extremely good at 27.6%. However, the ROE based on comprehensive income was lower by some 18% coming in at 22.7%. Mind you, 22.7% is still a very good number. However, it points to the fact that the net income may not be quite as good as it first looks like.
The 5 year median ROE based on net income is 15.3%. The 5 year median ROE based on comprehensive income is not far off at 14.3%. These are also good values.
The current Liquidity Ratio at 1.33 is rather low and it is much lower than the 5 year median Liquidity Ratio of 2.24. The Liquidity Ratio for the end of the financial year of 2011 was better at 1.62. The current Debt Ratio was also lower at 1.57. The Debt Ratio for the financial year of 2011 was also better at 1.60. The 5 year median Debt Ratio is also higher at 1.74. In the first half of 2012 the company took out $309M of long term debt to finance capital expenditures.
The Leverage Ratio is rather high at 5.76. Although, I must admit that this company has always had a high Leverage Ratio. The 10 year median Leverage Ratio is 5.49. The Debt/Equity Ratio is also high at 3.60. However, other utilities have Debt/Equity Ratios in this range.
Bye and large, this company has done well considering what the economic climate has been over the past few years. It is holding its own and making money for its shareholders. It has a long record of dividend increases. The management obviously expects 2012 to be a good year as it raised its dividend 14.9%. This is a lot higher than the recent years of 7 to 8% increases.
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 50% stake in Canadian Utilities Ltd. The company utilizes a dual share structure of voting and non-voting shares. 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 or StockTwits.
Tuesday, October 9, 2012
Keyera Corp 2
On my other blog I am today writing about the Dividend Growth Index, of which I am a member ...
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I do not own this stock (TSX-Key). This stock is also an x-income trust stock. The stock started out as KeySpan Facilities Income Fund (TSX-KEY.UN). Then name was changed in 2004 to Keyera Facilities Income Fund (TSX-KEY.UN). In 2010 it converted to a corporation and changed its name to Keyera Corp (TSX-KEY).
The Insider Trading report shows no insider buying and some insider selling at $0.5M. I do not see any options, but there are option like vehicles, like Rights Performance Share Awards, Rights Restricted Share Awards and Rights Share Awards. Lots of insiders have more of these option-like vehicles than shares, including CFO and officers. Directors only seem to have common shares.
The information on institutional investors seems inconsistent. However, institutions seem to be increasing their investment in this company. This is a positive. However, you might want to discount this because of inconsistencies in reporting.
I get 5 year low median and high median Price/Earnings Ratios of 13.14, 16.52 and 19.90. I get a current P/E Ratio of 27.42. This is based on EPS for 2012 at $1.79 and a stock price of $49.08. This test suggests that the current stock price is relatively high. The 10 year high median P/E Ratio is higher than the 5 year at 24.26. Even at this, the current stock price seems to be on the high side.
I get a Graham Number of $21.37. The low, median and high median Price/Graham Price Ratios are 1.03, 1.26 and 1.52. Using a current stock price of $49.08, I get a current P/GP Ratio of 2.30. This high ratio suggests that the stock price is relatively high.
I get a 10 year median Price/Book Value per Share Ratio of 2.08. The current P/B Ratio is 4.33. The current P/B Ratio is more than twice higher than the current one and also suggests that the current stock price is relatively high. Mitigating circumstances is the book value per shares has been falling partly due to new accounting rules and partly due to the change from an income fund to a corporation.
The last test is the dividend yield test and the 5 year dividend yield at 8.29% is some 50% higher than the current dividend yield of 4.16%. However, this was an income trust and most income trusts were expected to have their dividend reduced to a 4 to 5% range. This is what has occurred here.
However, there is no measure I can see that will say that the current price is not relatively high. This includes the Price/Cash Flow Ratio and Price/Sales ratios also. Also, I note that the current stock price is not quite up to the highest ever, but is it is very close. This stock hit its highest level ever in January 2012.
When I look at the analysts' recommendations, I find Buy and Hold recommendations. Because there are more Buy recommendations than Hold recommendations, the consensus recommendation is a Buy. Analysts' recommendations also depend where you look. At least one site shows some Strong Buy recommendations. However, the consensus is the same at a Buy recommendation. The 12 month consensus stock price is $50.90. This implies a total return of 7.87% with 4.16% from dividends and 3.71% from capital gains.
One analyst with a Hold recommendation has a 12 months stock price at $48.00, which is a bit lower than the current stock price. Davis Rea's John O'Connell says on September 12, 2012, that this stock is one of his top picks.
One analyst with a Buy recommendation thought it is a well-run company. Another thought the company was a long term buy. Another thought it had a good record for dividend increases and a number of analysts remarked on the good 4% dividend.
I am a long term investor. What I have found is that to pay more than a reasonable price for a stock greatly affects your long term return on a stock. Part of the problem is that this year is not turning out to be a great one for this company. However, the main reason that the stock price is relatively high is that the stock has had a great run recently and the stock price is up 178% since 2008.
Keyera provides essential services and products to oil and gas producers in western Canada, and markets related natural gas liquids (NGLs) throughout North America. Its web site is here Keyera. See my spreadsheet at key.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 or StockTwits.
I do not own this stock (TSX-Key). This stock is also an x-income trust stock. The stock started out as KeySpan Facilities Income Fund (TSX-KEY.UN). Then name was changed in 2004 to Keyera Facilities Income Fund (TSX-KEY.UN). In 2010 it converted to a corporation and changed its name to Keyera Corp (TSX-KEY).
The Insider Trading report shows no insider buying and some insider selling at $0.5M. I do not see any options, but there are option like vehicles, like Rights Performance Share Awards, Rights Restricted Share Awards and Rights Share Awards. Lots of insiders have more of these option-like vehicles than shares, including CFO and officers. Directors only seem to have common shares.
The information on institutional investors seems inconsistent. However, institutions seem to be increasing their investment in this company. This is a positive. However, you might want to discount this because of inconsistencies in reporting.
I get 5 year low median and high median Price/Earnings Ratios of 13.14, 16.52 and 19.90. I get a current P/E Ratio of 27.42. This is based on EPS for 2012 at $1.79 and a stock price of $49.08. This test suggests that the current stock price is relatively high. The 10 year high median P/E Ratio is higher than the 5 year at 24.26. Even at this, the current stock price seems to be on the high side.
I get a Graham Number of $21.37. The low, median and high median Price/Graham Price Ratios are 1.03, 1.26 and 1.52. Using a current stock price of $49.08, I get a current P/GP Ratio of 2.30. This high ratio suggests that the stock price is relatively high.
I get a 10 year median Price/Book Value per Share Ratio of 2.08. The current P/B Ratio is 4.33. The current P/B Ratio is more than twice higher than the current one and also suggests that the current stock price is relatively high. Mitigating circumstances is the book value per shares has been falling partly due to new accounting rules and partly due to the change from an income fund to a corporation.
The last test is the dividend yield test and the 5 year dividend yield at 8.29% is some 50% higher than the current dividend yield of 4.16%. However, this was an income trust and most income trusts were expected to have their dividend reduced to a 4 to 5% range. This is what has occurred here.
However, there is no measure I can see that will say that the current price is not relatively high. This includes the Price/Cash Flow Ratio and Price/Sales ratios also. Also, I note that the current stock price is not quite up to the highest ever, but is it is very close. This stock hit its highest level ever in January 2012.
When I look at the analysts' recommendations, I find Buy and Hold recommendations. Because there are more Buy recommendations than Hold recommendations, the consensus recommendation is a Buy. Analysts' recommendations also depend where you look. At least one site shows some Strong Buy recommendations. However, the consensus is the same at a Buy recommendation. The 12 month consensus stock price is $50.90. This implies a total return of 7.87% with 4.16% from dividends and 3.71% from capital gains.
One analyst with a Hold recommendation has a 12 months stock price at $48.00, which is a bit lower than the current stock price. Davis Rea's John O'Connell says on September 12, 2012, that this stock is one of his top picks.
One analyst with a Buy recommendation thought it is a well-run company. Another thought the company was a long term buy. Another thought it had a good record for dividend increases and a number of analysts remarked on the good 4% dividend.
I am a long term investor. What I have found is that to pay more than a reasonable price for a stock greatly affects your long term return on a stock. Part of the problem is that this year is not turning out to be a great one for this company. However, the main reason that the stock price is relatively high is that the stock has had a great run recently and the stock price is up 178% since 2008.
Keyera provides essential services and products to oil and gas producers in western Canada, and markets related natural gas liquids (NGLs) throughout North America. Its web site is here Keyera. See my spreadsheet at key.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 or StockTwits.
Friday, October 5, 2012
Keyera Corp
I do not own this stock (TSX-KEY). The stock started out as KeySpan Facilities Income Fund (TSX-KEY.UN). Then name was changed in 2004 to Keyera Facilities Income Fund (TSX-KEY.UN). In 2010 it converted to a corporation and changed its name to Keyera Corp (TSX-KEY). This was one of the stocks recommended by Jennifer Dowty from a column she wrote and I reviewed in February 2010 on Special Dividends paid. See Dividends and Special Dividends.
As with other utilities stock, this stock has a good dividend at 4.16%. The Dividend Payout Ratios are high with 5 year median DPR at 99.45% for earnings and 76.34% for cash flow. The DPR for earnings is expected to be over 100% in both 2012 and 2013. This company does have to get their DPR for earnings at a more reasonable rate, but they do have some tax pools which affect taxes they have to pay and also what is available for distributions.
The company obviously seems confident in its distribution rate as they raised the dividends by 6.3% at the end of 2011. However, they will have to get their DPRs in line in the near future. Dividend increases have been slowing down. The growth in dividends is 5.9% per year and 16.9% per year over the past 5 and 8 years.
Except for book value, the growth values on this company are very good. The outstanding shares have been increasing at the rate of 3.3% and 19.7% over the past 3 and 8 years, respectively. So far this year outstanding shares have increased by 7.5%. The majority of this was an equity issue. They had an acquisition. They also issued some shares because of their DRIP plan and also for some debenture conversion.
Revenue has grown at the rate of 13.4% and 104% per year over the past 5 and 8 years. The Revenue per share has grown at the rate of 9.8% and 70.4% per year over the past 5 and 8 years. The difference between these growth rates is, of course, because of issuance of new shares. However, the growth rate per share is a good one. (This company only went public in 2003.)
Earnings per Share have grown at the rate of 11.6% and 18% per year over the past 5 and 8 years. Cash Flow has grown at the rate of 15.9% and 18.2% per year over the past 5 and 8 years.
Book value per share has been declining recently with the decline over the past 5 years at 1.6% per year. There is a slight increase in book value per share over the past 8 years at 0.4% per year. (This company has over some of the past years made distributions that were higher than their income.)
Until 2008, the Return on Equity on this company was very low. The ROE for the financial year 2011 was very good at 20.2%. The company also has a 5 year median ROE of 20.2%. The ROE based on comprehensive income is the same as the net income and it was at 20.2% for the 2011 financial year.
This looks like a solid utilities stock with quite good growth. This company will need to get their Dividend Payout Ratio lower.
Keyera provides essential services and products to oil and gas producers in western Canada, and markets related natural gas liquids (NGLs) throughout North America. Its web site is here Keyera. See my spreadsheet at key.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.
As with other utilities stock, this stock has a good dividend at 4.16%. The Dividend Payout Ratios are high with 5 year median DPR at 99.45% for earnings and 76.34% for cash flow. The DPR for earnings is expected to be over 100% in both 2012 and 2013. This company does have to get their DPR for earnings at a more reasonable rate, but they do have some tax pools which affect taxes they have to pay and also what is available for distributions.
The company obviously seems confident in its distribution rate as they raised the dividends by 6.3% at the end of 2011. However, they will have to get their DPRs in line in the near future. Dividend increases have been slowing down. The growth in dividends is 5.9% per year and 16.9% per year over the past 5 and 8 years.
Except for book value, the growth values on this company are very good. The outstanding shares have been increasing at the rate of 3.3% and 19.7% over the past 3 and 8 years, respectively. So far this year outstanding shares have increased by 7.5%. The majority of this was an equity issue. They had an acquisition. They also issued some shares because of their DRIP plan and also for some debenture conversion.
Revenue has grown at the rate of 13.4% and 104% per year over the past 5 and 8 years. The Revenue per share has grown at the rate of 9.8% and 70.4% per year over the past 5 and 8 years. The difference between these growth rates is, of course, because of issuance of new shares. However, the growth rate per share is a good one. (This company only went public in 2003.)
Earnings per Share have grown at the rate of 11.6% and 18% per year over the past 5 and 8 years. Cash Flow has grown at the rate of 15.9% and 18.2% per year over the past 5 and 8 years.
Book value per share has been declining recently with the decline over the past 5 years at 1.6% per year. There is a slight increase in book value per share over the past 8 years at 0.4% per year. (This company has over some of the past years made distributions that were higher than their income.)
Until 2008, the Return on Equity on this company was very low. The ROE for the financial year 2011 was very good at 20.2%. The company also has a 5 year median ROE of 20.2%. The ROE based on comprehensive income is the same as the net income and it was at 20.2% for the 2011 financial year.
This looks like a solid utilities stock with quite good growth. This company will need to get their Dividend Payout Ratio lower.
Keyera provides essential services and products to oil and gas producers in western Canada, and markets related natural gas liquids (NGLs) throughout North America. Its web site is here Keyera. See my spreadsheet at key.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, October 4, 2012
Northland Power Inc 2
I do not own this stock of Northland Power Inc. (TSX-NPI). This company is into generating electric power. I have a lot invested in pipelines and I would like to have more invested in electric power as my utilities investment. I read a report on this stock last year that said it was a good defensive stock to buy. That is, it is a good stock to hold in a stock market correction. I can certainly see the logic of using utility stocks as defensive stocks.
When I look at insider trading, I find minimal trading with $0.10 insider buying and $0.14 insider selling. Insiders do not have options, but some have what is called "Replacement Rights" and these rights are convertible into shares. They were issued in connection with the merger with NPI. I would again like to point out one thing that I mentioned yesterday and that is that most of the convertible shares are owned by the previous Chairman of the Board. Because of the convertible and common shares he owns, I calculate that he owns around 70% of the outstanding shares.
There are 2 institutions that have shares in this company and own 0.55% of the company. Over the past 3 months they have decreased their shares by 40%. One institution closed their position and one institution decreased their position in this company. (There are inconsistencies in this report, because when I looked on September 29, it was reported that 5 institutions held 1.81% of the shares.)
When I look at 5 year low, median and high median Price/Earnings Ratios, I get 9.40, 11.28 and 13.16. Note that there are problems with looking as over the past 5 years as the company had two negative earning years. The 10 year low, median and high median P/E Ratios are 17.58, 19.66 and 20.93. Because so little is expected in earnings this year, I get a current P/E of 136.71 and a forward P/E of 54.69. This certainly shows that the stock price is relatively and absolutely high.
I get a current Graham Price of $3.97. The 10 year low, median and high median Price/Graham Price Ratio are 1.03, 1.17 and 1.34. I get a current P/GP Ratio of 4.83 and this high ratio a very high relative stock price. The problem with this test is that the Graham Price has been falling lately because of bad earning years and dropping book value. As recently as 2009, Graham Price was $9.94. As the Graham Price has fallen, the P/GP Ratio has been raising.
I get a 10 year median Price/Book Value per share Ratio of 1.75. The current P/B Ratio is 3.83. This current ratio is some 118% higher than the 10 year ratio.
The 5 year median dividend yield is 8.48%. The current yield is 5.64%. Although the 5 year median dividend yield is high and the current one is a good one, it is some 33% lower. You normally would want a higher dividend yield currently than the 5 year median.
Looking quickly at other measures, I get a 10 year Price/Sales Ratio of 4.87 and a current one of 6.62. A better price is with a lower current ratio than the 10 year median one. The 10 year median Price/Cash Flow ratio is 11.41 and the current one, based on last 12 month's cash flow is 14.72. Here again, a better price is a lower ratio.
All tests point to a very high relative current stock price. This stock is having trouble making a profit and the price does not seem to reflect that. I know we price stock based on what we think that the future holds, but it would appear that the current price is relatively high.
When I look at analysts' recommendations, I find Strong Buy, Buy and Hold. The vast majority of the recommendations are a Hold. The consensus recommendation would be a Hold. The 12 month stock price is $19.00. This implies a capital loss of 0.73%, dividend yield at 5.64% for a total return of 4.91%.
A couple of analysts have mentioned that the Dividend Payout Ratio is too high. One analyst thought the management team was very good. Another thought that the DPR will be around 80% in a couple of years. Note that this company has outperformed the TSX Index and the TSX Utilities Index over the past 1 to 3 years.
This company was a recent pick for Scotia McLeod's Greg Newman. See G&M's article.
The one thing that would prevent me from buying this company is that their earnings cannot cover their dividends. You would want a utility to have a Dividend Payout Ratio for earnings no higher than 70 to 75%. This company does not even come close to earnings covering dividends and will not for a while, as far as I can see.
Northland Power Inc. indirectly owns interests in power projects. Northland's assets comprise facilities that produce electricity from "clean" natural gas and "green" renewable sources such as wind and biomass. Electricity generation is sold under long-term PPAs with creditworthy customers, and any fuel for natural-gas-fired projects, where required, is purchased under long-term contracts to assure stability of operating margins. This company operates in Canada, US and Germany. Its web site is here Northland Power. See my spreadsheet at npi.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 minimal trading with $0.10 insider buying and $0.14 insider selling. Insiders do not have options, but some have what is called "Replacement Rights" and these rights are convertible into shares. They were issued in connection with the merger with NPI. I would again like to point out one thing that I mentioned yesterday and that is that most of the convertible shares are owned by the previous Chairman of the Board. Because of the convertible and common shares he owns, I calculate that he owns around 70% of the outstanding shares.
There are 2 institutions that have shares in this company and own 0.55% of the company. Over the past 3 months they have decreased their shares by 40%. One institution closed their position and one institution decreased their position in this company. (There are inconsistencies in this report, because when I looked on September 29, it was reported that 5 institutions held 1.81% of the shares.)
When I look at 5 year low, median and high median Price/Earnings Ratios, I get 9.40, 11.28 and 13.16. Note that there are problems with looking as over the past 5 years as the company had two negative earning years. The 10 year low, median and high median P/E Ratios are 17.58, 19.66 and 20.93. Because so little is expected in earnings this year, I get a current P/E of 136.71 and a forward P/E of 54.69. This certainly shows that the stock price is relatively and absolutely high.
I get a current Graham Price of $3.97. The 10 year low, median and high median Price/Graham Price Ratio are 1.03, 1.17 and 1.34. I get a current P/GP Ratio of 4.83 and this high ratio a very high relative stock price. The problem with this test is that the Graham Price has been falling lately because of bad earning years and dropping book value. As recently as 2009, Graham Price was $9.94. As the Graham Price has fallen, the P/GP Ratio has been raising.
I get a 10 year median Price/Book Value per share Ratio of 1.75. The current P/B Ratio is 3.83. This current ratio is some 118% higher than the 10 year ratio.
The 5 year median dividend yield is 8.48%. The current yield is 5.64%. Although the 5 year median dividend yield is high and the current one is a good one, it is some 33% lower. You normally would want a higher dividend yield currently than the 5 year median.
Looking quickly at other measures, I get a 10 year Price/Sales Ratio of 4.87 and a current one of 6.62. A better price is with a lower current ratio than the 10 year median one. The 10 year median Price/Cash Flow ratio is 11.41 and the current one, based on last 12 month's cash flow is 14.72. Here again, a better price is a lower ratio.
All tests point to a very high relative current stock price. This stock is having trouble making a profit and the price does not seem to reflect that. I know we price stock based on what we think that the future holds, but it would appear that the current price is relatively high.
When I look at analysts' recommendations, I find Strong Buy, Buy and Hold. The vast majority of the recommendations are a Hold. The consensus recommendation would be a Hold. The 12 month stock price is $19.00. This implies a capital loss of 0.73%, dividend yield at 5.64% for a total return of 4.91%.
A couple of analysts have mentioned that the Dividend Payout Ratio is too high. One analyst thought the management team was very good. Another thought that the DPR will be around 80% in a couple of years. Note that this company has outperformed the TSX Index and the TSX Utilities Index over the past 1 to 3 years.
This company was a recent pick for Scotia McLeod's Greg Newman. See G&M's article.
The one thing that would prevent me from buying this company is that their earnings cannot cover their dividends. You would want a utility to have a Dividend Payout Ratio for earnings no higher than 70 to 75%. This company does not even come close to earnings covering dividends and will not for a while, as far as I can see.
Northland Power Inc. indirectly owns interests in power projects. Northland's assets comprise facilities that produce electricity from "clean" natural gas and "green" renewable sources such as wind and biomass. Electricity generation is sold under long-term PPAs with creditworthy customers, and any fuel for natural-gas-fired projects, where required, is purchased under long-term contracts to assure stability of operating margins. This company operates in Canada, US and Germany. Its web site is here Northland Power. See my spreadsheet at npi.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, October 3, 2012
Northland Power Inc
On my other blog I am today writing about My Own Advisor blog Part 2. My Own Advisor has been blogging for a couple of years and has a lot to share with novice investors. This is a second part for this blogger as in my original post on My Owner Advisor Blog I just noted the investment books he was recommending. The following are posts on this blog for novice investors...
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I do not own this stock of Northland Power Inc. (TSX-NPI). This company is into generating electric power. I have a lot invested in pipelines and I would like to have more invested in electric power as my utilities investment. I read a report on this stock last year that said it was a good defensive stock to buy and this is why I started to follow this stock. This is another stock that used to be an income trust, It was called Northland Power Income Fund (TSX=NPI.UN). This company is labeled an Alternative Energy company.
The first thing to talk about is dividends. The yield is quite good at 5.64%. They basically did not lower the dividends when the company changed from an income trust. However, the 5 year median Dividend Payout Ratios are far too high. The DPR for earnings is 229% (ignoring the years with negative income). The 5 year median DPR for cash flow is 112%. The DPRs for 2012 are expected to be 771% for Earnings and 101% for cash flow.
The DPRs are not expected to improve anytime soon. No one is talking about Distributable Income or AFFO in comparison with the dividend distribution this year. DI or AFFOs figures were given for this company up to last year to compare with the distributions.
According to my calculations, outstanding shares have increased at the rate of around 14% per year over the past 5 and 10 years. Wherever you look, different sites show different numbers of outstanding shares. I have included the convertible shares as they can collect distributions in starting in 2012. The other thing is the most of the convertible shares are owned by the previous Chairman of the Board. Because of the convertible and common shares he owns, I calculate that he owns around 70% of the outstanding shares. The number of outstanding shares becomes important when you look at values per shares (like revenue per shares).
The recent increase in outstanding shares has to do with the merger of Northland Power Inc. and Northland Power Income Fund to form the new Northland Power Inc. company.
I find that revenues have increased by 14% and 16% per year over the past 5 and 10 years. However, Revenue per Share has grown by 0% and 2% per year over the past 5 and 10 years. The difference in these two growth rates is due to growth in outstanding shares.
I cannot get a growth for earnings per share as the EPS was negative for 2012. Analysts expect that EPS will be positive for 2012 and 2013. The EPS for the first quarter was positive. However, the EPS for the 2nd quarter was negative and was a surprise for the market.
Although there are no years with a negative cash flow per share, cash flow per shares has not grown much either. Growth of cash flow per share over the past 5 and 10 years is at 0.5% and 1.7% per year, respectively.
There has been no growth in book value per share over the past 5 and 10 years. Book value per share has declined by 8% and 3% per year over the past 5 and 10 years.
Return on Equity is non-existent for the financial year of 2011 as the company had a loss. The 5 year median ROE is just 0.2%. The ROE based on comprehensive income also has a 5 year median value of 0.2%.
The current Liquidity Ratio is quite good at 2.10 and a lot higher than the Liquidity Ratio for the 2011 financial year of 1.06. The current Debt Ratio of 1.64 is also better than the ratio of 1.52 for the 2011 financial year. The current Leverage and Debt/Equity Ratios are a bit high at 3.70 and 2.26. The comparable 5 year median ratios are much better at 1.59 and 0.59.
It would be nice to make money from alternative energy and perhaps the environment at the same time. However, even though this company can usually make a profit, I would not buy one where the profit cannot cover the dividend distributions.
Northland Power Inc. indirectly owns interests in power projects. Northland's assets comprise facilities that produce electricity from "clean" natural gas and "green" renewable sources such as wind and biomass. Electricity generation is sold under long-term PPAs with creditworthy customers, and any fuel for natural-gas-fired projects, where required, is purchased under long-term contracts to assure stability of operating margins. This company operates in Canada, US and Germany. Its web site is here Northland Power. See my spreadsheet at npi.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 do not own this stock of Northland Power Inc. (TSX-NPI). This company is into generating electric power. I have a lot invested in pipelines and I would like to have more invested in electric power as my utilities investment. I read a report on this stock last year that said it was a good defensive stock to buy and this is why I started to follow this stock. This is another stock that used to be an income trust, It was called Northland Power Income Fund (TSX=NPI.UN). This company is labeled an Alternative Energy company.
The first thing to talk about is dividends. The yield is quite good at 5.64%. They basically did not lower the dividends when the company changed from an income trust. However, the 5 year median Dividend Payout Ratios are far too high. The DPR for earnings is 229% (ignoring the years with negative income). The 5 year median DPR for cash flow is 112%. The DPRs for 2012 are expected to be 771% for Earnings and 101% for cash flow.
The DPRs are not expected to improve anytime soon. No one is talking about Distributable Income or AFFO in comparison with the dividend distribution this year. DI or AFFOs figures were given for this company up to last year to compare with the distributions.
According to my calculations, outstanding shares have increased at the rate of around 14% per year over the past 5 and 10 years. Wherever you look, different sites show different numbers of outstanding shares. I have included the convertible shares as they can collect distributions in starting in 2012. The other thing is the most of the convertible shares are owned by the previous Chairman of the Board. Because of the convertible and common shares he owns, I calculate that he owns around 70% of the outstanding shares. The number of outstanding shares becomes important when you look at values per shares (like revenue per shares).
The recent increase in outstanding shares has to do with the merger of Northland Power Inc. and Northland Power Income Fund to form the new Northland Power Inc. company.
I find that revenues have increased by 14% and 16% per year over the past 5 and 10 years. However, Revenue per Share has grown by 0% and 2% per year over the past 5 and 10 years. The difference in these two growth rates is due to growth in outstanding shares.
I cannot get a growth for earnings per share as the EPS was negative for 2012. Analysts expect that EPS will be positive for 2012 and 2013. The EPS for the first quarter was positive. However, the EPS for the 2nd quarter was negative and was a surprise for the market.
Although there are no years with a negative cash flow per share, cash flow per shares has not grown much either. Growth of cash flow per share over the past 5 and 10 years is at 0.5% and 1.7% per year, respectively.
There has been no growth in book value per share over the past 5 and 10 years. Book value per share has declined by 8% and 3% per year over the past 5 and 10 years.
Return on Equity is non-existent for the financial year of 2011 as the company had a loss. The 5 year median ROE is just 0.2%. The ROE based on comprehensive income also has a 5 year median value of 0.2%.
The current Liquidity Ratio is quite good at 2.10 and a lot higher than the Liquidity Ratio for the 2011 financial year of 1.06. The current Debt Ratio of 1.64 is also better than the ratio of 1.52 for the 2011 financial year. The current Leverage and Debt/Equity Ratios are a bit high at 3.70 and 2.26. The comparable 5 year median ratios are much better at 1.59 and 0.59.
It would be nice to make money from alternative energy and perhaps the environment at the same time. However, even though this company can usually make a profit, I would not buy one where the profit cannot cover the dividend distributions.
Northland Power Inc. indirectly owns interests in power projects. Northland's assets comprise facilities that produce electricity from "clean" natural gas and "green" renewable sources such as wind and biomass. Electricity generation is sold under long-term PPAs with creditworthy customers, and any fuel for natural-gas-fired projects, where required, is purchased under long-term contracts to assure stability of operating margins. This company operates in Canada, US and Germany. Its web site is here Northland Power. See my spreadsheet at npi.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, October 2, 2012
Organic Resource Management 2
I own this stock (TSXV-ORI). I made several purchases of the stock over a few months between July and December of 1997. My purchase prices ranged from $.86 to $2.00. My total return since then is a loss of 16.2 per year or a 93% capital loss.
Looking at the insider trading report, I find no insider buying and no insider selling over the past year. Insiders do have lots of shares in this company. The Chairman and CEO, when I looked at his holdings in my review in 2010 had 44.6% of the outstanding shares. When I looked at his holdings in 2011, he had 41.6% of the outstanding shares. When I look at his holdings today, he has 31.4% of the outstanding shares. The CFO and the officers have more options than shares; however, this is not true of the CEO or the directors.
I cannot do any Price/Earnings test because this company had too many years of negative earnings. The problem of negative earnings also hampers a Graham Price test.
The Price/Book Value per Share test can be done. The 10 years P/B Ratio is 0.91 and the current P/B Ratio is 1.58. This would suggest a relatively high current stock price. However, there are problems. First the 10 year P/B Ratio is quite low. When it is below 1.00 it implies that the stock price is lower than the book value. When the stock price is lower than the book value, it generally means that the stock price is very low. Also, the book value has been declining over the last over the last 5 and 10 years. Lastly, the P/B Ratio of 1.58 is a reasonable ratio on an absolute basis.
There are other tests that can be done besides my standard tests. One is the Price/Sales Ratio test. Using the last Revenue per Share value, I get a P/S Ratio of 0.61. The 10 year low, median and high median P/S Ratios are 0.20, 0.39, and 0.63. The 0.61 current ratio would suggest that the stock price is relatively high. However, a P/S Ratio is 0.61 on an absolute basis is a low one.
There is also the Price/Cash Flow per Share Ratio test. The 10 year low, median and high median P/CF Ratios are 2.70, 5.69, and 9.49. Using the latest Cash Flow per Share, I get a P/CF Ratio of 5.68. This P/CF Ratio suggests that the stock price is reasonable.
My stock price tests give rather mixed results. The price is probably reasonable.
I cannot find any analysts that follow this stock. Still, the most positive thing that I see is that more than 34% of the company is owned by insiders. (Although insider used to own more shares just a couple of years ago.) I did not sell this because of the low value. It is also interesting to track such a company and see how it ends up. You do have a tendency to keep track of companies you invest in. I will retain the shares I have for now and see what happens.
There is an interesting article on Stock Guru about this company possibly wanting to sell itself.
A number of sites list this stock as a great one to buy in 2012. They talk about what the company does, but none says why to buy. For an example of this see Kandy Daily. I think that saying a stock is a good one to buy without saying why is a rather useless report for investors.
I think you have to review both the good and the bad investments. The main reason I liked this company was because it was "green". It would seem I could invest in a "green" company and make money. It did not turn out that way.
So, I originally bought this company because I was impressed with what they we doing. It sounded great for the environment and look where it got me. The real question is "Can they make any money?" I do not think they have proven this.
The Company's core business is the regularly scheduled collection of non-hazardous liquid organic residuals. It collects, processes and recycles these wastes. Its web site is here Organic Resource. See my spreadsheet at ori.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.
Looking at the insider trading report, I find no insider buying and no insider selling over the past year. Insiders do have lots of shares in this company. The Chairman and CEO, when I looked at his holdings in my review in 2010 had 44.6% of the outstanding shares. When I looked at his holdings in 2011, he had 41.6% of the outstanding shares. When I look at his holdings today, he has 31.4% of the outstanding shares. The CFO and the officers have more options than shares; however, this is not true of the CEO or the directors.
I cannot do any Price/Earnings test because this company had too many years of negative earnings. The problem of negative earnings also hampers a Graham Price test.
The Price/Book Value per Share test can be done. The 10 years P/B Ratio is 0.91 and the current P/B Ratio is 1.58. This would suggest a relatively high current stock price. However, there are problems. First the 10 year P/B Ratio is quite low. When it is below 1.00 it implies that the stock price is lower than the book value. When the stock price is lower than the book value, it generally means that the stock price is very low. Also, the book value has been declining over the last over the last 5 and 10 years. Lastly, the P/B Ratio of 1.58 is a reasonable ratio on an absolute basis.
There are other tests that can be done besides my standard tests. One is the Price/Sales Ratio test. Using the last Revenue per Share value, I get a P/S Ratio of 0.61. The 10 year low, median and high median P/S Ratios are 0.20, 0.39, and 0.63. The 0.61 current ratio would suggest that the stock price is relatively high. However, a P/S Ratio is 0.61 on an absolute basis is a low one.
There is also the Price/Cash Flow per Share Ratio test. The 10 year low, median and high median P/CF Ratios are 2.70, 5.69, and 9.49. Using the latest Cash Flow per Share, I get a P/CF Ratio of 5.68. This P/CF Ratio suggests that the stock price is reasonable.
My stock price tests give rather mixed results. The price is probably reasonable.
I cannot find any analysts that follow this stock. Still, the most positive thing that I see is that more than 34% of the company is owned by insiders. (Although insider used to own more shares just a couple of years ago.) I did not sell this because of the low value. It is also interesting to track such a company and see how it ends up. You do have a tendency to keep track of companies you invest in. I will retain the shares I have for now and see what happens.
There is an interesting article on Stock Guru about this company possibly wanting to sell itself.
A number of sites list this stock as a great one to buy in 2012. They talk about what the company does, but none says why to buy. For an example of this see Kandy Daily. I think that saying a stock is a good one to buy without saying why is a rather useless report for investors.
I think you have to review both the good and the bad investments. The main reason I liked this company was because it was "green". It would seem I could invest in a "green" company and make money. It did not turn out that way.
So, I originally bought this company because I was impressed with what they we doing. It sounded great for the environment and look where it got me. The real question is "Can they make any money?" I do not think they have proven this.
The Company's core business is the regularly scheduled collection of non-hazardous liquid organic residuals. It collects, processes and recycles these wastes. Its web site is here Organic Resource. See my spreadsheet at ori.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, October 1, 2012
Organic Resource Management
On my other blog I am today writing about Save Withdrawal Rates. If you are planning on using your investments in retirement, you need to consider what is being written on this subject continue...
I own this stock of Organic Resource Management (TSXV-ORI). I read about buying small caps in 1997 and this is one I picked because I liked the it was a "green" company. I made several purchases of the stock over a few months between July and December of 1997. My purchase prices ranged from $.86 to $2.00. My total return since then is a loss of 16.2 per year or a 93% capital loss.
I bought this stock as part of basket of small caps. This was bought for capital gain, not for dividends, as it has never had any dividends. I did not sell when the stock declined as it was worth so little and so not worthwhile selling. Now I am holding on to it to see what happens to it in the long run.
The stock price peaked on this stock in 1999. It initially fell some 87% in 2000, and ultimately fell over 99%. In 2008 this stock went through a 20 to 1 consolidation. This is never a good sign. The stock hit a peak of $2.99 in February 2011, but by the end of the year it was only worth $0.89. Price has been climbing lately, 56% in September alone. The current price is $1.95.
The financial year for this company ends on June 30 each year. In 2009 it turned a profit, the first one for a very long time. It had two years of profit, then earnings losses in 2011 and 2012. However, the loss of 2012 is minimal coming in at $0.01. I cannot get a growth in EPS as the EPS is negative for the financial year ending in June 2012.
There was a big increase in outstanding shares in 2007 as the remaining preferred shares were converted into common shares. Over the past 10 years, the number of shares is up 10%. Over the past 5 years there has been no increase in shares.
Revenue has had several peaks in 1997, 2003 and 2006. Revenue is down 1.8% per year over the past 5 years and up 7.8% over the past 10 years. Revenue per share is down 1.8% over the past 5 years and down 2.4% over the past 10 years. The difference between revenue growth or decline and revenue per share decline is due to growth in shares.
Cash Flow has not done badly over the past 5 and 10 years with growth at 14% and 7.3% per year, respectively. Book Value per Share has not gone anywhere with BV per Share down 3.5% and 12% per year over the past 5 and 10 years.
There is, of course, no Return on Equity because there are no earnings. Comprehensive income is the same as net income. (The ROE for both net income and comprehensive income is a negative 1%.)
The debt ratios are ok for this stock. The current Liquidity Ratio is low at 0.96. This means that the current assets cannot cover current liabilities. However, the strong cash flow increases this ratio to a health 1.73. The current Debt Ratio is good at 1.95. The current Leverage and Debt/Equity Ratios are fine at 2.06 and 1.06.
At the moment I plan to hold on to my shares and continue to review this company. However, it would appear that the company is considering selling itself, so I might in the end have sell my shares.
The Company's core business is the regularly scheduled collection of non-hazardous liquid organic residuals. It collects, processes and recycles these wastes. Its web site is here Organic Resource. See my spreadsheet at ori.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 own this stock of Organic Resource Management (TSXV-ORI). I read about buying small caps in 1997 and this is one I picked because I liked the it was a "green" company. I made several purchases of the stock over a few months between July and December of 1997. My purchase prices ranged from $.86 to $2.00. My total return since then is a loss of 16.2 per year or a 93% capital loss.
I bought this stock as part of basket of small caps. This was bought for capital gain, not for dividends, as it has never had any dividends. I did not sell when the stock declined as it was worth so little and so not worthwhile selling. Now I am holding on to it to see what happens to it in the long run.
The stock price peaked on this stock in 1999. It initially fell some 87% in 2000, and ultimately fell over 99%. In 2008 this stock went through a 20 to 1 consolidation. This is never a good sign. The stock hit a peak of $2.99 in February 2011, but by the end of the year it was only worth $0.89. Price has been climbing lately, 56% in September alone. The current price is $1.95.
The financial year for this company ends on June 30 each year. In 2009 it turned a profit, the first one for a very long time. It had two years of profit, then earnings losses in 2011 and 2012. However, the loss of 2012 is minimal coming in at $0.01. I cannot get a growth in EPS as the EPS is negative for the financial year ending in June 2012.
There was a big increase in outstanding shares in 2007 as the remaining preferred shares were converted into common shares. Over the past 10 years, the number of shares is up 10%. Over the past 5 years there has been no increase in shares.
Revenue has had several peaks in 1997, 2003 and 2006. Revenue is down 1.8% per year over the past 5 years and up 7.8% over the past 10 years. Revenue per share is down 1.8% over the past 5 years and down 2.4% over the past 10 years. The difference between revenue growth or decline and revenue per share decline is due to growth in shares.
Cash Flow has not done badly over the past 5 and 10 years with growth at 14% and 7.3% per year, respectively. Book Value per Share has not gone anywhere with BV per Share down 3.5% and 12% per year over the past 5 and 10 years.
There is, of course, no Return on Equity because there are no earnings. Comprehensive income is the same as net income. (The ROE for both net income and comprehensive income is a negative 1%.)
The debt ratios are ok for this stock. The current Liquidity Ratio is low at 0.96. This means that the current assets cannot cover current liabilities. However, the strong cash flow increases this ratio to a health 1.73. The current Debt Ratio is good at 1.95. The current Leverage and Debt/Equity Ratios are fine at 2.06 and 1.06.
At the moment I plan to hold on to my shares and continue to review this company. However, it would appear that the company is considering selling itself, so I might in the end have sell my shares.
The Company's core business is the regularly scheduled collection of non-hazardous liquid organic residuals. It collects, processes and recycles these wastes. Its web site is here Organic Resource. See my spreadsheet at ori.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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