Morningstar | Emera Looks to Sell Assets to Fund Regulated Growth Opportunities
We are reaffirming our CAD 46 fair value estimate along with our narrow economic moat and stable moat trend ratings after Emera reported third-quarter operating earnings per share of $0.82 versus $0.55 in the same year-ago period. After a strong first quarter and third quarter, year-to-date results are in line with our expectations. Management does not issue earnings guidance.After lowering its annual dividend growth target to 4%-5% from 8% in the second quarter, management turned its attention to assuaging investor concerns on how it plans to fund its sizable growth plan while still deleveraging its balance sheet. Emera plans to fund its 2019-21 capital plan mostly with internally generated cash flow and debt raised at its regulated utilities in line with their allowed capital structures. For its equity needs, rather than the previously required equity issuance, Emera will sell assets to fund 20%-30% of the $6 billion we forecast the company to need.
We like management's decision to sell assets. We would like Emera to focus on selling its no-moat unregulated generation in the Northeast, which we have long argued prevents Emera from trading in line with its regulated peers even though the unit represents less than 10% of earnings in a typical year. Also, Emera is trading at a discount to our fair value estimate, and we think further equity issuance wouldn't be in shareholders' best interest at current trading levels.
Growth investments remain on track, with approximately 70% of its growth plan directed toward its Florida utilities. The company's TECO unit is progressing on its plans to install 600 megawatts of solar in Florida. To date, Emera has spent over $500 million of the total $850 million forecast. Emera is exploring an additional 600 MW in solar opportunities post-2020.
Emera is an energy and services company which invests in electricity generation, transmission and distribution, gas transmission and utility energy services. Co. had six segments: Nova Scotia Power Inc., an electric utility and electricity supplier in Nova Scotia; Emera Maine, which provides electric transmission and distribution services in the U.S.; Emera Caribbean, which includes Emera (Caribbean) Incorporated and its subidiaries; Pipelines, which includes Emera Brunswick Pipeline Company Ltd. and an equity investment in Maritimes & Northeast Pipeline; Emera Energy, which includes Emera Energy Services that provides energy management services; and Corporate and Other.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.