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Just Energy Group Inc. Message Board

  • mavmike mavmike Dec 12, 2013 6:08 PM Flag

    Why is JUST ENERGY worth anything with a book value of -$2.50?

    Help me understand. I'm looking at the numbers, the balance sheet is horrible.
    They barely have any hard assets (like plant equipment property) to support a floor price.
    They are nearly 1 Billion in debt, with no cash.
    Why are they even paying a dividend? It should be cut right out.
    Book value of -$2.50 per share sure looks scary.
    I was looking to buy for the dividends, but it looks like this stock will keep falling and making 12% off dividends in a year won't do much good if they stock price is down +12% in that same time period.
    Is this company dying?

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • DIVIDEND MATH FACTS:
      Price when dividends started = $14.85 per share
      Dividends paid out since inception = $3.33 per share (27 x $0.10 + 9 x $0.07)
      TOTAL RETURN ON INVESTMENT = 22.42%
      TOTAL DECLINE IN STOCK PRICE = 50.90%
      This is the problem, even if you collected all the dividends from day 1 you would be down 28.48% of your investment. Now this is for people who started day 1.
      ---------------
      If you started on the 7 cent dividend it looks like this:
      Price when 7 cent dividend started = $6.25 per share
      Dividends paid out since 7 cent = $0.63 per share (9 x $0.07)
      TOTAL RETURN ON INVESTMENT = 10.08%
      TOTAL PROFIT IN STOCK PRICE = 20.95%
      --------------
      Now if you consider that history may repeat itself, then $6.25 would fall to ~$3 and the dividend cut in half to ~3 cent. Under a likely scenario that the company does this, as it has before:
      Dividends paid out since 7 cent = $2.16 (27 x $0.07 + 9 + 0.03)
      TOTAL RETURN ON INVESTMENT = 34.56%
      TOTAL DECLINE IN STOCK PRICE = 50.90%
      Boom, you lost 16.34% of your investment from $6.25 stock price

      Will you ever get your money back?

    • re Je balance sheet equity it is misleading because of the losses created by their futures and hedges in the past when gas prices collapsed. Accounting rules don't allow recognizing the asset value of the future customer revenue associated with those past losses so the large negative equity. The real value of the company seems to be in the customer base "goodwill" and discounted future cash flow associated with those contacts minus of course their cost to provide services. In theory, as long as states allow competitive alternative energy suppliers, JE can do well by undercutting the cost of regional utilities and selling their "green" energy which seems all the rage lately.

      They seem poised for some growth, the current quarter will probably be their best ever. Shares seem to be a bargain if you can believe the cash flows but I agree with you on the weird balance sheet.

    • It's funny how there are no posters wondering about the value of the company on up days. But have a dip and presto, someone with concerns about the viability of the company magically appear. Just an observation.

      • 1 Reply to d_tom70
      • No, what I think is funny or better yet, annoying, are non-value added posts like yours. mavmike asked a decent question that should be an obvious potential concern for anyone new to this stock. I myself have begun looking into JE as I just recently signed up for their services. Your observation on posters with questions like this on down days is merely a byproduct of luck. Even if you could show me proof that supports your claim, how does that answer the question above? Anyone who is long or into JE should welcome questions like the one above, at least it is not a random basher. I'd be curious to hear an answer myself. Initially, I would think the nature of their business is a big part of what Mike is asking about but would like to hear more from experienced JE followers.

 
JE
5.20-0.01(-0.19%)Dec 24 1:01 PMEST

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