8% yeld = $ 10.5 target
The earnings killed the doubters and further divy reduction ` chickens
Most important metric is the payout ratio from generated -hard cash
= from BFFO = from base funds from operations =95%
Means, sustainable at 84 c divy ( thought on high side )
Even if JE won`t achieve the 65% payout ratio target by 2016
( means , rise BFFO by 30% in 2-3 Y or reduce share count or both)
they can afford the 84 c divy for many years to come .
AND THAT`s THE BOTTOM LINE.
At US $6.15 bottom , on day before earnings, the yield was 13.6%
BUT NO MORE = such yeld grabbing opportunity won`t happen for many years to come.
The target prices now are :
--at 10% yield = $ 8.4 = 35% up from May 15 bottom at US $ 6.15
( + 13% divy = 48% total return )
--at 9% yield SP target = $ 9.2 = up 50% from May 15
( + 13% divy = 63% )
--at 8% yield target = $ 10.5 = up 57% from May 15
( + 13% = 70 %)
--at 7% yield SP target = $ 11.8 = up 64% from May 15
( + 13% = 77% )
At yield of 7%-- even 6% and 5% ,, there shall be still many buyers
supporting the $ 12 max possible target.
As long as market perception will be ......, the divy is secure
( they just got it today )
Crossrefferencing above targets with chart resistance levels
-- jumped above 50 DMA today
-- $7.55 small resist .. should pause there and print a CUP or REVERSE H&S with implied target 8.9
Which is also 1 Y descending trendline
-- $9.15 = 200 DMA
-- $11.9 = 2 Y descending trendline - I don`t think will get past that
unless next Q earnings will be excellent.
-- golden cross 50 / 200 DMA shall happen in next 2 months or faster ( today's candle enflugged 45 days of previous drops/ range .... geeeesus )
MOST LIKELY target is around $9 = plenty TA resist there
,Second target $ 10.5 = 8% yeld and 50% up even after today`s jump-
$ 9.8 = closing the gap
Neddless to say that RSI jumped up by 50% ,MAC , accumulation and force index went through roof
BOTTOM LINE : NO MORE SP DECLINE and secure divy for long time.
MEANS FAT DIVY WHILE WAITING FOR HIGHER SP
2013 IS THE LAST Y in which JE will finish unloading the high priced NG contracts
After that JE will be loaded with the low priced ( like $2- 2,5- $ 3 )
futures NG contracts they entered 1 y ago at bottom.
while NG cash price is hitting $ 4 now
Means , SECULAR JE earnings REVERSAL regardless of / in adition to
rising sales and steady 10% customer count growth.
The happy customers who locked -in NG at half of today`s price
will tend to stay with JE for long time and brag to neighbours what good a deal they have got
Plus people in rising NG price envinron , will want to lock it -in ..... again .
Plus the number of 2014 upcoming renevals will be half the 2013 in a first place
Still bit of struggle in 2013 CY but much clearer sailing 2014 forward.
===============
In lack of better forecasting tool lets compare FY 2013 ( just ended) to coming FY 2014 by annualizing last Q results
FY 2012 ...... FY 2013..... Est,annualized FY 2014
-----------------------------------------------------------------------------------------------
sales 2.66B 2.88B 3.5 B= 22% more vs 2013
gross margin 500m 526m 630m = 19% more
base EBITA 193 m 163m 279 m = 71% more
BFFO 161 m 97m 189m= 75% more
profit (128m loss) 608m 813 = 35% more= 5.7 EPS = P/E 1.2
divy paid 174m 178 m (156 in cash) 180m
payout R.to BFFO 109 % 184% 95%= cut in half by reducing divy by30% and rising BFFO
That was accompanied by overdone 60% drop in SP pushing yeld to 13.5%
In addition ,historically , Q ending June 30 is usually best Q in a year.
Means, should be better than CY Q 1 on which I based my simple 4x multiplication ,to est FY 2014
Controversly , Q3 and Q 4 are usually much worse , so simple extrapolation of Q1 results may not be correct.
Nevertheless , above 2014 growth numbers ( 19- 75%) are quite high.
Means , still quite a cushion , even if they will be much lower.
I DO NOT CARE OR RELAY ON EST 2014 UNBELIVABLE PE 1.2 OR EST EPS 2014 $ 5.7 OR EBITA ( YET ALONE ADJUSTD EBITA)
THOSE ARE TO VOLATILE , too seasonal ,to murky and unpredictable
I care only about 2 things :
1, CAN THEY AFFORD TO PAY DIVY?
As above shows, for est FY 2014 :
divy to pay = $ 180m and BFFO $ 189 m
Close , but good enough , especially when DRIP ( paying divy in shares)
reduces the cash needed for payouts to $ 156 m
SO THE CASH PAYOUT IS CLOSER TO 85% OF BFFO
2. can they service and pay off the debt ?
That`s quite more complex Q
--one indicator , they can ( at least till 2016 ) is price of their due 2014 debenture
It is $98-99 .Means , holders of this debt don`t worry
They worry bit more about the after 2017 debt
--another indicator is : banks did lend them $105 m not long ago
althought at elevated interest.
If banks do not fear lending them more (thought at lower debt rating level),
why should I ?
Their value of future contracts is $ 2.3 b and growing
Double the debt .
In summarry , they are bit tight but OK till 2017, with 4 y time to improve.
and collect meanwhile 4 x 12% divy , plus likely 50% cap gain
That``s 100% = all my money back before next problems will arrive after 2017.
... or not
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BFFO = BASIC FUNDS FROM OPERATIONS
..