Discussed today is a trust which has announced two distribution increases in 2016, offering unitholders a yield of over 8 per cent, and the average one-year target price implies a potential 35-per-cent rise in the unit price. That security is Crius Energy Trust (KWH.UN-T).
A brief outline is provided below that may serve as a springboard for further fundamental research.
The trust
Crius Energy Trust provides electricity, natural gas, and solar products to its customers across the United States.
In March, Crius reported better-than-expected fourth-quarter results, sending the stock higher by 3 per cent the following day. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was $13.2-million (U.S.), beating the consensus forecast of $12.2-million.
Crius will be reporting its first-quarter financial results on May 12, after the market closes and holding a conference call the following day. The consensus EBITDA estimate is $15.5-million (U.S.).
Distribution policy
The Trust pays unitholders a monthly distribution of 6.07 cents (Canadian) per unit, or 72.84 cents per unit on a yearly basis. This equates to an annualized yield of 8.2 per cent.
The company is committed to returning capital to its unitholders and has announced not one but two distribution increases since the beginning of 2016, in January as well as in April.
The distribution appears sustainable. In 2015, the payout ratio was 58.2 per cent.
Analysts’ recommendations
According to Bloomberg, there are four buy recommendations, two hold recommendations, and there are no sell recommendations. The average one-year target price is $11.96, which implies the unit price can potentially increase nearly 35 per cent. Individual price targets are as follows: $11, $11.25, $11.50, $12, and two at $13.
The Street is forecasting EBITDA of $61.8-million (U.S.) in 2016, rising 13 per cent to $69.9-million in 2017.
Chart watch
The unit price has been relatively stable, consolidating largely between $8 and $9.50 since September 2015.
Looking at resistance and support levels, the unit price is approaching resistance at $9, and there is large overhead resistance at $10. There is downside support around $8.40, close to its 50-day moving average (at $8.42) and its 200-day moving average (at $8.48). Failing that, there is downside support at $8.
The Breakouts file is a technical analysis screen intended to identify companies that are technically breaking out. In addition, this report highlights a company’s dividend policy, analysts’ recommendations, and provides a brief technical analysis for a security to provide readers with more information.
If a stock appears on the positive breakouts list, this indicates positive price momentum, and that a company may be worthwhile for investors to look at the fundamentals in order to determine if the recent price strength is warranted and will continue. If a security appears on the negative breakouts list, this indicates negative price momentum, and may be indicative of either deteriorating fundamentals or perhaps indicates a buying opportunity.
A technical analysis screen does not replace fundamental analysis, but can help identify companies worth having a closer look at.