RE: T/AHi Steve:
The debt/equity number, in itself, is not a problem; also look at the interest coverage number. The amount of interest incurred in on that debt is only covered 2.9 times by the companys earnings and earnings were 1.80
"... at current interest rates ..."
Do you know that all of their debt is floating rate? I don't and by the size of the interest coverage ratio and the eps I don't think that it is.
Now what would happen if one of the following senarios were to play out:
1. a debt down grade by some bond rating agency raising interest costs.
2. a spike in long term interest rates.
3. pressure on earnings coming from a number of sources ie. high fibre market price, the loss of a major customer, economic slow down, law suit etc.
I have found that it pays to be pessimistic.
It is a good business, IMHO, otherwise I wouldn't hold it but the market is not recognizing the fact and I have tired of watching it cycle through 14.50 to 16.75 and may have found a way to capitalize on it in the short term. Time will tell.
Good luck to you and all
Ps. If the company were to get serious about realizing shareholder value they would sign long term power contracts with Boralex then sell off their position in it, pay down the debt and concentrate their efforts on the business as they have been doing. But this is my view and after all, who am I?