On Tuesday, major North American stock markets were mixed.
In the U.S., the Dow Jones Industrial Average fell 0.01 per cent, the S&P 500 index declined 0.07 per cent, while the Nasdaq composite index advanced 0.33 per cent.
In Canada, the S&P/TSX composite index declined 86 points, or 0.55 per cent, led by a slide in energy stocks. There were 98 securities in the TSX Index that advanced, 148 securities declined in value, and four stocks closed the day unchanged.
Year to date, the TSX Index is up 1.67 per cent. In the U.S., the Dow Jones Industrial Average is up 6.16 per cent year-to-date, the S&P500 index is up 7.23 per cent, and the Nasdaq composite has rallied 14.62 per cent.
On today's TSX Breakouts report, there are 41 stocks on the positive breakouts list (stocks with positive price momentum), and 36 stocks are on the negative breakouts list (stocks with negative price momentum).
Featured today is a security that appears on the negative breakouts list. The share price has fallen 14 per cent month-to-date, making it the one of the worst performing stocks in the S&P/TSX composite index this month. The share price sharply declined after the company reported a large earnings miss. However, for longer-term investors seeking income, the recent price weakness may be creating a buying opportunity. Earlier this week, the chief financial officer was taking advantage of the price weakness and accumulating shares. The company offers investors an attractive 5 per cent yield. The security I am referring to is Enercare Inc. (ECI-T).
A brief outline is provided below that may serve as a springboard for further fundamental research.
The company
Toronto-based Enercare provides water heaters, furnaces, air conditioners and HVAC (heating, ventilation, and air conditioning) rental products, as well as services such as protection plans to its customers. In addition, Enercare is also a leading sub-meter provider for apartments and condominiums, and through its Triacta division, manufactures sub-meters. Enercare has operations in both Canada and the United States, serving approximately 1.6 million customers annually.
Before the market opened on May 12, the company reported a large earnings shortfall relative to the Street's expectations causing the share price to plunge over 10 per cent on high volume. That day, over 2.8-million shares traded, well above the three-month historical daily average trading volume of approximately half a million shares. The company reported adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $52.5-million in the first quarter, well below the consensus estimate of $61-million. On the earnings conference call, the chief financial officer Evelyn Sutherland addressed the shortfall stating, "EBITDA decreased by 3 per cent or 10 per cent on an acquisition adjusted basis. In Q1 (the first quarter), EBITDA was affected by the seasonal nature of the Service Experts business coupled with an unusually warm winter as well as a few one-time items"¦EBITDA would've increased by 4 per cent, excluding the relevant one-time items. "
Wed, 17 May 2017 8:20 EDT