Enercare reaps rewards of it's recent Acquisition

      On March7, Enercare reported it's fourth quarter and annual results for 2016.Enercare has had it's first year of operation for it's new acquisition called Service Experts.As a result annual revenues were up by 77% over 2015 -from $432 million to $995 million.Also it increased HVAC (heating,ventilation,and air conditioning) rental transactions by 31% over 2015.And it increased the number of sub-metering contracts by 50%.So adjusted EBITDA increased by 20% over 2015 or $2.60 per share.Consequently P/E ratio is cheap at less than 8 times.This blog uses adjusted EBITDA as a measure of earnings;other websites use net income but that includes factors like interest and depreciation.A more comparable measure of earnings is adjusted EBITDA.Using these growth metrics ECI is a bargain in comparison to most other  Canadian utilities.For example, Qtrade and Yahoo Finance show the P/E ratio for Fortis at 42 times and for Emera  at 35 times.And their growth is not as substantial as that of Enercare.       

Enercare is an utility but does not provide electricity for cars such as the one above.So it is not a regulated utility and has more freedom in it's pricing than regulated utilities such as Canadian Utilities or Emera.This means that it's growth will be more rapid than electric and gas utilities and so it should command a greater P/E ratio than regulated utilities but in fact it is now less.Yes, this blog sees Enercare as quite a bargain.The Enercare CEO says in the report that the "successful acquisition of Service Experts has exceeded expectations".And for that reason ECI increased it's dividend from $.92 to $.96 per annum.It  now has a little less than a 5% yield.This blog looks for ECI to hit $25 before Thanksgiving.

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