For this week’s content analysis, we went looking for a Canadian utilities company with strong potential, given the benefits the sector may glean from a period of low, or decreasing, interest rates. We found Emera Inc. (EMA), a Halifax-based company with operations in Canada, the U.S., and the Caribbean 
Download . For more information on the company, you can visit their corporate website: http://www.emera.com/en/home/default.aspx
Even though its return on capital has never been very high over the course of the past five years, Emera has always been able to keep it above its cost of capital, and maintain a positive performance spread. That being said, Emera’s return on capital in 2014 was easily its strongest over the past five years. This increase in return on capital, and consequent increase in performance spread, had a substantial effect on Intrinsic Value, which jumped from $35 to $50.45 following Emera’s Q4 earnings. The company’s P/IV ratio is now 0.83, indicating upside potential of around 21%.
The current future growth value (FGV) reflects a 6.6% premium relative to current operating value (COV). This premium appears fair, considering Emera’s 8.4% annualized COV growth rate over the past five years.
The long-term EVA trend is positive, with mild growth, supported by fairly stable increases in net operating profit after tax (NOPAT) each year.
As for accounting performance, Emera has increased its dividend in each of the past five years (at an annualized rate of 6.28%) and has generated positive, growing free cash-flow since 2013. Current dividend is of 3.83%, as of March 16th, 2015.
Finally, for those seeking a component of social or environmental responsibility in their portfolios, you’ll note that Emera Inc. is involved in the production and distribution of clean energy, investing in projects targeting wind, biomass, hydro, and tidal energy generation. The building that houses Emera’s Halifax headquarters was in fact the first in Atlantic Canada to achieve LEED Platinum certification.
