Emera Utilities is in a Breakout Pattern

   Emera is a Canadian utility that is based in Nova Scotia.It

was growing slowly for the last 5 to 6 years.But in 2016 it acquired Teco Energy and it's assets grew from 8 billion which is substantial to $20 billion.It acquired Teco assets in Florida, New Mexico and the Carribean.This plus one or two other transactions has helped to transform Emera; now it is on a breakout pattern.2016 was only an average year as it was experiencing acquisition costs and               re- organization costs.Revenues dropped,EBIT dropped and so did e.p.s.But 2017 looks like it will have quite a bit better results in most financial categories.
       The First Half
   Adjusted EBITDAat $922 million and and earnings per share (e.p.s.) at $1.87 are almost as large as for the entire year of 2016.And the third quarter looks like it will be better than the second quarter.And if the third quarter is only 50% better than the below average second quarter at $.75 per share the total for 9 months will approximate $2.70 per share and exceed the 2016 annual total.Again an average fourth quarter will put e.p.s. for 2017 much larger than 2016.As said above that will mean that Emera results will have a break out year in 2017.
     The change has come from the Teco Energy acquisition which at first didn't look successful and now is bearing fruit.Emera has said after the Teco acquisition that it intends to raise the dividend by 8% every year until 2020.This seemed like a vacant promise at the time but now appears more likely.Partly as a result of this policy Credit- Suisse has given it a target price of $58 per share.This blog sees that once the 8% dividend increase is implemented in 2018 that Emera will continue to breakout towards $58 but not until then.
                         Signs of a Breakout
  First it must be remembered that 2016 was an good year so it will be difficult to generate large increases in 2017.So increases in revenues should not be on average as high as 25% better than 2016 as was experienced in the first quarter.The second quarter was below average but both the third and fourth quarter should return to the level seen in Q1.That will bring earnings up to between that seen in the first and in the second quarter.If this happens then this blog sees e.p.s. of $3.50 per share for 2017.This is in comparison to $1.87 for 2016.This should produce adjusted EBITDA of close to $1.5 billion for the year in comparison to $1.19 billion for 2016.In addition, Emera says that it will raise it's dividend by 8% each year until 2020.If Emera is able to increase it's dividend by 8% in Q2 2018 then Credit- Suisse will likely be right and the share price will be close to $55 in 2018 and $58 in 2019.     www.Credit-Suisse.com