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One of the main reasons to consider Westar Energy is that it maintained its uptrend in the face of the current correction. A clear sign of its strength is its ability to surge to new highs the moment the market started to rally. Finally, it has a rather low beta, indicating that it's not a very volatile stock.

Reasons to be bullish on Westar Energy (NYSE:WR):

  • A good relative strength score of 77 out of a possible 100
  • Year over year projected growth rates of 6.3% and 6.4% for 2012 and 2012 respectively
  • A very low beta of 0.38 indicates that the stock is not very volatile
  • Net income increased from $175 in 2009 to $230 million in 2011
  • Cash flow per share increased from $3.90 in 2009 to $4.61 in 2011
  • Sales increased from $1.8 billion in 2009 to $2.1 billion in 2011
  • A decent yield of 4.52%
  • A decent 5 year growth rate of 4.8%
  • A projected 3-5 estimated growth rate of 5.7%
  • A decent interest coverage ratio of 3.00
  • A good free cash flow yield of 8.17%
  • $100k invested for 10 years would have grown to $390K

Suggested strategy

It is in a strong uptrend so unless something goes terribly wrong it is unlikely to pull back very strongly. With that in mind there is a chance that the stock could test the 27.50-28.00 range once again. Investors can consider opening up positions in those ranges. The options are not liquid so selling puts might not be the best strategy as you are not likely to get a good price.

Company: Westar Energy

Levered Free Cash Flow = -274.88M

Brief Overview

  1. Percentage Held by Insiders = 0.88
  2. Number of Institutional Sellers 18 Weeks = 1
  3. Relative Strength 58 weeks = 77
  4. Cash Flow 5-year Average = 3.97
  5. Profit Margin = 10.5%
  6. Operating Margin = 21.7%
  7. Quarterly Revenue Growth = -1.3%
  8. Quarterly Earnings Growth = - 12.9%
  9. Operating Cash Flow = 431 million
  10. Beta = 0.38
  11. Percentage Held by Institutions = 54%
  12. Short Percentage of Float = 0.90%

Growth

  1. Net Income ($mil) 12/2011 = 230
  2. Net Income ($mil) 12/2010 = 204
  3. Net Income ($mil) 12/2009 = 175
  4. Net Income Reported Quarterly ($mil) = 28
  5. EBITDA ($mil) 12/2011 = 839
  6. EBITDA ($mil) 12/2010 = 781
  7. EBITDA ($mil) 12/2009 = 642
  1. Cash Flow ($/share) 12/2011 = 4.61
  2. Cash Flow ($/share) 12/2010 = 4.36
  3. Cash Flow ($/share) 12/2009 = 3.9
  1. Sales ($mil) 12/2011 = 2171
  2. Sales ($mil) 12/2010 = 2056
  3. Sales ($mil) 12/2009 = 1858
  1. Annual EPS before NRI 12/2008 = 1.33
  2. Annual EPS before NRI 12/2009 = 1.28
  3. Annual EPS before NRI 12/2010 = 1.81
  4. Annual EPS before NRI 12/2011 = 1.81

Dividend history

  1. Dividend Yield = 4.52
  2. Dividend Yield 5 Year Average = 5.17
  3. Dividend 5 year Growth = 4.8

Dividend sustainability

  1. Payout Ratio 03/2012 = 0.98
  2. Payout Ratio 5 Year Average 03/2012 = 0.81

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 5.74
  2. ROE 5 Year Average 03/2012 = 7.93
  3. Return on Investment 03/2012 = 3.77
  4. Debt/Total Cap 5 Year Average 03/2012 = 51.86
  5. Current Ratio 03/2012 = 0.72
  6. Current Ratio 5 Year Average = 0.85
  7. Quick Ratio = 0.49
  8. Cash Ratio = 0.21
  9. Interest Coverage = 3.00

Conclusion

Long-term investors can use strong pullbacks to open up positions in stocks they would not mind owning for the long haul. A great way to get into a stock at a price of your choosing is to sell puts at strikes you would not mind owning the stock at. Investors willing to take on a bit more risk might find this article to be of interest: Westport Innovations Among 1 Of 4 Interesting Speculative plays.

EPS and Price Vs industry charts obtained from zacks.com. A major portion of the historical data used in this article was obtained from zacks.com. Ycharts data sourced from ycharts.com. Earnings and growth estimates sourced from dailyfinance.com.

Disclaimer: This list of stocks is meant to serve as a starting point. Please do not treat this as a buying list. It is imperative that you do your due diligence and then determine if any of the above plays meet with your risk tolerance levels. The Latin maxim caveat emptor applies - let the buyer beware

Source: Westar Energy: A Low-Beta Stock With A Strong Upward Trend