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Investment Q&A

Not investment advice or solicitation to buy/sell securities. Do your own due diligence and/or consult an advisor.

Q: Hi Peter. I hold both ECI and BTB.un and both for income but hopeful for growth...
ECI recently closed $250 mil at 4.3% and this makes sense to me but the share price has weaken.
BTB.un has issues $20 mill of units which will offer a current rate of 9% . This seems like expensive financing. Am I missing something?
I feel like I should exit BTB.un and buy more ECI or like companies.
Appreciate your advices
John
Read Answer Asked by John on December 06, 2012
Q: EnerCare (ECI, $8.83, 2-SP, $9.50 target) – Customer attrition could heat up in second half of 2012
 EnerCare announced that it was served with a Notice of Action from a competitor claiming damages resulting from
EnerCare engaging in unlawful surveillance activities. As a result of the allegations, EnerCare will temporarily
suspend its program to combat attrition, while it conducts an investigation of the allegations.
 Attrition spike could be higher than expected in 2H/12. We had previously expected a spike in 2H/12 attrition
stemming from further customer pushback as EnerCare attempts to increase New Contract penetration, without making
the customer terms more favourable (lower termination/buyout clauses). Our current attrition estimates call for 21k in
Q2/12 and 45k for 2H/12, and believe they could be biased
higher.
 Given that the company's multiple trades closely with attrition,
we believe that a sizeable increase in attrition could lead to a
pronounced multiple compression. If we apply a 5.5x
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EV/EBITDA multiple on the Legacy segment (same multiple from Q3/09 to Q2/10 when ECI experienced an increase in
attrition driven from D2D competition) and 14x EV/EBITDA on the company's high-growth sub-metering division, we
would get a target price of ~$8.00. any thoughts
Read Answer Asked by andrew on July 12, 2012