Wednesday’s TSX breakouts: Yielding 7% with an attractive valuation, this utility is coming off an earnings beat

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With a forecast return of 40 per cent, this company has been laggard thus far in 2023

On today’s Breakouts report, there are 38 stocks on the positive breakouts list , and 21 securities are on the negative breakouts list .Superior Plus Corporation). Last week, the stock appeared on the negative breakouts list with the share price closing at a 52-week low. Given this decline, the stock is trading at an attractive valuation.

There is seasonality in the company’s operations with most earnings generated in the first and fourth quarters with the highest earnings realized in the first quarter. Adjusted EBITDA came in at $272-million, ahead of the consensus estimate of $263–million, and up 9 per cent year-over-year. Adjusted operating cash flow was $1.05, down from $1.13 reported during the same period last year. The company’s leverage ratio improved, declining to 3.9 times from 4.1 times at the end of 2022. Management targets a long-term leverage ratio of between 3.5 times and 4 times.

Earnings estimates have been rising given the planned acquisition of Certarus. For instance, at the beginning of the year, the consensus EBITDA estimates were $556-million for 2023 and $581-million for 2024.According to Bloomberg, the stock is trading at an enterprise value-to-EBITDA multiple of 6.9 times the 2024 consensus estimate, below the five-year historical average of 8 times.

 

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