CANADIAN UTILITIES LTD. - Toronto symbols CU $36 and CU.X $36

CANADIAN UTILITIES LTD. (Toronto symbols CU [class A non-voting] $36 and CU.X [class B voting] $36; Income Portfolio, Utilities sector; Shares outstanding: 258.2 million; Market cap: $9.3 billion; Price-to-sales ratio: 3.2; Dividend yield: 2.7%; TSINetwork Rating: Above Average; www. canadianutilities.com) distributes electricity and natural gas in Alberta and Australia. It also operates 18 power plants in Canada, Australia and the U.K. ATCO Ltd. (see right) owns 52.9% of the company.

In the quarter ended March 31, 2013, Canadian Utilities earned $183 million, down 3.7% from $190 million a year earlier. Earnings per share fell 4.2%, to $0.68 from $0.71. (All per-share amounts adjusted for a 2-for-1 stock split in May 2013.)

Without unusual items, mainly deferred payments from or refunds paid to customers, earnings would have risen 3.4%. Revenue gained 8.0%, to $876 million from $811 million. Colder-than-normal winter weather increased demand for electricity and natural gas. Higher rates in Australia also contributed to the gain.

The company continues to work on several new power projects in Alberta, including 355 kilometres of transmission lines and substations in the province’s southeast. It’s also building a 485-kilometre power line from northeast of Edmonton to southeastern Alberta. In all, the company expects to spend $4 billion on these projects between 2013 and 2015.

Canadian Utilities will probably earn $2.17 a share in 2013, and the stock trades at 16.6 times that estimate. The company’s 2014 earnings should rise to $2.34 a share as more of its new Alberta projects start up. The stock trades at a more reasonable 15.4 times that forecast. The $0.97 dividend yields 2.7%.

The class A non-voting shares are more liquid than the class B voting shares.

Canadian Utilities A is a buy.

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