Q: TOU has been range been bound between $60 and $70 for the past 2 years. Natural gas has hovered between $1.60 and $3 over that same timeframe. In the past 6 months, gas has more than doubled to $4.10 today and yet TOU has only grown 8.5% in that same time frame. What is holding back the price of TOU ?
5i Research Answer:
When looking at TOU, it is important to note its special dividends when looking at returns. In the past two years it has paid $7.50 in special dividends, along with $2.62 in regular dividends. Thus, performance is better than it appears. The company is conservatively run with very little debt compared with cash flow. It could be more aggressive with spending but then it wouldn't be the same TOU.