Friday, July 31, 2015

Canam Group Inc.

Sound bite for Twitter and StockTwits is: Price is reasonable to expensive. This is a small cap with a dividend. It might be a very interesting investment. On some absolute basis the stock could be considered to be cheap, for example when the P/GP Ratio is less than 1.00. See my spreadsheet at cam.htm.

I do not own this stock of Canam Group Inc. (TSX-CAM, OTC-CNMGA) but I used to. I bought this at the end part of 2011 because I thought that the market had gone overboard in punishing the stock because of a dividend cut and the company was having a tough time. I thought I could make a few thousand dollars for my RRIF account and that is what I did.

Dividends have been inconsistent with this company. They seem to give dividends out in good times and cut them in bad times. There was no dividend between mid-2011 and 2014. It was some 14 years ago when they increased the dividend to $0.16 per year and it has not changed, except to be cut. So this is not a dividend growth stock, at least not at the present.

One thing I look at is how much of a stock's original cost would be covered by dividends. If you had held this stock for 15, 20 or 25 years, dividends would have covered 29%, 58% and 62% of the original cost of your stock if you paid a median price.

The dividend yields have mostly been low. The current dividend yield is 1.13% based on a stock price of $14.13. The historical median dividend yield is 1.34%. If you had paid a median price for this stock and have held it for 15, 20 or 25% years, your current dividend yield on your original purchase price would be 2.02%, 3.74% and 3.91%. This is nothing to write home about.

Shareholders have done fine over the past 5 and 10 years. The total returns over the past 5 and 10 years are at 14.99% and 8.53% per year. The portion of this total return attributable to dividends is 0.77% and 1.34% per year. The portion of this total return attributable to capital gain is 14.21 and 7.18% per year.

The number of outstanding shares has decreased by 1.2% and 0.7% per year over the past 5 and 10 years. Shares have increased because of share issues, stock options and decreased because of buy backs. Over the past 5 and 10 years Revenue has had good to moderate growth, Earnings has had good growth and Cash Flow has had good growth. However for both Earnings and Cash Flow, there have been a lot of fluctuations year to year and if you look at 5 year running averages, there is no growth.

Revenue has grown at 14.5% and 6.1% per year over the past 5 and 10 years. Revenue per Share is up by 15.9% and 5.4% per year over the past 5 and 10 years. Even with Revenue, if you look at 5 year running average growth for Revenue per Share, growth is at 7.2% and 0.2% per year over the past 5 and 10 years. There has been fluctuation in Revenue year to year also.

EPS is up by 9.7% and 22.3% per year over the past 5 and 10 years. However, looking at 5 year running averages, EPS declined by 23% and increased by 6.3% per year over the past 5 and 10 years. This is because the company earned nothing in 2010 and had a loss in 2011.

Cash flow is up by 4.6% and 5.6% per year over the past 5 and 10 years. Cash Flow per Share is up by 5.9% and 4.8% per year over the past 5 and 10 years. Cash flow has also fluctuated year to year and if you look at 5 year running averages, CFPS is down by 23.4% and 10.4% per year over the past 5 and 10 years. The main reason for this is a negative Cash Flow in 2011.

The Return on Equity is low. The ROE for 2014 was 6.4% and the 5 year median is 4.7%. The ROE on comprehensive income is better and for 2014 it was 11.4% but the 5 year median is lower at just 2.2%.

Debt Ratios are generally good. The Liquidity Ratio for 2014 was 1.65 and the 5 year median is 2.03. Good Liquidity Ratios help see companies through the bad times. The Debt Ratio for 2014 was 1.65 and the Leverage and Debt/Equity Ratios for 2014 were 2.19 and 1.19. These last ratios are a little high.

The 5 year Price/Earnings per Share ratios are 9.90, 13.27 and 18.39. The corresponding 10 year ratios are lower at 8.76, 12.71 and 15.78. The current P/E Ratio is 13.72 based on a stock price of $14.13 and 2015 EPS estimate of $1.03. This stock price testing suggests that the stock price is relatively reasonable.

I get a Graham Price of $16.35. The 10 year Price/Graham Price Ratios are 0.55, 0.78 and 1.02. The current P/GP Ratio is 0.86 based on a stock price of $14.13. This stock price testing suggests that the stock price is relatively reasonable. On an absolute basis, a P/GP Ratio of less than 1.00 says that a stock is cheap.

I get a 10 year Price/Book Value per Share Ratio of 1.01. The current P/B Ratio is 1.23 based on a stock price of $14.13 and BVPS $11.53. The current P/B Ratio is some 22% above the 10 year P/B Ratio. This stock price testing suggests that the stock price is relatively expensive. However note that on an absolute basis P/B Ratios of 1.50 or lower are considered good ratios.

The current Dividend Yield is 1.13% based on a dividend of $0.16 and a stock price of $14.13. The only other dividend yield I can compare it to is the historical median dividend yield which is 1.34%, a value some 15.5% higher. This stock price testing suggests that the stock price is relatively reasonable but going towards expensive.

When I look at analysts' recommendations, I find only Buy recommendations so the consensus is a Buy. The 12 month stock price consensus is $17.00. This implies a total return of 21.44% with 1.13% from dividends and 20.31% from capital gains.

This Financial Post article by Damon van der Linde talks about speculation that the company might be awarded the steel contract for the multi-billion-dollar replacement of Montreal's Champlain Bridge. Then there is a Newswire article saying that Canam did signed a letter of commitment with SNC-Lavalin. In this addition of Me and My Money at the G&M the investor likes Canam Group. On Legacy, Taylor Nule talks about analysts' ratings for this stock.

I will have only one entry for this stock as I must do on some stock because I cover too many stocks to do double entries on all that I follow.

Canam Group specializes in the design and fabrication of construction products and solutions for the commercial, industrial, institutional, multi-unit residential, and bridge and highway infrastructure markets. This company has offices in Canada, US, Saudi Arabia, United Arab Emirates, India, Romania France and China. Its web site is here Canam.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Thursday, July 30, 2015

Penn West Petroleum Ltd.

Sound bite for Twitter and StockTwits is: Cheap, but risky. The problem is that revenues, earnings, cash flow and book value are all in deep decline. See my spreadsheet at pwt.htm.

I do not own this stock of Penn West Petroleum Ltd. (TSX-PWT, NYSE-PWE) but I used to. I bought this stock as Maximum Energy Trust (MXT.UN) in 1998. I sold this stock of Penn West in 2010 as it was changing to a corporation, but they are also getting back into exploration, rather than just selling oil from their wells. They also just reduced their dividends from $.15 per share per month to $.09 per share per month.

The dividends have continued to decline since 2010 and they are at $0.01 per quarter or at $0.04 per year. They have declined by 92.9% in 2015. The current dividend yield is 2.26% as the stock price has continued to decline also. Since they have not made a profit since 2013 and are not expected to make a profit before 2017, they really cannot afford to pay any dividends.

From Funds from Operations (FFO) stand point, the payout ratio is still good. In 2014 the Dividend Payout Ratio was 77.8%. In 2015 the DPR for FFO is expected to be around 22.7%. The big decline in dividends occurs next year when yearly dividend goes from $0.17 in 2015 or just $0.04 in 2016. The company obviously expects another big decline in FFO. The expected one in 2015 is some 60.5% lower than the FFO for 2014.

What I made on this stock was a total return of 8.47% with 10.43% from distributions and a capital loss of 1.96% between 1998 and 2010. Shareholders have not done well lately on this stock. The 5 and 10 year total return is a loss of 11.90% and 2.47% per year. The portion of this total return attributable to dividends is 4.10% and 9.11% per year over the past 5 and 10 years. The portion of this total return attributable to capital loss is at 16.00% and 11.58% per year over the past 5 and 10 years.

If you compare values for the year ending at the end of the second quarter to values at the end of 2014 revenue, earnings and cash flow has all declined. For Revenues the decline is28.9%, for FFO the decline is 45%, for earnings the decline is 18.8% and for cash flow the decline is 69.7%. None of this is good news.

One problem this company has is debt. Their Liquidity Ratio for 2014 is just 0.43. Current assets cannot cover current liabilities. If you add back in the current portion of long term debt ratio is 0.62. If you also add in cash flow after dividends the ratio is 1.48. However, cash flow is declining fast. Low Liquidity Ratios make a company vulnerable in the bad times. It is the bad times for oil companies.

The other debt ratios are fine. The Debt Ratio is 2.56 in 2014 and the Leverage and Debt/Equity Ratios for 2014 are 1.64 and 0.64.

In doing tests for stock price, I can use the Price/Book Value per Share Ratios. I have a 10 year P/B Ratio of 1.11 and the current ratio of 0.17 is some 85% lower. The current ratio is based on BVPS of $10.57 at the end of the second quarter and a stock price $1.77. However, the BVPS dropped some 30% between the end of 2014 and the end of the second quarter. On an absolute basis a P/B Ratio of 0.17 shows a very cheap price as company is theoretically selling below its breakup value. But with the BVPS dropping so fast this may not matter.

I get a 5 year median Price/FFO Ratio of 6.19 and the current P/FFO Ratio at 2.37 that is some 62% lower based on FFO estimate of $0.75 for 2015. This estimate is some 60.5% lower than 2014 FFO. Also, the FFO has dropped some 45% if you compare the FFO at the end of the second quarter to the FFO at the end of 2014.

When I look at analysts' recommendations, I find Hold, Underperform and Sell recommendations. Most recommendations are Underperform (or weak sell) and the consensus would be Underperform. The 12 month stock price is $2.78. This implies a total return of 59.32% with 2.26% from dividends and 57.06% from capital gains. This does not seem to correspond well with the analysts' recommendation of Underperform.

The Penn West Board faces allegations of stock options manipulation according to a recent article in the G&M. An article by Nelson Smith in the Motley Fool asks if sub $50 oil is going to send this company into bankruptcy.

I will have only one entry for this stock as I must do on some stock because I cover too many stocks to do double entries on all that I follow.

It is the largest conventional oil and natural gas producing trust in North America. They operate only in Alberta. Its web site is here Penn West.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Wednesday, July 29, 2015

Lassonde Industries Inc. 2

On my other blog I am today writing about growing dividend income if dividends are reinvested continue...

Sound bite for Twitter and StockTwits is: Stock price seems expensive. This stock has done very well for its shareholders, but it does seem relatively pricey at the moment. See my spreadsheet at las.htm.

I do not own this stock of Lassonde Industries Inc. (TSX-LAS.A, OTC- LSDAF). Although this stock is not on the Investment Reporter list, MPL communications does write about this stock. It has been covered several times in their Advice Hotline emails in 2010. Reports have been favorable and they suggest buying it for dividends and long term capital gains.

There is insider ownership with the Chairman and CEO owing all the Class B shares. If these shares were Class A shares they would be worth around $488M. They are probably worth more as they have 10 votes to Class A shares of one vote. There seems to be no stock options. In insider trading there was some insider selling and some insider buying with a net insider selling equal to 0.01% of the market cap of this stock.

The 5 year low, median and high median Price/Earnings per Share Ratios are 11.23, 13.18 and 15.14. These are a bit higher than the corresponding 10 year ratios of 10.34, 12.29 and 14.12. The current P/E Ratio is 20.92 based on a stock price of $137.46 and EPS for the 12 months ending at the end of the first quarter of $6.57. I could find no estimates for this company. No analyst seems to follow this company. This stock price testing suggests that the stock price is relatively expensive.

I get a Graham Price of $95.39. The 10 year low, median and high median Price/Graham Price Ratio is 0.87, 0.99 and 1.13. The current P/GP Ratios is 1.44 based on a stock price of $137.46. This stock price testing suggests that the stock price is relatively expensive.

I get a 10 year Price/Book Value per Share 1.80. The current P/B Ratio is 2.23 a value some 24% higher. My P/B Ratio of 2.23 is based on a stock price of $137.46 and BVPS of $61.55. This stock price testing suggests that the stock price is relatively expensive.

The 5 year median, historical average and historical median dividend yields are 1.69%, 1.96% and 1.83% which are some 29%, 39% and 35% higher than the current dividend yield of 1.19%. The dividend yield is based on dividends of $1.64 and a stock price of $137.46. This stock price testing suggests that the stock price is relatively expensive. The historical low dividend yield is 1.26% and this some 5% higher than the current dividend yield.

Lassonde has announced via the Newswire that they may buy back outstanding shares on the open market. Lassonde recently announced its Q1 2015 results via Newswire. Lassonde recently announced their acquisition of Apple & Eve, LLC. There is an interesting article about Lassonde suing a small company over its use of Oasis. Internet media helped resolve the dispute.

This is the second of two parts. The first part was posted on Tuesday, July 28, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.

Lassonde Industries Inc. is a North American leader in the development, manufacture and sale of a wide range of fruit and vegetable juices and drinks marketed under recognized brands such as Apple & Eve, Everfresh, Fairlee, Flavür, Fruité, Graves, Northland, Oasis, Rougemont, Seneca and The Switch. Lassonde is the second-largest producer of store brand ready-to-drink fruit juices and drinks in the United States and a major producer of cranberry juices, drinks and sauces. Its web site is here Lassonde.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Tuesday, July 28, 2015

Lassonde Industries Inc.

Sound bite for Twitter and StockTwits is: Dividend growth Consumer Staple stock. Even though the original owner has kept control through two classes of shares, shareholders have well when investing in this company. See my spreadsheet at las.htm.

I do not own this stock of Lassonde Industries Inc. (TSX-LAS.A, OTC- LSDAF). Although this stock is not on the Investment Reporter list, MPL communications does write about this stock. It has been covered several times in their Advice Hotline emails in 2010. Reports have been favorable and they suggest buying it for dividends and long term capital gains.

This company started to give dividends in 1991. Although they do not consistently raise their dividends each year the dividends has risen quite well. The dividend growth over the past 5 and 10 years is at 15.1% and 14% per year.

The dividend yield is quite low, but the growth is good. The current dividend is 1.19% based on a stock price of $137.46. The 5 year median dividend yield is better at 1.69%. If you have had this stock for 5, 10, 15 or 20 years, you would be currently earning a dividend yield of 3%, 5%, 12.5% or 13.5% on your original stock price is you made a median price for your stock.

If you purchased this stock today with the dividend yield of 1.19% and they continued to increase the dividends at 15%, in 10 or 15 years’ time you could be earning 4.8% or 9.7% yield on today’s stock costing $137.46.

The Dividend Payout Ratios are good. The DPR for EPS for 2014 was 24.6% and for CFPS was 19.2%. The 5 year median DPR for EPS is 23.2% and for CFPS is 14.1%.

Shareholders have done well over the past 5 and 10 years. The total return for the past 5 and 10 years is 20.47% and 14.8% per year. The portion of this total return attributable to dividends is 1.74% and 1.52% per year. The portion of this total return attributable to capital gains is 18.73% and 13.28% per year.

Outstanding shares have increased by 1.2% and 0.2% per year over the past 5 and 10 years. Shares have increased due to stock issues and decreased due to Buy Backs. There are also two levels of shares. Class A shares have one vote each and these are on the TSX. Class B shares have 10 votes each and are owned by insider Pierre-Paul Lassonde, who is the Chairman and CEO.

Revenue growth has been good over the past 5 and 10 years. Earnings growth is moderate to good. Cash Flow growth is low to good. Revenue has grown at 17.6% and 16.3% per year over the past 5 and 10 years. Revenue per Share has grown at 16.3% and 16% per year over the past 5 and 10 years. EPS has grown at 7% and 13.9% per year over the past 5 and 10 years.

Cash flow has grown at 2.2% and 9.2% per year over the past 5 and 10 years. CFPS is up by 1% and 8.9% per year over the past 5 and 10 years. Cash Flow can fluctuate so it is interesting to look at 5 year running averages. The for CFPS, the 5 year running averages show growth at 12.9% and 13.1% per year over the past 5 and 10 years. So growth in cash flow maybe better than it first appears just looking at growth over exactly 5 and 10 years.

The Return on Equity has been over 10% each year over the past 10 years. The ROE for 2014 was 10.5% and the 5 year median ROE is 12.4%. The comprehensive income is better with ROE for 2014 at 15.6% and the 5 year median ROE at 15.6%. This suggests that earnings are of good quality.

Debt Ratios are good. The Liquidity Ratio is 1.79 for 2014. The Debt Ratio is 1.74 for 2014. The Leverage and Debt/Equity Ratios are 2.36 and 1.36 for 2014.

This is the first of two parts. The second part will be posted on Wednesday, July 29, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.

Lassonde Industries Inc. is a North American leader in the development, manufacture and sale of a wide range of fruit and vegetable juices and drinks marketed under recognized brands such as Apple & Eve, Everfresh, Fairlee, Flavür, Fruité, Graves, Northland, Oasis, Rougemont, Seneca and The Switch. Lassonde is the second-largest producer of store brand ready-to-drink fruit juices and drinks in the United States and a major producer of cranberry juices, drinks and sauces. Its web site is here Lassonde.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Monday, July 27, 2015

Atlantic Power Corp.

On my other blog I am today writing about growing dividend income, spreadsheet versus actual. continue...

Sound bite for Twitter and StockTwits is: Cannot make money. No matter what my stock testing shows, I do not like companies that cannot make money. See my spreadsheet at atp.htm.

I do not own this stock of Atlantic Power Corp. (TSX-ATP, NYSE-AT). Because I like utility companies and in 2010, I have read two columns that recommended this particular utility company (TSX-ATP), I decided to investigate it. This company has converted from an income trust to a corporation.

My first impression when updating my spreadsheet recently was that this company does not seem to know how to make a profit. Personally, I prefer companies that can make a profit. It is in only one year in the past 11 years has this company made a profit. Analysts also do not expect this to happen again anytime in the near future.

They, of course, cannot cover their distributions with earnings. As far as I can see their distributable income for 2014 was negative. The Adjusted Funds from Operations was positive, but could not cover distribution either. The Payout Ratio for AFFO was 115%.

This is probably why the company changed their distributions from monthly to quarterly and dropped then some 70%. Distributions are down by 21% and 12% per year over the past 5 and 9 years.

Stock prices have not done well either. The total return is negative over the past 5 years at 19.6% per year and positive over the past 10 years at 2.07% per year. The capital loss over the past 5 and 10 years is at 26.74% and 11.40% per year. The portion of the total return attributable to dividends is at 7.09% and 13.47% per year over the past 5 and 10 years.

The outstanding shares have increased by 15% and 12.7% per year over the past 5 and 10 years. Shares have increased due to Share Issues, Stock Options and DRIP. This company reports in US$ and using US GAAP, so most of what I talk about in revenue, earnings and cash flow will be using US$. Revenue growth is moderate to good. There is no growth in AFFO, FFO or earnings. In fact earnings are growing worse. Growth in cash flow is non-existent to good.

Revenue has grown at 20% and 41% per year over the past 5 and 10 years. Revenue per share has grown at 4.4% and 25% per year over the past 5 and 10 years. Analysts expect no growth in 2015 or 2016.

With earnings most analysts refer to AFFO and I only have AFFO figures for 3 years and AFFO is down by 37% over the past 3 years.

Cash Flow is up by 14.7% and 31.8% per year over the past 5 and 10 years. Cash Flow down by 0.3% and up by 16.98% per year over the past 5 and 10 years. Because Cash Flow has fluctuated a lot it is interesting to look at 5 year running averages. Over the past 5 years, 5 year running averages for cash flow per share is down by 2.7% per year.

Debt ratios are decent. The Liquidity Ratio is good in 2014 at 1.82. The Debt Ratio is a little low in 2014 at 1.39 and I would prefer this to be at least 1.50. The Leverage and Debt/Equity Ratios for 2014 are 3.08 and 2.22, respectively. I would prefer them to be lower.

There are many ways to determine if stock price is reasonable and most I cannot apply, such as P/E Ratios, Price/Graham Price Ratios (because Graham Price is undeterminable) and dividend yield (because dividends have recently dropped 70%).

I can look at AFFO, but I only have four years of data. The median Price/AFFO Ratio over the past 4 years is 11.49 and the current P/AFFO Ratio is 19.78 based on 2015 AFFO estimate of $0.12 US$ or $0.16 CDN$ and a CDN$ stock price of $3.10. The current P/AFFO Ratio is some 74% higher than the 4 year median P/AFFO Ratio. This stock price testing suggests that the stock price is expensive.

The 10 year Price/Book Value per Share Ratio is 2.10. The current P/B Ratio is 0.86 based on BVPS of $3.61 CDN$ and stock price of $3.10 CDN$. This stock price test suggests that the stock price is cheap. On an absolute basis, a P/B Ratio less than 1.00 says a stock is cheap. You are purchasing a stock for less than its breakup value. Also, this stock has $1.08 CDN$ in cash for each shares.

I will have only one entry for this stock as I must do on some stock because I cover too many stocks to do double entries on all that I follow.

Atlantic Power Corporation is an independent power producer that owns interests in a diversified fleet of power generation and transmission projects located in the United States. This company has a collection of gas-fired plants in the US and is generally in the lower cost quadrant of generation in its region. ATP owns interests in a diversified portfolio of independent, non-utility power generation projects and one transmission line situated in major U.S. markets. Its web site is here Atlantic Power.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Thursday, July 23, 2015

Artis REIT

Sound bite for Twitter and StockTwits is: REIT, but not dividend growth. The dividend yield is good at 7.85%, but has not had an increase for a while. See my spreadsheet at ax.htm.

I do not own this stock of Artis REIT (TSX-AX.UN, OTC-ARESF). Early in 2013, this company was mentioned as a good REIT to own. A number of people I correspond with mentioned this REIT. However, my first view of it is not positive. It is also not a dividend growth stock.

One of the first things you see on Artis's Site is the statement of "Artis REIT is focused on producing a stable and growing stream of cash distributions for Unitholders." The problem is that companies that focus on good returns for their shareholders are not the companies that tend to make money and stay around for the long haul. The companies that do stat around are run by people that are passionate about their business.

This company is not producing a growing stream of cash flow. Distributions are up by 0% and 4.2% per year over the past 5 and 10 years. Dividend yield is quite good, but they have not increased the distribution since 2009. The dividend yield is currently at 7.85% and the 5 year median dividend yield is 7.15%.

The Dividend Payout Ratio for EPS has been high for the past 2 years and is expected to be even higher in 2015. However, the DPR for AFFO and FFO seems fine. The DPR for EPS for 2013 and 2014 was 95% and 81%. This ratio is expected to be 113% in 2015. The corresponding DPR for AFFP and FFO for 2014 was 87.8% and 76%. The Ratios for 2015 are expected to be 83% and 71%, respectively.

If you had held this stock for the past 5 and 10 years, dividends would have covered 43.6% and 94.7% of the cost of your stock if you paid a median price. If you had held this stock for the past 5 and 10 years, your dividend yield would be 8.72% and 9.54% if you paid a median price.

Shares have increased by 29% and 62% per year over the past 5 and 10 years. Shares have increased due to Stock Issues, Conversion of Debentures, Stock Options and DRIP. This makes the per share values the most important ones. Revenue growth is low to good. EPS growth is good, but this is because of a lot of years of negative EPS. Cash Flow growth is moderate to good. FFO growth is non-existent to good and AFFO growth is moderate.

Revenue has grown at 29.6% and 97.6% per year over the past 5 and 10 years. Revenue per Share has only grown at 0.1% and 21.8% for the past 5 and 10 years. Analysts expect Revenue growth to be around 6.5% in 2015. If you compare the 12 month period to the end of 2014 and the 12 month period to the end of the first quarter, Revenue has grown at only 1.7%.

As I have said, EPS growth is very good, but 5 and 10 years ago, this stock had negative earnings. They did not start to have positive earnings until 2011. EPS growth is 47.3% and 20.5% per year over the past 5 and 10 years. Analysts expect EPS to drop by some 29% in 2015. If you compare the 12 month period to the end of 2014 and the 12 month period to the end of the first quarter, EPS is down 26%. EPS is expected to do better in 2016.

Cash flow is up by 38% and 37.6% per year over the past 5 and 10 years. CFPS is up by 6.7% and 28% per year over the past 5 and 10 years. Analysts expect cash flow to drop by around 43% in 2015. If you compare the 12 month period to the end of 2014 and the 12 month period to the end of the first quarter, cash flow is up by 8.2%.

Funds from Operations (FFO) is down by 15.5% per year over the past 5 years and up by 10.3% per year over the past 9 years. Analysts expect FFO to grow by 7% in 2015. If you compare the 12 month period to the end of 2014 and the 12 month period to the end of the first quarter, FFO is flat.

Adjusted Funds from Operations (AFFO) is up by 5.5% per year over the past4 years. Analysts expect AFFO to growth by 5.7% in 2015. If you compare the 12 month period to the end of 2014 and the 12 month period to the end of the first quarter, AFFO has grown by 0.8%.

The Return on Equity is low. The ROE for 2014 was 7.3% and the 5 year median ROE is 7.7%. The ROE on comprehensive income is better at 9.7% with a 5 year median value of 9.7%.

I hate the Liquidity Ratio. Low Liquidity Ratios make a company vulnerable in the bad times. If you invest in a company for the longer term you want it able to survive the bad times. If you look at current assets and current liabilities, the 2014 Ratio is 0.15. This means that the company has far more liabilities and assets. You have to subtract the current portion of long term debt and add in cash flow after taking into account actual cash dividends paid. The Ratio is then low, but acceptable at 1.40.

This company does not pay all dividends in cash. Because it has a DRIP plan they can issue dividends as stock not cash and this conserves their cash.

Other debt ratios are fine. The Debt Ratio for 2014 is 1.99 and the Leverage and Debt/Equity Ratios for 2014 are 2.01 and 1.01.

This is the first of two parts. The second part will be posted on Friday, July 24, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.

Artis REIT's portfolio is comprised of industrial, retail, and office space in Canada and the United States. Its web site is here Artis REIT.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Wednesday, July 22, 2015

Inter Pipeline Ltd. 2

On my other blog I am today writing about growing dividend income continue...

Sound bite for Twitter and StockTwits is: stock is rather expensive. The only test that shows that price might be reasonable is the 5 year dividend yield test. However, they are probably paying too much out in dividends and they are still increasing dividends when they really cannot afford to. See my spreadsheet at ipl.htm.

I do not own this stock of Inter Pipeline Ltd. (TSX-IPL, OTC-IPPLF). In 2008, a friend had asked me about this pipeline and I had no information on it, so I investigated it. It is a utility and I follow and have lots of utility stocks.

When I look at insider trading, I find no insider selling and a small amount of insider buying worth around $1.5M and 0.02% of the market cap. There is insider ownership with the CEO owning shares worth around $15.6M and an officer owning shares worth around $46.8M. The old chairman owned shares worth around $230M but the new chairman owns share worth around only $0.8M.

The insiders do not get stock options that increase outstanding shares. Rather they get Rights that are cashable. In 2014 insiders got the equivalent of 580,000 shares which lowered the book value by some $30.3M. At the end of 2014 this number of shares would have been worth $20.8M.

The 5 year low, median and high median Price/Earnings per Share Ratios are 15.13, 17.56 and 19.92. The 10 year corresponding ratios are lower at 12.03, 14.29 and 16.76. The current P/E Ratio is 19.45 based on a stock price of $28.59 and 2015 EPS estimate of $1.47. This stock price testing suggests that the stock price is rather relatively expensive. The stock price is near the very top end of the reasonableness range.

I get a Graham Price of $16.46. The 10 year low, median and high median Price/Graham Price Ratios are 1.07, 1.25 and 1.43. The current P/GP Ratio is 1.74 based on a stock price of $28.59. This stock price testing suggests that the stock price is relatively expensive.

I get a 10 year Price/Book Value per Share Ratio of 2.23. The current P/B Ratio is 3.49 a value some 57% higher. The current P/B Ratio is based on a stock price of $28.59 and BVPS of $8.19. This stock price testing suggests that the stock price is relatively expensive.

The 5 year median dividend yield is 5.07% and the current dividend yield at 5.14% is some 1.4% higher. The current dividend yield is based on dividends of $1.47 and a stock price of $28.59. This stock price testing says that the stock price is reasonable. However, you have to wonder about this test because they are paying out more than their earnings. The Dividend Payout Ratio for EPS was 128% in 2014 and is expected to be around 100% in 2015. This would suggest that dividends are too high.

If you look at historical dividends, they are a lot higher with the historical median dividend yield at 9.02%. This is because this company used to be a Limited Partnership, but in 2013 IPL because a corporation. Dividend yield started to decrease in 2011 when other companies that were Limited Partnerships or Income Trust companies were converting to corporations.

When I look at analysts' recommendations I find Strong Buy, Buy and Hold Recommendations. The consensus recommendation is a Buy. The 12 month consensus stock price is $34.40. This implies a total return of 25.46% with 5.14% from dividends and 20.32% from capital gains.

In this update on Dakota Financial News, Samantha Reynolds talks about recent insider buying and recent analysts' comments on this stock. In this article in the Your oil and Gas News, IPL talks about completing the Polaris Pipeline expansion. Andrew Walker of the Motley Fool gives 3 reasons why you should buy this stock.

This is the second of two parts. The first part was posted on Tuesday, July 21, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.

Inter Pipeline is a major petroleum transportation, natural gas liquids extraction, and bulk liquid storage business based in Calgary, Alberta, Canada. Structured as a publicly traded limited partnership, Inter Pipeline owns and operates energy infrastructure assets in western Canada, the United Kingdom, Germany and Ireland. The company is a limited partnership, not an income trust. Its web site is here Inter Pipeline.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Inter Pipeline Ltd.

Sound bite for Twitter and StockTwits is: Dividend growth stock, very low Liquidity Ratio. The problem with low Liquidity Ratios is that it can make a company vulnerable in bad times. The lower ROE on Comprehensive Income is not a good sign either. See my spreadsheet at ipl.htm.

I do not own this stock of Inter Pipeline Ltd. (TSX-IPL, OTC-IPPLF). In 2008, a friend had asked me about this pipeline and I had no information on it, so I investigated it. It is a utility and I follow and have lots of utility stocks.

The thing that I noticed in doing my spreadsheet is that this company has a very low Liquidity Ratio. In 2014 it was 0.13. The last time it was over 1.00 was in 2006. Even if you strip out the current portion of the long term debt and the revolving commercial papers the Liquidity Ratio only rises to 0.41. And, if you add in cash flow less dividends it is 0.65.

The thing with this stock is that they use DRIPs. This means that they do not have to pay all their dividends in cash, but give out additional stock instead. So, if I add in cash flow and just subtract dividends paid in cash the Liquidity Ratio is 1.08 instead of 0.65. The problem with low Liquidity Ratios is that this makes a company vulnerable in the bad times and recessions do crop up on a regular basis. I prefer companies with a Liquidity Ratio of at least 1.50. The problem with revolving commercial paper is that it may be cancelled at any time. Another vulnerability for this company.

This is a dividend growth stock. The dividend is good and the increases are moderate. The current dividend is 5.14% and the 5 year median dividend yield is 5.04%. The 5 and 10 year dividend growth is at 9.2% and 6% per year.

Because dividends are good and increasing, it does not take long for your stock's purchase price to be covered by dividends. If you bought this stock 5 and 10 years ago today, 45.6% and 105.6% of the stock price would have been covered by dividends. Also, if you had bought this stock 5 or 10 years ago, you could be earning 11.3% or 15.3% dividend yield on your original purchase price. These both are dependent on you paying a median price for your stock.

Shareholders have done well over the past 5 and 10 years with total return at 19.98% and 17.38% per year. The portion of this total return from dividends is at 6.09% and 6.36% per year. The portion of this total return from capital gains is at 13.89% and 11.02% per year.

Outstanding shares have increased over the past 5 and 10 years by 5.1% and 6.1% per year. Shares have increase due to share issues and DRIP. This makes the per share values the most important ones. The Revenue growth is moderate to good. The EPS share growth is moderate to good as is Cash Flow.

Revenue has grown at 11% and 12.4% per year over the past 5 and 10 years. Revenue per share has grown at 5.6% and 5.9% per year over the past 5 and 10 years. Analysts expect good growth in Revenue in 2015 at around 15%. However, if you look at the 12 months to the end of 2014 compared to the 12 months to end of the first quarter, Revenue is down slightly by 0.3%.

EPS has grown at 9.1% and 6.9% per year over the past 5 and 10 years. There has been a lot of fluctuation in EPS year to year. If you look at the 5 year running averages, EPS has grown at 8.7% and 12.7% per year over the past 5 and 10 years. Analysts expect growth in EPS of around 44% in 2015. If you look at the 12 months to the end of 2014 compared to the 12 months to end of the first quarter, EPS is up by 6.9%. It is going in the right direction.

Cash Flow is up by 13% and 18.6% per year over the past 5 and 10 years. CFPS is up by 8.4% and 7.6% per year over the past 5 and 10 years. Analysts expect Cash Flow to grow by 33% in 2015. If you look at the 12 months to the end of 2014 compared to the 12 months to end of the first quarter, Cash Flow is up by 4.3%. It is going in the right direction.

Return on Equity has been below 10% twice in the past 5 years and 4 times in the past 10 years. The ROE for 2014 was 9.9% and the 5 year median was 17.5%. The ROE on comprehensive income is lower at 9.3% for 2015 and 15.5% at the 5 year median. The lower ROE on comprehensive income suggests that the earnings may not be all they appear to be.

I have already talked about the Liquidity Ratio. The Debt Ratio is fine at 1.64, but its 5 year median value is a bit low at 1.45. The Leverage and Debt/Equity Ratios are a little high, but these ratios are not uncommon for utility stocks. Ratios for 2014 were at 2.56 and 1.56 respectively.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus recommendation is a Buy. The 12 month stock price consensus is $34.40. This implies total return of 25.46% with 20.32% from capital gains and 5.14% from dividends. The 12 month stock consensus price seems a little high to me.

This is the first of two parts. The second part will be posted on Wednesday, July 22, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.

Inter Pipeline is a major petroleum transportation, natural gas liquids extraction, and bulk liquid storage business based in Calgary, Alberta, Canada. Structured as a publicly traded limited partnership, Inter Pipeline owns and operates energy infrastructure assets in western Canada, the United Kingdom, Germany and Ireland. The company is a limited partnership, not an income trust. Its web site is here Inter Pipeline.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Monday, July 20, 2015

TMX Group Ltd.

On my other blog I am today writing about how my dividend growth calculation spreadsheets would be if dividend increases were strong at first and then weaker later continue...

Sound bite for Twitter and StockTwits is: Not dividend growth, price cheap to reasonable. Dividend yield testing is one of my favourite methods because it involves no estimates and uses current values of dividend yield and stock price. By this light this stock is selling at a price that is relatively above the median. See my spreadsheet at x.htm.

I do not own this stock of TMX Group Ltd. (TSX-X, OTC-TMXXF). I looked at this stock in 2008 after I found it on a list of Strongest Dividend Growth stocks. I am interested in such stocks.

This stock started off as a dividend growth stock in 2003. However, since 2007, it has only raised the dividend once and that was in 2010. So I would think that this stock is no longer a dividend growth stock. Dividend growth is good for the last 10 years but is very low for the last 5 years. Dividend growth is at 1% and 10.7% per year over the past 5 and 10 years.

This stock's earnings have fluctuated over the years and they could not always cover the dividends. For example in 2009 the Dividend Payout Ratio is 108% and in 2012 DPR was 219%. The 5 year median DPR for EPS is not bad at 77.6%. However, the DPR for EPS was a bit high in 2014 at 86.5%. The DPR for CFPS is looking ok with the DPR for CFPS for 2014 at 25.3% and the 5 year median at 32.26%.

Shareholders have done well over the last 5 years, but not over the last 10 years. The 5 and 10 years total return is 10.49% and 3.97% per year with 6.65% and 0.82% per year from capital gains and 3.84% and 3.15% per year from dividends.

The outstanding shares have decreased by 6.1% and 2.2% per year over the past 5 and 10 years. Shares have increased due to stock options and share issues and have decreased due to Buy Backs. Revenue growth is moderate to good. Earnings growth is non-existent to moderate. Cash Flow Growth is good.

Revenue has grown at 5.2% and 11.4% per year over the past 5 and 10 years. This is the Revenue value we should be looking at because of decreasing shares. Revenue per Share is up by 12% and 13.9% per year over the past 5 and 10 years. Analysts expect modest growth in Revenue this year.

Net Income, the earnings value we should be most interested in, is down by 1.2% and up by 3.9% per year over the past 5 and 10 years. EPS is up by 5.6% and 6.4% per year over the past 5 and 10 years. Analysts expect very good growth in earnings for 2015, but both EPS and Net Income are down for the first quarter of 2015.

Cash flow is up by 9.7% and 18.8% per year over the past 5 and 10 years and CFPS is up by 16.8% and 21.5% per year over the past 5 and 10 years. Analysts expect a decline in cash flow for 2015, but cash flow is up by 7% for the first quarter of 2015 if you compare the 12 months to the end of 2015 and the 12 months to the end of the first quarter.

Return on Equity has been below 10% each of the past 3 years. The 2015 ROE is 3.4% and the 5 year median is 4.2%. The ROE on comprehensive income is similar as the 2015 ROE is 3.3% and the 5 year median is 4.9%.

There is very little insider ownership expect for one director that owns shares worth around $20.7M. There is no insider buying, but insider selling is just $0.6M and only 0.02% of the market cap.

The 5 year low, median and high median Price/Earnings per Share Ratios are 18.69, 21.74 and 24.79. They are similar to the 10 year values of 15.57, 22.40 and 26.07. The current P/E Ratio is 14.87 based on a stock price of $51.00 and 2015 EPS estimate of $3.43. This stock price testing suggests that the stock is relatively cheap. However, EPS estimates have been lower than the actual EPS over the past 2 years.

I get a Graham Price of $64.56. The 10 year low, median and high median Price/Graham Price Ratios are 1.27, 1.56 and 1.77. The current P/GP Ratio is 0.79 based on a stock price of $51.00. This stock price testing suggests that the stock is relatively cheap.

The 10 year Price/Book Value per Share Ratio is 2.96. The current P/B Ratio is 0.94 and is some 68% lower based on a BVPS of $54.00 and a stock price of $51.00. This stock price testing suggests that the stock is relatively cheap.

The 5 year median Dividend yield is 3.32% and the historical median dividend yield is 3.20%. These are both higher than the current Dividend Yield of 3.14%. What you want for a good stock price is for the current dividend yield is to higher than the median dividend yields. However, the median dividend yields are not that far off the current dividend yield and this suggests that this stock price testing shows the stock is relatively reasonable. However, price is above the relative median and it is far better for it to be at least below the relative median price.

The analysts' recommendations are Buy, Hold and Underperform. There is only 5 analysts following this stock and the consensus would be a Hold. The 12 month stock price is $56.00. This implies a total return of 12.94% with 9.80% from capital gain and 3.14% from dividend. This good return does not quite match the Hold and Underperform recommendations.

This article in the Financial Post talks about TMX Group taking a fresh approach with their hire of Nick Thadaney.

I will have only one entry for this stock as I must do on some stock because I cover too many stocks to do double entries on all that I follow.

TMX Group Ltd. operates two national stock exchanges, Toronto Stock Exchange serving the senior equity market and TSX Venture Exchange serving the public venture equity market, Natural Gas Exchange (NGX), a North American exchange for the trading and clearing of natural gas and electricity contracts and Shorcan Brokers Limited, a fixed income inter-dealer broker. Its web site is here TMX Group.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

Friday, July 17, 2015

Morneau Shepell Inc.

Sound bite for Twitter and StockTwits is: May not be as cheap as it seems. On some measures, this stock is cheap. However, looking at the P/B Ratio testing it is not. The book value is basically the breakup value of a company and this value has been declining. BVPS is down by 2.1 and 1.1% per year over past 5 and 9 years or 9.9% over the past 9 years. This is not good. See my spreadsheet at msi.htm.

I do not own this stock of Morneau Shepell Inc. (TSX-MSI, OTC-MSIXF). Every once in a while I go through the stocks that my brokerage, TD Waterhouse, is recommending to find promising new stocks. In February 2013 this stock was rated a buy by TD Waterhouse. It was under Diversified Financials.

This company used to be an income trust under Morneau Sobeco Income Trust (TSX-MSI.UN). It changed to a corporation in January 2011 and changed its name to Morneau Shepell Inc. At the same time the dividends were decreased by 17.4%. Also since then the dividends have not been increased. There was dividend increases prior to 2011 on this company that went public in 2005.

Dividends are still paid monthly. If you compare dividends paid to EPS, the Dividend Payout Ratio is 152% in 2014. Analysts expect this to drop to around 84% in 2015. They come up with a Distributable Income, which they now call Normalized Free Cash Flow and say that their Payout Ratio is 74%. I get a DPR for cash flow at 41% in 2014. It would seem that they would perhaps have room in the future to increase dividends again.

The total return over the past 5 and 10 years is 16.34% and 9.33% per year with 9.98% and 3.15% per year from capital gains and 6.37% and 6.18% per year from dividends. Future dividends will be lower as this company is no longer an income trust. Current dividends are good at 4.67%.

Outstanding shares have increased by 0.1% and 6.4% per year over the past 5 and 9 years. Outstanding shares have increased due to Share Issues, Stock Options and Conversion of Debentures. Revenue growth has been good. Earnings growth has been low to good. Cash Flow Growth has been moderate to good.

Revenues have grown at 10.1% and 18.1% over the past 5 and 9 years. Revenue per Share has grown at 10% and 11% per year over the past 5 and 9 years. EPS has 14.4% and 1.8% per year over the past 5 and 9 years. Cash Flow has grown at 7.2% and 33.6% per year over the past 5 and 9 years. CFPS has grown at 7.1% and 25.6% per year over the past 5 and 9 years. Analysts only expect little change for 2015.

The Return on Equity has always been low with the ROE for 2014 at 7.9% and the 5 year median at 6.1%. The ROE on comprehensive income is similar with the ROE for 2014 at 8% and the 5 year median at 6.3%.

Debt ratios are fine. The Liquidity Ratio for 2014 was 1.90 and the Debt Ratio for 2014 was 1.73. Leverage and Debt/Equity Ratios are a little high at 2.38 and 1.38.

Insiders seem to be selling. For example last time I looked the CEO has some 27,000 shares and now has none and the Chairman had some 2.24M shares and now has some 396,000 shares. This is not really a good sign.

The 5 year low, median and high median Price/Earnings per Share Ratios are 24.70, 27.52 and 30.35. The corresponding 10 year values are similar at 24.35, 29.22 and 32.30. The current P/E Ratio is 17.77 based on a stock price of $16.70 and 2015 EPS estimate of $0.94. This stock price testing suggests that the stock price is relatively cheap.

I get a Graham Price of $11.81. The 10 year low, median and high median Price/Graham Price Ratios are 1.24, 1.45 and 1.59. The current P/GP Ratio is 1.41 based on a stock price of $16.70. This stock price testing suggests that the stock price is relatively cheap.

I get a 10 year Price/Book Value per Share of 1.57. The current P/B Ratio is 2.53 based on a stock price of $16.70 and PVPS of $2.53. This stock price testing suggests that the stock price is expensive. The problem is that the Book Value has been declining after hitting a peak in 2009. This is not a good sign.

I will have only one entry for this stock as I must do on some stock because I cover too many stocks to do double entries on all that I follow.

Morneau Shepell Inc. provides human resource consulting and outsourcing services. The firm delivers solutions to assist employers in managing the financial security, health and productivity of their employees. The company has business in Canada and US. Its web site is here Morneau Shepell.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.