Monday, March 30, 2015

Enbridge Inc. 2

On my other blog I am today writing about Dividend Payment Dates continue...

Sound bite for Twitter and StockTwits is: Stock price seems high. On most tests the current stock price seems to be rather high. On a relative basis the stock price seems to have been high since at least 2012. See my spreadsheet at enb.htm.

I own this stock of Enbridge Inc. (TSX-ENB, NYSE-ENB). I first bought this stock in 2005 and then bought more in 2008 and 2009. This stock was on the Dividend Achievers, the Dividend Aristocrats list and also on Mike Higgs' list of Canadian Dividend Growth stocks. Enbridge is considered to be a low risk stock.

The first thing I noticed was the incredible number of options that insiders have. The CEO has some 5.7M options worth at current prices around $340.9M. The CEO has some 1.6M options worth around $96.9M. The company says that it has set aside for options some 60M shares. Currently this number of shares is worth some $3,584M. This is some 7.2% of the outstanding shares. This company is worth some $50B. All stock options granted have strike prices.

In 2014 the outstanding shares were increased by some 3M shares. The book value for these shares was $51M and at the end of 2014 these shares were worth $179M. The 3M shares are only 0.35% of the outstanding shares.

However, in 2013 and 2012 outstanding shares were increased by 0.60% and 0.75% respectively. Generally companies increase the shares by around 0.50% for stock options. The percentage of options is a bit high in 2013 and 2012 but not extraordinarily and the stock options for 2014 were lower.

Insider trading in the past year has $25.3M of insider selling and net insider selling at $25.1M. There is some minor insider buying. This insider selling is just 0.05% of the stock's market cap.

The 5 year low, median and high median Price/Earnings per Share Ratios are 33.47, 38.65 and 43.82. These are considerably higher than the corresponding 10 values of 18.03, 20.68 and 23.43. The 5 year values are high because the last 3 years the P/E Ratios have been high. This has been mostly due to low EPS for 2012 and 2013. To me, the 5 year P/E Ratios is very high for a utility stock.

The current P/E Ratio is 27.19 based on a stock price of 60.90 and 2015 EPS estimate of $2.24. Compared to the 10 year P/E Ratios, this is a rather high one. I think that the 10 year P/E Ratios are more reasonable than the 5 year P/E Ratios. By the way, the historical high P/E Ratio is 30.57 based on a formula that ignores outlier values. By looking at the P/E Ratios, it would seem that the stock price might be relatively expensive.

I get a Graham Price of $27.21. The 10 year low, median and high median Price/Graham Price Ratios are 1.40, 1.61 and 1.82. The current P/GP Ratio is 2.24 based on a stock price of $60.90. This stock price testing would suggest that the stock price is relatively expensive. Do not forget that Benjamin Graham thought that a good stock price was one where the P/GP Ratio was 1.00 or below.

The 10 year Price/Book Value per Share Ratio is 2.82. The current P/B Ratio at 4.14 is some 47% higher. The current P/B Ratio is based on a stock price of $60.90 and current BVPS of $14.69. This stock price testing would suggest that the stock price is relatively expensive.

The 5 year median Dividend Yield is 2.86% and the current Dividend Yield at 3.05% is some 6.9% higher and this is good. You want the current Dividend Yield to be higher the median. However, if you look at historical Dividend Yields the pictures changes.

The historical average Dividend Yield is 4.66% and the historical median Dividend Yield is 3.47%. The current Dividend Yield is some 34% higher than the historical average, but only 12% above the historical median. The historical median is probably more meaningful as a way to test the Dividend Yield. It is only in this category that the current stock price could be characterized as reasonable.

However, there was also a very high dividend hike of almost 33% in the dividends for 2015. This is way above the norm for this stock which normally hikes the dividend by a value closer to 11 or 12%. There could be a case to not do dividend yield testing of the stock price for this company. On the other hand, if you look at projected EPS, it would appear that the company can clearly afford this dividend increase.

When I look at analysts' recommendations, I find Buy, Hold and Underperform recommendations. Most of the recommendations are a Buy and this would be the consensus recommendation. The stock price consensus target is $66.60. This implies a total return of 12.41%, with 3.05% from dividends and 9.36% from capital gains.

This article talks about National Energy Board fining Enbridge $264,000 in penalties. This is a company that earned almost $1.2B in 2014. This Motley Fool article by Cameron Conway talks about Enbridge transferring assets to its subsidiary companies. This article in Market Wired talks about analysis reaction to Enbridge's plans to optimize a previously announced expansion of its Regional Oil Sands System.

This is the second of two parts. The first part was posted on Friday, March 27, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.

Enbridge is focused on three core businesses of crude oil and liquids pipelines, natural gas pipelines, and natural gas distribution. They operate in Canada and US. Its web site is here Enbridge.

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, March 27, 2015

Enbridge Inc.

Sound bite for Twitter and StockTwits is: Dividend Growth Utility Stock. This pipeline stock has done well over the years and I am currently happy with my investment in this company. See my spreadsheet at enb.htm.

I own this stock of Enbridge Inc. (TSX-ENB, NYSE-ENB). I first bought this stock in 2005 and then bought more in 2008 and 2009. This stock was on the Dividend Achievers, the Dividend Aristocrats list and also on Mike Higgs' list of Canadian Dividend Growth stocks. Enbridge is considered to be a low risk stock.

This stock has a moderate dividend and moderate dividend increases. The Dividend is 3.05% and the 5 year median is 2.86%. The dividends have grown at 13.6% and 11.8% per year over the past 5 and 10 years. The last dividend increase was in 2015 and the increase was quite high at 32.9%.

The Dividend Payout Ratio against EPS has been high lately, but it is moderate for CFPS. The DPR for EPS was at 102% for 2014 and it has a 5 year median DPR of 102%. However, even with the large dividend growth for 2015, the DPR for 2015 is expected to be around 83%. The DPR for CFPS is at 27.6% in 2014 and the 5 year median is 29%.

The company has been given out an Adjusted EPS value each year for quite a number of years. This Adjusted EPS the company feels is a better reflection of earnings. The DPR for the Adjusted EPS for 2014 was at 75% and the 5 year median is 70%. A few analysts have been giving out an AFFO value for this stock for the last few years. For 2014 the DPR for AFFO is 53.6% and the 4 year median value is 52%.

I have done quite well with these shares. My Total Return is 19.35% with 16.14% from capital gains and 3.21% from dividends. The 5 and 10 year Total Return to date is at 20.08% and 15.86% per year with 16.70% and 12.86% per year from capital gains and 3.38% and 3% per year from dividends.

The outstanding shares have increased by 2.4% and 2.1% per year over the past 5 and 10 years. The revenue and cash flow has grown quite well over the past 5 and 10 years. Earnings and net income growth is non-existent over the past 5 years but moderate over the past 10 years. The Adjusted EPS has grown quite well, but AFFO has not grown at all.

Revenue is up by 24.7% and 19% per year over the past 5 and 10 years. Revenue per share is up by 21.8% and 16.7% per year over the past 5 and 10 years. Cash Flow has grown by 17.9% and 15.1% per year over the past 5 and 10 years. CFPS is up by 16.7% and 13.1% per year over the past 5 and 10 years.

EPS is down by 8.4% and up by 3.7% per year over the past 5 and 10 years. EPS has been a bit volatile and if you look at the 5 year running average, EPS is down by 4.4% and up by 2.3% per year over the past 5 and 10 years. Adjusted EPS is up by 9.7% and 9.8% per year over the past 5 and 10 years. AFFO is up by 0.3% per year over the past 3 years.

Until 2011, the Return on Equity was 10% or over. Since then it has been quite low. The ROE for 2014 was 5.5% and the 5 year median value is also 5.5%. However, the ROE on comprehensive income is much higher with the 2014 value at 10.5% and the 5 year median at 10%. This suggests that the earnings are better than they might first appear to be.

A negative for this company is the not so good debt ratios. The Liquidity Ratio for 2014 was 0.86. This means that the current assets cannot cover the current liabilities. If you add in cash flow after dividends the ratio barely makes 1.00 at 1.01. The company will rely on cash flow to pay current liabilities. The Debt Ratio is low, but adequate at 1.41. The Leverage and Debt/Equity Ratios are rather high, but this is not unusual for this sort of stock. The value for 2014 was 3.46 and 2.46, respectively.

This is the first of two parts. The second part will be posted on Monday, March 31, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.

Enbridge is focused on three core businesses of crude oil and liquids pipelines, natural gas pipelines, and natural gas distribution. They operate in Canada and US. Its web site is here Enbridge.

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, March 26, 2015

Richelieu Hardware Ltd. 2

Sound bite for Twitter and StockTwits is: Stock price is relatively expensive. I do not believe in buying stocks when they are relatively expensive. Have patience and a stock will come into at least a reasonable range at some point. See my spreadsheet at rch.htm.

I own this stock of Richelieu Hardware Ltd (TSX-RCH, OTC-RHUHF). I initially bought this stock in 2007 because it was recommend by the Investment Reporter. It is not on any of the dividend lists, probably because they only started to pay dividends in 2000, they are a rather small company and they did not increase dividends in 2009.

Over the past year there has been $1M of insider selling and $0.8M of net insider selling with a bit of insider buying. Insider selling is only around 0.07% of the market cap and therefore is relatively low. There is some insider ownership with the CEO owing shares worth around $79.2M and just over 7% of the outstanding shares. Also, the Chairman has shares worth around $4.5M.

In 2014, the outstanding shares were increased by 188,000 shares for stock options. The book value of these shares was $4.6M and this number of shares was worth around $10.6M at the end of 2014. The number of shares is 0.96% of the outstanding shares. This is relatively a little high when a lot of company's stock options are around 0.50% of the outstanding shares.

The 5 year low, median and high median Price/Earnings per Share Ratios are 12.95, 14.80 and 16.71. The corresponding 10 year values are similar at 14.03, 15.47 and 16.94. The current P/E Ratio is 21.02 based on a stock price of $61.18 and 2015 EPS estimate of $2.91. This stock price testing suggests that the stock is relatively expensive.

I get a Graham Price of $32.16. The 10 year low, median and high median Price/Graham Price Ratios are 1.16, 1.29 and 1.43. The current P/GP Ratio is 1.90 based on a stock price of $61.18. This stock price testing suggests that the stock is relatively expensive.

The 10 year median Price/Book Value per Share Ratio is 2.45. The current P/B Ratio at 3.87 is some 58% higher. The current P/B Ratio is based on a BVPS of $15.80 and a stock price of $61.18. This stock price testing suggests that the stock is relatively expensive.

The 5 year median, historical average and historical median Dividend Yields are 1.38%, 1.34% and 1.19%. They are 29%, 26% and 18% higher than the current dividend yield of 0.98%. The current dividend yield is based on Dividends of $0.60 and a stock price of $61.18. Mind you it is still some 30% away from the historical low Dividend Yield of 0.76%. However, this stock price testing still suggests that the stock is relatively expensive.

The analysts' recommendations are a Buy, but there is only two analysts following this stock. The stock price target is $63.50. This implies a total return of just 4.77% with 3.79% from capital gains and 0.98% from dividends. Rather low return for Buy recommendations.

This is the second of two parts. The first part was posted on Wednesday, March 25, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.

This company is a distributor, importer and manufacturer of specialty hardware and complementary products. Its products are kitchen and bathroom cabinets, furniture, and window and door. It is also involved with residential and commercial woodworking industry. It has a large customer base of hardware retailers. Its web site is here Richelieu Hardware.

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, March 25, 2015

Richelieu Hardware Ltd.

On my other blog I am today writing about Dividend Payment Cycles continue...

Sound bite for Twitter and StockTwits is: Dividend growth consumer stock. I have done quite well with this stock and I am pleased with it. The only problem is the low dividend rate. This means that it will be one of the first for me to sell from the Registered Accounts. See my spreadsheet at rch.htm.

I own this stock of Richelieu Hardware Ltd (TSX-RCH, OTC-RHUHF). I initially bought this stock in 2007 because it was recommend by the Investment Reporter. It is not on any of the dividend lists, probably because they only started to pay dividends in 2000, they are a rather small company and they did not increase dividends in 2009.

Dividends are low and the increases are moderate. The current dividend is just 0.98%. The 5 year median is 1.38%. The 5 and 10 year growth in dividends is at 11.8% and 13.4% per year. The company has been paying dividends since 2002. The most recent dividend increases was in 2015 and the increase was for 7.1%.

The Dividend Payout Ratios are low. The 2014 DPR for EPS is at 21.3% and the 5 year median for EPS is 22.3%. The DPR for CFPS for 2014 is at 18.2% and the 5 year median DPR for CFPS is at 18.3%.

For the shares I bought in 2009, I am currently earning 3.3% on my original purchase. For the shares I bought in 2007, I am currently earning 2.5% on my original purchase. This is because the shares I bought in 2009 were cheaper than the shares I bought in 2007.

I have made a total return of 21.86% per year with 20.52% per year from capital gains and 1.34% per year from dividends. The 5 and 10 year total returns today is 16.18% and 11.03% per year with 14.89% and 9.95% per year from capital gains and 1.295 and 1.09% per year from dividends.

The outstanding shares have decreased over the past while. In the last 5 and 10 years, outstanding shares have decreased by 2.1% and 1.6% per year. Shares have increased for Stock Options and decreased for Buy Backs. This means that things like Revenue are more important than Revenue per Share. Growth is better over the past 5 years than over the past 10 years.

Revenue growth has been mostly quite good. Revenue has grown at 8.8% and 7.3% per year over the past 5 and 10 years. Revenue per Share is up by 11.2% and 9.1% per year over the past 5 and 10 years.

Earnings growth is also quite good. The EPS growth is 13.8% and 8.9% per year over the past 5 and 10 years. Net Income has grown at 11.5% and 7.2% per year over the past 5 and 10 years.

Cash Flow good has also been quite good. The Cash Flow growth is at 10.1% and 7.3% per year over the past 5 and 10 years. CFPS is up by 12.4% and 9.1% per year over the past 5 and 10 years.

Return on Equity seems always to have been good and ROE has been above 10% each year over the past 10 years and even over the past 20 years. ROE for 2014 is 16.7% and the 5 year median is 15.8%. The ROE on Comprehensive Income is also good with the value for 2014 at 18.5% and the 5 year median at 15.6%. When the ROE on Comprehensive Income is close to that of Net Income it suggests that the earnings are of good quality.

Another good thing about this stock is that the debt ratios are very good. The Liquidity Ratio is 4.05 and the Debt Ratio is 5.06. The Leverage and Debt/Equity Ratios are 1.25 and 0.25, respectively. This is a good quality to have in a retail stock because it means that the company can survive the bad times.

This is the first of two parts. The second part will be posted on Thursday, March 26, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.

This company is a distributor, importer and manufacturer of specialty hardware and complementary products. Its products are kitchen and bathroom cabinets, furniture, and window and door. It is also involved with residential and commercial woodworking industry. It has a large customer base of hardware retailers. Its web site is here Richelieu Hardware.

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, March 24, 2015

Canadian Tire Corp. 2

Sound bite for Twitter and StockTwits is: Using Div Yield, price reasonable. Other measures are showing this stock to be expensive, except for the dividend yield test. However, the P/E Ratio and P/B Ratios are not that high on an absolute basis. See my spreadsheet at ctc.htm.

I own this stock of Canadian Tire Corp. (TSX-CTC.A, OTC- CDNAF). In 2000 when I first bought this stock, it was on the Investment Reporter's list of conservative Canadian stocks. I bought this stock for my Canadian Trading account in 2009. I bought it because I have done well with it in my Pension Account and it was a consumer stock.

Last year there was no increase in outstanding shares due to stock options. When I look at insider trading, I find $4M of Insider Buying and $7.3M of Insider selling, with net insider selling at $3.3M. Insider selling is relatively low at just 0.03%.

Insiders generally own the voting shares and with just 4.4% of the outstanding shares, control this company. The Billes family owns around 61% of the vote. As I mentioned yesterday, there is currently a high premium on the voting shares that is currently running at almost 82%. If you look at the 10 year median premium it is 15%. Insiders also own Class A shares. For example, Martha Gardiner Billes owns around 1% of the outstanding Class A shares worth around $92.8M.

The 5 year low, median and high median Price/Earnings per Share Ratios are 9.73, 11.12 and 12.26. The corresponding 10 year ratios are a bit higher at 10.00, 12.07 and 15.11. The current P/E Ratios is 16.33 based on a stock price of $129.49 and 2015 EPS estimate of $7.93. This stock price testing suggests that the stock price is relatively high. However, a P/E Ratio of 16.33 is not a high P/E Ratio on an absolute basis.

I get a Graham Price of $113.90. The 10 year low, median and high median Price/Graham Price Ratios are 0.68, 0.83 and 1.04. The current P/GP Ratio is 1.14 based on a stock price of $129.49. This stock price testing suggests that the stock price is relatively high.

I get a 10 year Price/Book Value per Share Ratio of 1.28. The current P/B Ratio at 2.07 is some 62% higher. The current P/B Ratio is based on a stock price of $129.49 and a Book Value per Share of $62.69. This stock price testing suggests that the stock price is relatively high.

I get 5 year median, historical average, and historical median dividend yields of 1.68%, 1.78% and 1.67%. The current dividend yield of 1.62% is 3.8%, 8.6% and 2.9% lower than these values. The current dividend yield of 1.62% is based on dividends of $2.10 per year and a stock price of $129.49. This testing suggests that the stock price is relatively reasonable.

When I look at analysts' recommendations, I find Strong Buy, Buy, Hold and Underperform Recommendations. Most of the recommendations are a Buy and the consensus recommendation is a Buy. The 12 month target stock price is $143.00. This implies a total return of 12.05% with 10.43% from capital gains and 1.62% from dividends.

This is an article in the Financial Post which talks about Canadian Tire getting customers to test out new products. This article on BNN talks about this company's unprofitable forays into the US market and of Targets bad results in Canada. Cameron Conway of Motley Fool gives a recent positive review of this company. And lastly, the Wall Street Journal named this company and 6 other Canadian companies as Canadian stocks to watch.

This is the second of two parts. The first part was posted on Monday, March 23, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.

Canadian Tire operates several retail businesses that offer everyday products and services through a network of over 1,700 locations across the country. The key banners that the company operates under include Canadian Tire Retail, FGL Sports, Mark's, Petroleum, Part Source, and Financial Services. Its web site is here Canadian Tire.

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, March 23, 2015

Canadian Tire Corp.

On my other blog I am today writing about Beta continue...

Sound bite for Twitter and StockTwits is: Dividend growth consumer stock. I have done well with this stock and consider it a core stock in my portfolio. See my spreadsheet at ctc.htm.

I own this stock of Canadian Tire Corp. (TSX-CTC.A, OTC- CDNAF). In 2000 when I first bought this stock, it was on the Investment Reporter's list of conservative Canadian stocks. I bought this stock for my Canadian Trading account in 2009. I bought it because I have done well with it in my Pension Account and it was a consumer stock.

One thing I find curious is the current difference in the stock price for the Common Share (TSX-CTC) and the Class A Non-voting Shares. Usually, there is a premium the Common and Voting Shares. However, in 2013 it was 25%, and then in 2014 it climbed to over 100% and now is currently hovering around 81%.

There was an article by David Milstead in Globe and Mail at the end of 2014 that talks about this. He comes to the conclusion that someone thinks that there is some sort of transaction that will occur on this company. It would seem no one is sure why this is happening.

This stock is currently a dividend growth stock with a moderate dividend and good growth. The current dividend yield is 1.62% and the 5 year median dividend yield is 1.68%. Over the past 5 and 10 years the dividend has grown at 17.4% and 14.1% per year.

The last dividend increase was for 2015 and was for 5%. However, if the dividend does not change in 2015, shareholders will receive a 12% increase in dividends in 2015 compared to 2014. In 2014 the dividend was increased twice.

The Dividend Payout Ratios are very good. The DPR for 2014 was 24.7% for EPS and 10.6% for CFPS. The 5 year median DPRs are 19.7% for EPS and 8.34% for CFPS. It is not surprising the DPRs have increased as the dividends paid in 2014 were 34% higher than the dividends paid in 2013.

I first bought this stock in 2000 and since then have bought more. I did recently sell some of this stock from my RRSP account as I am taking money from this account and I am selling off the lowest dividend payers. It is not that I do not like this company, but the dividends are lower than other stocks.

My total return on this company is at 14.82% per year with 13.36% per year from capital gains and 1.46% per year from dividends. The 5 and 10 year total return to date on this stock is 15.38% and 7.60% per year with 13.68% and 6.41% per year from capital gains and 1.69% and 1.19% per year from dividends.

There are two classes of shares. The common and voting shares are mainly for insiders but are traded on the Toronto Stock Exchange (TSX-CTC). The other class of shares is a Class A and non-voting. This is the main class of shares and is some 96% of the outstanding shares for the company.

The outstanding shares have decreased slightly over the past 5 and 10 years. The outstanding shares are down by 1% and 0.5% per year over the past 5 and 10 years. The shares have increased due to DRIP and Stock Options and have decreased due to Buy Backs.

As far as growth goes, it is moderate to good. The growth over the past 5 years is better than the growth over the past 10 years. The lowest growth is for Revenue. The company also talks about an Adjusted EPS as well as EPS. Also because of decreasing shares, things like Revenue is more important than Revenue per Share

Revenue is up by 7.5% and 5.7% per year over the past 5 and 10 years. Revenue per Share is up by 8.6% and 6.2% per share over the past 5 and 10 years. Cash Flow is up by 14.6% and 8.1% per year over the past 5 and 10 years. Cash Flow per Share is up by 15.8% and 8.6% per year over the past 5 and 10 years.

The adjusted EPS is up by 13.5% and 9.3% per year over the past 5 and 10 years. EPS is up by 13.1% and 8% per year over the past 5 and 10 years. Net Income is up by 12.5% and 7.3% per year over the past 5 and 10 years.

The ROE has been above 10% every year over the past 5 years and for 9 of the past 10 years. The ROE for 2014 was at 10.7% and the 5 year median is 10.7%. The ROE on comprehensive income for 2014 was slightly higher at 11.1% with a 5 year median of 11.1%. This suggests that the earnings are of good quality.

Debt Ratios are good and have always been good. The Liquidity Ratio for 2014 is 1.86 and has a 5 year median of 1.85. The Debt Ratio is 1.63 for 2014 and the 5 year median is 1.63. The Leverage and Debt/Equity Ratios are a little high but acceptable at 2.58 and 1.58 in 2014 with 5 year median values of 2.28 and 1.28, respectively.

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

Canadian Tire operates several retail businesses that offer everyday products and services through a network of over 1,700 locations across the country. The key banners that the company operates under include Canadian Tire Retail, FGL Sports, Mark's, Petroleum, Part Source, and Financial Services. Its web site is here Canadian Tire.

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, March 20, 2015

Melcor Developments Inc. 2

Sound bite for Twitter and StockTwits is: Stock price reasonable to cheap. It is a good time to buy stocks when they are relatively cheap. See my spreadsheet at mrd.htm.

I own this stock of Melcor Developments Inc. (TSX-MRD, OTC-MODVF). This was one of the stocks on Mike Higgs' list of good dividend growth stocks. So I looked into it and bought it. I bought this stock first in 2008 and then some more in 2009. It is a little followed real estate company from Western Canada

When I look at insider trading for the past year I see insider selling at $6.1M and net insider selling at 5.8M. Insider buying is small. The net insider selling is 0.9% of market cap and therefore relatively small. There is insider ownership. The CEO owns shares worth around $1.5M and chairman owns shares worth around $37M.

However, Melton Holdings holds around 47.5% of the outstanding shares. See a Market Wired announcement dated in 2014 about Melton Holdings acquiring some Melcor Development shares.

In 2014 the outstanding shares were increased by 226,000 shares with a book value of $3.7M. This number of shares would be worth $4.4M at the end of 2014. This number of shares is around 0.68% of outstanding shares and so probably reasonable.

The 5 year low, median and high median Price/Earnings per Share Ratios are 5.36, 6.07 and 6.79. The corresponding 10 year ratios are 5.30, 8.10 and 9.33. The current P/E Ratio is 7.11 based on 2015 EPS estimate of $2.44 and a stock price of $17.36. It is high according to the 5 year ratios, but looks more reasonable against the 10 year ratios.

I get a Graham Price of $38.66. The 10 year low, median and high median Price/Graham Price Ratios are 0.39, 0.60 and 0.78. The current P/GP Ratio is 0.45 based on a stock price of $17.36. This testing suggests that the stock price is relatively reasonable.

I get a 10 year Price/Book Value per Share Ratio of 0.96. The current P/B Ratio is 0.64 a value some 33.6% lower. The current P/B Ratio is based on a stock price of $17.36 and a BVPS of $27.22. This testing suggests that the stock price is relatively cheap.

The 5 year median dividend yield is 2.78% and the current dividend yield at 3.46% is some 24.18% higher. The current dividend is based on a dividend of $0.60 per year and a stock price of $17.36. The historical average and historical median dividend yields are 2.71% and $2.70% with the current dividend some 27.8% and 28% higher. This testing suggests that the stock price is relatively reasonable to cheap. It is not historically cheap as the historical high dividend is 3.95% a value still above the current one.

When I look at analysts' recommendations, I find Buy and Hold recommendations. There are only 3, two Buys and one Hold, so the consensus would be a Buy. The 12 month stock price consensus is $27.50. This implies a total return of 61.87% with 3.46% from dividends and 58.41% from capital gains. This is a rather high total return for the lukewarm recommendations. I do not believe the stock price consensus value, but stock could do well because it is relatively cheap.

This article on Market Wired talks about Melcor Developments' relationship with Melcor REIT (TSX-MR.UN), a REIT that started trading on the TSX in 2013. There is a recent Dakota Financial News item about RBC Capital dropping their target price from $29.00 to $25.50. This article in the Calgary Herald talks about a community planned by Melcor Development.

This is the second of two parts. The first part was posted on Thursday, March 19, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.

This company is primarily engaged in the acquisition of land for development and sale of residential communities, multi-family sites and commercial sites. It operates western Canada and the US. The company also develops, owns and manages commercial income properties, as well as four golf courses. Its web site is here Melcor.

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, March 19, 2015

Melcor Developments Inc.

Sound bite for Twitter and StockTwits is: Dividend Growth Real Estate Company. Although this company has proven that it is willing to cut the dividend when necessary, I still see it as a dividend growth company. This company is in Western Canada. With this economic heavily dependent on of oil and mining, the economy has seen both booms and busts. See my spreadsheet at mrd.htm.

I own this stock of Melcor Developments Inc. (TSX-MRD, OTC-MODVF). This was one of the stocks on Mike Higgs' list of good dividend growth stocks. So I looked into it and bought it. I bought this stock first in 2008 and then some more in 2009. It is a little followed real estate company from Western Canada.

The company brags that it has been giving out dividends since 1969. Just recently, the company has changed from giving semi-annual dividends to quarterly dividends. This is a big step for a dividend company. This occurred this year. I have dividend records for this company going back to 1990 and in most years the dividends have gone up. The company has increased total dividends each year for the last 10 years except for one year when the dividends were decreased by 40.5% in 2009.

The dividend is moderate with very good dividend growth. The current dividend is 3.46% and the 5 year median 2.78%. The dividends have grown at 18.3% and 17.1% per year over the past 5 and 10 years. The most recent dividend increase was in 2014 and the increase was for 7.1%.

Because I bought my stock in 2008, my current dividend on my original purchase is at 3.45% a value just slightly below the current dividend of 3.46%. If you look at dividends paid, I have received $3.22 dividends per share and my cost per share is $10.86. This means that dividends over the past 7 years have covered some 30% of my stock costs. (I did buy more shares in 2009, when the stock price fell.)

The Dividend Payout Ratios are good. For 2014 the DPR for EPS is 19% and for CFPS is 23%. The 5 year median values are 19% and 22% respectively. I have noticed that in the past the company has cut dividends because it was too high in regards to cash flow not earnings. When dividends were cut in 1998 and 2009 the DPR for Cash Flow per Share was close to 70% in both instances.

My total return is 11.38% per year with 8.12% from capital gains and 3.26% from dividends. The 5 and 10 years total return on this stock is not great, but it is acceptable. The 5 and 10 year total return is 6.97% and 7.14% per year with 3.175 and 3.89% per year from capital gains and 3.80% and 3.25% per year from dividends.

Outstanding shares have increased by 1.8% and 0.8% per year over the past 5 and 10 years. The shares have increased due to stock options and debenture conversion and decreased due to buy backs. Growth in Revenue, Earnings and Cash Flow has all been quite good.

Revenue is up by 18% and 13.5% per year over the past 5 and 10 years. Revenue per Share is up by 15.9% and 12.6% per year over the past 5 and 10 years. EPS is up by 31.8% and 14.7% per year over the past 5 and 10 years. Cash Flow per Share is up by 18.8% and 13.8% per year over the past 5 and 10 years.

Return on Equity was below 10% only once in the past 10 years and it was in 2009. The 2014 ROE is 11.2% and the 5 year median ROE is 12.8%. The ROE on comprehensive income is close with the ROE of 2014 at 11.9% and the 5 year median ROE at 13.5%. With the ROE on comprehensive income higher than the ROE in net income, suggests that the earnings are of good quality.

Debt Ratios are fine. The Liquidity Ratio has been quite good with the one for 2014 at 3.39 and it has a 5 year median of 3.39. However, this ratio is not as important as the other debt ratios when dealing with a real estate company. The Debt Ratio for 2014 is 1.94 and the 5 year median is 1.92, so this is very good.

The Leverage and Debt/Equity Ratios are a little high, but fine with the 2014 ratios at 2.07 and 1.07 respectively. The 5 year median ratios are 2.19 and 1.19, respectively.

This is the first of two parts. The second part will be posted on Friday, March 20, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.

This company is primarily engaged in the acquisition of land for development and sale of residential communities, multi-family sites and commercial sites. It operates western Canada and the US. The company also develops, owns and manages commercial income properties, as well as four golf courses. Its web site is here Melcor.

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, March 18, 2015

H & R Real Estate Trust 2

On my other blog I am today writing about Investing in REITs in Canada continue...

Sound bite for Twitter and StockTwits is: Stock price seems reasonable. It must have a shock for investors when this REIT cut the dividend in half in 2009. Mostly people invest in REITs to obtain steady income. Their yield is a bit higher than most other REITs and that would suggest a slightly better relative stock price. See my spreadsheet at hr.htm.

I do not own this stock of H & R Real Estate Trust (TSX-HR.UN, OTC- HRUFF). Before I started blogging, I was following a number of REITs and this is one I had followed. It also used to be on a dividend list I followed.

When I look at insider trading, I find $1.2M of insider buying and $4.2M of insider selling with a net of insider selling of $3M. Since this is only 0.05% of the market cap of this stock, it is relatively low. Insiders do have ownership with the CEO owning shares worth around $89.6M and the Chairman owning shares worth around $30.2M. However, these two only hold only around 2% of the outstanding shares of this REIT.

The outstanding shares were increased by 194,000 shares and this number of shares is only 0.07% of outstanding shares. I could not find a book value for these shares but at the end of 2014 this number of shares is worth $4.2M.

The 5 year median Price/Funds from Operations Ratio is 12.84. The current P/FFO Ratio is 12.06 and is some 6% lower. The current P/FFO Ratio is based on 2014 FFO estimate of $1.85 and a stock price of $22.32. The 10 year median P/FFO Ratio is 12.68 and the current P/FFO Ratio is some 4.8% lower than this ratio. This testing suggests that the stock price is relatively reasonable.

The 5 year median Price/Adjusted Funds from Operations Ratio is 15.21. The current P/AFFO Ratio is 13.45 and is some 11.6% lower. The current P/AFFO Ratio is based on 2014 AFFO estimate of $1.66 and a stock price of $22.32. The 10 year median P/AFFO Ratio is 14.65 and the current P/FFO Ratio is some 8.2% lower than this ratio. This testing suggests that the stock price is relatively reasonable.

The 10 year Price/Cash Flow per Share Ratio is 8.80. The current P/CF Ratio is 8.12 based on the most recent Cash Flow of $660 and CFPS of $2.76 and a stock price of $22.32. The current P/CF Ratio is 12.7% lower than the 10 year median P/CF Ratio. This testing suggests that the stock price is relatively reasonable.

The 10 year P/S Ratio is 5.00 and the current P/S Ratio is 4.82, a value some 8.8% lower. The current P/S Ratio is based on 2015 Revenue estimate of $1,334M and Revenue per Share of $4.33. This testing suggests that the stock price is relatively reasonable.

The 5 year median dividend yield is 5.97% and the current dividend yield of 6.05% is higher by 1.4%. The current dividend yield is based on distributions of $1.35 per year and a stock price of $22.32. This testing suggests that the stock price is relatively reasonable.

Looking at historical dividend yields is different. The historical median dividend yield is 6.58% and this is higher than the current dividend yield by 8%. There is not that much of a difference. However, the historical average dividend yield is 7.92% a value some 23.6% higher than the current dividend yield. The current dividend yield is far from both the historical high of 11.31% and the historical low of 4.52%.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus would be a Buy. The 12 month stock price is $25.90. This implies a total return of 22.09% with 16.04% from capital gains and 6.05% from distributions.

In this News Wire report H&R reports a good 3 quarter for 2014. Several analysts recently updated their ratings on H&R.

This is the second of two parts. The first part was posted on Tuesday, March 17, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.

H&R Real Estate Investment trust is an open-ended real estate investment trust. They have a portfolio of office properties, single-tenant industrial properties, retail properties and development projects. They operate across Canada and US. Its web site is here H&R.

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, March 17, 2015

H & R Real Estate Trust

Sound bite for Twitter and StockTwits is: Considered a Core REIT. Nothing much is happening lately for this REIT although it has done as well as some others recently. See my spreadsheet at hr.htm.

I do not own this stock of H & R Real Estate Trust (TSX-HR.UN, OTC- HRUFF). Before I started blogging, I was following a number of REITs and this is one I had followed. It also used to be on a dividend list I followed.

If you look at growth in distributions, it is 13.4% and 0.82% per year over the past 5 and 10 years. The thing is that 6 years ago this company reduced distributions by 50%. Before the reduction, distributions were at $1.44 per share per year. Today they have not quite got back to that amount and are at $1.35 per share per year. They have done well in increasing the dividends over the past 5 years.

In 2008, this REIT announced it will reduce its monthly cash distributions to unitholders by half to $0.06 per unit commencing with the January 2009 distribution. The cash flow retained from the reduced distribution will be used to finance construction of The Bow, an H&R's development project in Calgary.

There have been good increases since 2009 until last year when there was no dividend increase. The last increase was 2013 and the increase was an 8% increase. Most analysts expect small increases in 2015 and 2016.

The Payout Ratios for Funds from Operations (FFO) is at 72% for 2014 and the 5 year median is at 68%. The Payout Ratios for Adjusted Funds from Operations (AFFO) is at 88% for 2014 and the 5 year median is at 86%. The Payout Ratios are fine.

The outstanding shares have increased by 13.8% and 11.1% per year over the past 5 and 10 years. This means that for a shareholder, per share values are important. Revenues have grown well, but Revenue per Share growth is very low. Cash Flow's growth is moderate to good. FFO growth is moderate to low and AFFO growth is very low.

Revenue has grown at 15% and 11.6% per year over the past 5 and 10 years. Revenue per Share growth is at 1% and 0.5% per year over the past 5 and 10 years. Cash Flow has grown at 22.7% and 17.6% per year over the past 5 and 10 years. CFPS growth is at 7.8% and 5.9% per year over the past 5 and 10 years.

FFO has grown at 4.3% and 2.7% per year over the past 5 and 10 years. AFFO has grown at 0.4% and 0.4% per year over the past 5 and 10 years. The AFFO growth is especially low. Analysts seem to expect that FFO growth will be down a bit this year, but AFFO will increase nicely.

Shareholders have done ok with 5 and 10 year total returns at 8.79% and 6.14% per year. The portion of this return attributable to capital gains is at 2.81% and 0.64% per year. The portion of this return attributable to dividends is at.5.98% and 5.50% per year. Others that I have reviewed lately have done better in return to shareholders over the past 5 and 10 years.

Debt Ratios are fine with the Debt Ratio at 1.95 and Leverage and Debt/Equity Ratios at 2.05 and 1.05. Leverage and Debt/Equity Ratios have improved as the 5 year median ratios are 3.19 and 2.19,

This is the first of two parts. The second part will be posted on Wednesday, March 18, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.

H&R Real Estate Investment trust is an open-ended real estate investment trust. They have a portfolio of office properties, single-tenant industrial properties, retail properties and development projects. They operate across Canada and US. Its web site is here H&R.

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.