Monday, June 29, 2015

CI Financial Corp 2

On my other blog I am today writing about Assets under Management continue...

Sound bite for Twitter and StockTwits is: Stock price probably cheap. I worry a bit about what the Graham Price Test and P/B Ratio tests are saying, but the dividend yield tests are based more on facts and in my mind probably the best testing to do. See my spreadsheet at cix.htm.

I do not own this stock of CI Financial Corp (TSX-CIX, OTC-CIFAF). I started to follow this stock originally because it was a Mutual Fund company. People talked about it being easier to make money from buying a Mutual Fund company than buying Mutual Funds. In 2009, it lost its listing on my dividend lists because of a dividend cut. In June 2014, MPL communications called this stock a Buy and advised that they were adding it to their list of Key Stock for the Investment reporter.

When I look at insider trading, I find minimal insider buying and insider selling of $12.9M and net insider selling of $12.8M. Insider selling is 0.13% of the market cap of the stock and is relatively high. However, it is less than options granted in 2014 which runs to $0.18% of outstanding shares. In 2014 outstanding shares were increased by around 493,000 or $0.18% of the outstanding shares.

There is insider ownership with the CEO owning shares worth around $30M, one director owning shares worth around $39M and another director owning shares worth around $147.2M. However, this all adds up to just less than 2% of the outstanding shares. The Chairman owns the most with shares worth around $303.5M and around 3.3% of the outstanding shares.

The 5 year low, median and high median Price/Earnings per Share ratios are 16.57, 18.32 and 19.91. The 10 year corresponding P/E Ratios are close at 15.84, 17.55 and 19.90. The current P/E Ratio is 15.73 based on a stock price of $33.97 and 2015 EPS estimate of $2.16. This stock price test suggests that the stock price is relatively cheap.

I get a Graham Price of $18.19. The 10 year low, median and high median Price/Graham Price Ratio is 1.49, 1.69 and 1.95. The current P/GP Ratio is 1.87 based on a stock price of $33.97. This stock price test suggests that the stock price is relatively reasonable. However, the ratio is to the top end of reasonableness range and these P/GP Ratios are all rather high.

I get a 10 year Price/Book Value per Share ratio of 3.80. The current P/B Ratio is 4.99 based on a stock price of $33.97 and BVPS of $6.81. The current P/B Ratio is some 31% higher than the 10 year ratio. This stock price testing suggests that the stock is relatively expensive. Also a P/B Ratio of 4.99 is rather high.

The 5 year median dividend yield is 3.72%. The current dividend yield at 3.89% based on a stock price of $33.97 is some 4.4% higher. This stock price test suggests that the stock price is relatively reasonable. It is also good that the current dividend yield is above the 5 year median value.

In the past the dividend yield has gotten very high, especially when this stock had an unsustainably high dividend. There is a huge spread between the historical high and low at 17.62% and 0.20%. However the historical median is a viable test, with the historical median dividend yield at 2.93% and some 32.6% below the current dividend yield of $3.89% based on a stock price of $33.97. This final test suggests that the stock price is below the median and is relatively cheap.

When I look at analysts' recommendations I find Strong Buy, Buy and Hold recommendations. Most of the recommendations are a Buy and the consensus recommendation would be a Buy. The 12 month consensus stock price is $39.90. This implies a total return of 21.34% with 17.465 from capital gains and 3.89% from dividends.

A recent press release on Stockhouse talks about this company planning to buy back its shares. Another press release onStockhouse talks about current good growth in Assets under Management. This recent report from Dakota Financial News talks about seven brokerages giving this stock a Buy rating.

This is the second of two parts. The first part was posted on Friday, June 26, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.

CI Financial Corp. is a diversified wealth management firm and one of Canada's largest investment fund companies. CI is an Independent and Canadian-owned company. This company promotes and manages mutual funds and other investment products through its wholly-owned subsidiaries of CI Investments Inc., and Assante Wealth Management. Its web site is here CI Financial.

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, June 26, 2015

CI Financial Corp

Sound bite for Twitter and StockTwits is: Dividend Growth Company. This company has been doing well lately and has done a good job of increasing its dividends. They have set their dividends to values that probably can maintain. See my spreadsheet at cix.htm.

I do not own this stock of CI Financial Corp (TSX-CIX, OTC-CIFAF). I started to follow this stock originally because it was a Mutual Fund company. People talked about it being easier to make money from buying a Mutual Fund company than buying Mutual Funds. In 2009, it lost its listing on my dividend lists because of a dividend cut. In June 2014, MPL communications called this stock a Buy and advised that they were adding it to their list of Key Stock for the Investment reporter.

When they became a Unit Trust in 2006, dividends were significantly increased, but these dividends proved to be unsustainable, so dividends where decreased in 2010. They changed back to a corporation in 2009 and since that time, they have been increasing their dividends since 2011. This company has been publicly traded on the Toronto Stock Exchange since June 1994.

The company has a very mixed record when it comes to dividend increases. Some years dividends were not increased and some years dividends were decreased. They would seem at present to be a dividend growth company. The dividends have increased by 12% and 21% per year over the past 4 and 10 years. Over the past 5 years, dividends have decreased by 16% per year because of the 74% decrease in dividends in 2010.

If you had held this stock for 5, 10, 15 or 20 years to the end of 2014, 29%, 95%, 374% and 1054% of your original stock cost would have been covered by dividends. Because dividends were quite high, especially from 2007 to 2009, what has happened in the past probably will not happen in the future.

However, current the dividend rate is good and so are the dividend increases. The current dividend yield is 3.89% and the 5 year median dividend yield is 3.72%. The most recent dividend increase was in 2015 and was for 4.8%. However, the total dividends to be paid in 2015 will be 9.75% higher than the total dividends paid in 2014. This is because dividends have been raised more than once during a calendar year.

If you had held this stock for 5, 10, 15 or 20 years to the end of 2014, you would be earning 7.1%, 8.5%, 31.6% and 88.4% on your original stock purchase price. Here again what happened in the past may not happen in the future, but the dividends are good on this stock and so are the current dividend increases.

The Dividend Payout Ratios are fine. The 2014 DPR for EPS is 63% and the DPR for CFPS is 49.1. The 5 year median values are 67.2% and 49.1% for EPS and CFPS, respectively. Both these ratios are expected to be around 60% in 2015.

The outstanding shares have decreased slightly (less than 1% per year) over the past 5 and 10 years. Assets under Management (AUM) growth have been moderate to good. Revenue and earnings growth has been good. Cash Flow growth has been moderate. You will notice that the actual Revenue growth is less than the growth for Revenue per Share. This is because of the slight decline in outstanding shares. In this case the Revenue growth is more important for shareholders than the Revenue per Share growth.

AUM growth over the past 5 and 10 has been at 9.9% and 7.6% per year. Analysts expect similar growth over the next two years. Assets under Administration have growth at 9.1% and 6.7% per year over the past 5 and 10 years.

Revenue has grown at 9% and 8.3% per year over the past 5 and 10 years. Revenue per Share has grown at 9.8% and 8.8% per year over the past 5 and 10 years. Analysts seem to expect Revenue growth of 10.7% for 2015. If you compare the 12 month growth in Revenue to the end of 2014 to the 12 month growth in Revenue to the end of the first quarter, the growth is only 3%.

Net Income has grown at 16.5% and 9% per year over the past 5 and 10 years. EPS has grown at 12.9% and 8.5% per year over the past 5 and 10 years. Net Income is expected to growth at 15% for 2015. If you compare the 12 month growth in Net Income to the end of 2014 to the 12 month growth in Net Income to the end of the first quarter, the growth is only 4.4%.

Cash Flow has grown at 6.3% and 6.3% per year over the past 5 and 10 years. Cash Flow per share has grown at 7% and 6.8% per year over the past 5 and 10 years. Analysts expect Cash Flow to decline in 2015. However, if you compare the 12 month growth in Cash Flow to the end of 2014 to the 12 month growth in Cash Flow to the end of the first quarter, there is some growth at 1.5%.

Return on Equity has always been good and it has been above 10% each year over the past 10 years. The ROE for 2014 is 27.5% and the 5 year median is 23.3%. The ROE on comprehensive income is very close at 27.6% with a 5 year median of 23.1%. This suggests that the earnings are of good quality.

The Liquidity Ratio for 2014 was 0.90. This means that the current assets cannot cover the current liabilities. If you had in cash flow after dividends, the ratio is 1.82%. This means that the company depends on cash flow to fund current liabilities. The Debt Ratio has always been quite good and the current one for 2014 is 2.72. The 5 year median 2.29.

Leverage and Debt/Equity Ratios are good ones, especially considering this is a financial service company. The ratios for 2014 are 1.58 and 0.58. The 5 year median values are also 1.58 and 0.58.

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

CI Financial Corp. is a diversified wealth management firm and one of Canada's largest investment fund companies. CI is an Independent and Canadian-owned company. This company promotes and manages mutual funds and other investment products through its wholly-owned subsidiaries of CI Investments Inc., and Assante Wealth Management. Its web site is here CI Financial.

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, June 25, 2015

Canexus Corporation

Sound bite for Twitter and StockTwits is: Cheap, but not doing well. I do not like to debt ratios. When debt ratios are not good, a company can be vulnerable. They have an updated business plan and their credits have bought into it. This is a good sign. See my spreadsheet at cus.htm.

I do not own this stock of Canexus Corporation (TSX-CUS, OTC- CXUSF). I started to follow this stock in 2012 after reading that it was part of Sentry Small/Mid Cap Income Fund. It is a small cap that pays good dividends. See stocks in this fund on G&M. Sentry home site is here. This stock was also mentioned by Michael Decter in May of 2012. Michael Decter is president and CEO of LDIC Inc.

This stock started out as an income trust with a very high yield of around 11.3%. They lowered the dividend in 2008 and then kept it flat until 2014 when dividend was decreased by some 93%. The current dividend yield is just 2.61%. They really had no choice about decreasing the dividends as they were not covering the dividend by their earnings. In 2014 EPS was negative and they could not even cover the dividend with cash flow.

In 2015 analysts expect EPS is be again negative, but with positive earnings in 2016. In 2015, analysts do expect dividends to be covered by cash flow. In fact some analysts expect the EPS in 2016 to cover earnings and also expect that the company will raise the dividends in 2016.

With current stock price at $1.53, the total return over the past 5 and 10 years has been a loss of 15.73% and 3.49% per year. The portion attributable to capital loss is at 26.37% and 16.00% per year. The portion attributable to dividends is at 10.64% and 12.52% per year.

Of course you try to make money when you invest. However, another thing that you should also try to do is limit your losses. Dividends help to do this. If you invested in the company at the start at $10.00 you would have recovered some 58% of your purchase price in dividends.

Outstanding shares have grown at 40% and 20% per year over the past 5 and 10 years. Revenues have grown at a moderate rate and cash flows have grown at a good rate. However, there is a decline Revenue per Share and CFPS has some growth. There has been no growth in EPS as they are now negative.

Revenue is up by 4.5% and 4.1% per year over the past 5 and 9 years. Revenue per Share is down by 25.6% and 14.4% per year over the past 5 and 9 years. Analysts do expect very modest growth in Revenues for 2015 of around 1.6%. If you compare the Revenue for the 12 months to the end of 2014 and for the 12 months to the end of the first quarter, Revenue is up by 1.7%.

Cash Flow is up by 37% and 28.5% per year over the past 5 and 9 years. CFPS is down by 2.4% and up by 5.7% per year over the past 5 and 9 years. Analysts do expect growth in Cash Flow for 2015. However, if you compare the 12 months to the end of 2014 and for the 12 months to the end of the first quarter, Cash Flow is down by 35%.

Another thing is that the debt ratios are no good. The Liquidity Ratio is 0.84. This means that the current assets cannot cover the current liabilities. If you subtract current long term debt from current debt, the Ratio becomes 1.35. A good Liquidity Ratios start at 1.50. The Debt Ratio is low at 1.20. Good Debt Ratios start at 1.50. Leverage and Debt/Equity Ratios are high at 6.07 and 5.07. Good Leverage and Debt/Equity Ratios are under 2.00 and 1.00.

There is little to do stock price testing with. With negative EPS expected in 2015, you cannot do price testing with EPS. Using Book Value for testing says that the stock is way overpriced. Dividend yields are a fraction of what they used to be and so imply the stock is way overprice.

I get a Graham Price of $1.11. The 10 year Price/Graham Price Ratios are 1.30, 1.52 and 1.83. The current P/GP Ratio is 1.38. This testing would suggest that the stock price is relatively reasonably. I wonder how good this testing is as it is rather hard to really get a good fix on the Graham Price.

The 10 year Price/Cash Flow per Share Ratio is 9.13. If I use the 12 month to the end of the first quarter CFPS, I get a P/CF Ratio of 5.80, a value some 36.5% lower than the 10 year P/CF Ratio. This stock price testing suggests that the stock price is relatively cheap.

The 10 year P/S Ratio is 0.66 and the current P/S Ratio of 0.49 is some 25.6% lower. The current P/S Ratio is based on 2015 Revenues of $580.00. This stock price testing suggests that the stock price is relatively cheap. On an absolute basis, a P/S Ratio of less than 1.00 suggests the stock is priced cheaply.

When I look at analysts' recommendations I find a Buy recommendation and lots of Hold recommendations. The consensus recommendations would be a Hold. The 12 month stock price consensus is $1.94. This implies a total return of 29.41% with 2.61% from dividends and 26.80% from capital gains.

This site of Dakota Financial News talks about recent analysts ratings of which most are Holds. Lou Schizas' technical analysis of Canexus in the Globe and Mail shows this stock in deep decline. In March 2015 Canexus announced a Business Improvement Plan.

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.

Canexus Corporation is engaged in the production of sodium chlorate and chlor-alkali products, and operates a hydrocarbon terminal. They have four plants in Canada and two at one site in Brazil. Its web site is here Canexus.

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, June 24, 2015

Power Corp of Canada 2

On my other blog I am today writing Dividend Growth Calculations continue...

Sound bite for Twitter and StockTwits is: Stock is relatively cheap. It is best to buy good companies when they are cheap. See my spreadsheet at pow.htm.

I do not own this stock of Power Corp of Canada (TSX-POW, OTC-PWCDF). I started following this stock because it was on the Dividend Achievers, the Dividend Aristocrats lists and also on Mike Higgs' list. I would not buy it because I have shares in Power Financial, which this company controls.

The outstanding shares were increased by 1.238M shares in 2014 for stock options. The book value for these shares was $40M. This number of shares was worth $39.3M at the end of 2014. This number of shares is 0.16% of the outstanding shares. For most companies, stock options issued in one year is 0.50% or less of outstanding shares. For insider trading, there was $23.9M of insider selling and $23.9M of net insider selling. There was a minimal amount of insider buying. The insider selling is 0.16% of the market cap. This is rather on the high side.

The Desmarais Family Residuary Trust owns some 48.3M shares of this company and 10.56% of the outstanding shares. This company has also issued Participating Preferred Shares Participating which the Desmarais Family Residuary Trust also own 99.5% of. These Participating Preferred Shares have 10 votes each whereas the other shares are subordinate shares with one vote each. This gives the Desmarais Family effective control of this company.

The 5 year low, median and high median Price/Earnings per Share Ratios are 12.18, 13.79 and 15.28. The 10 year corresponding P/E Ratios are similar at 10.96, 13.79 and 15.16. The current P/E Ratio is 10.50 based on a stock price of $32.43 and 2015 EPS estimate of $3.09. This stock price test suggests that the stock price is relatively cheap.

I get a Graham Price of $40.72. The 10 year low, median and high median Price/Graham Price Ratios are 0.80, 0.94 and 1.09. The current P/GP Ratio is 0.80 based on a stock price of $32.43. This stock price test suggests that the stock price is relatively cheap. On an absolute basis a P/GP Ratio of less than 1.00 says a stock is cheap.

I get a 10 year Price/Book Value per Share Ratio of 1.65. The current P/B Ratio is 1.36, a value some 17% lower. The P/B Ratio of 1.36 is based on a stock price of $32.43 and BVPS of $23.85. This stock price test suggests that the stock price is relatively reasonable. For the stock to be considered cheap by this test, the current P/E Ratio would have to be 20% lower than the 10 year median ratio.

The 5 year median dividend yield is 4.14% and the current dividend yield at 3.84% is some 7.3% lower. What you want is to have the current dividend yield higher than the ones of the past, but it is only 7.3% higher, so not that much higher. This stock price test suggests that the stock price is relatively reasonable.

The historical average and historical median dividend yields are lower than the current dividend yields. The historical average and historical median dividend yields are 3.53% and 2.25%. These are 8.9% and 70% lower than the current dividend yield. The historical median dividend yield is probably the right measure. And, by this measure this stock price test suggests that the stock price is relatively cheap.

When I look at analysts' recommendations, I find Buy and Hold recommendations. Most of the recommendations are a Buy and the consensus recommendation is a Buy. The 12 month consensus stock price is $37.00. This implies a total return of 17.93% with 17.09% from capital gains and 3.84% from dividends.

Joseph Solitro in March 2015 in a Motley Fool report asks if you should now buy Power Corp. (Note that sometimes you have to exit and go back into a Motley Fool report to get the full report.) Solitro thinks that Power Corp is a long term investment opportunity. There is an interesting December 2014 article in the Globe & Mail talking about should you buy a parent company (like Power Corp) or one of its subsidiaries. This Business Financial Post report talks about the Desmarais Family selling Power Corp stock for estate purposes.

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

Power Corporation of Canada is a diversified international management and holding company with interests in companies in the financial services, communications and other business sectors in North America, Europe and Asia. Some of it subsidiary companies include Power Financial, the Pargesa group and Gesca and Square Victoria Digital Properties. Its web site is here Power Corp.

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, June 23, 2015

Power Corp of Canada

Sound bite for Twitter and StockTwits is: Dividend Growth Financial Service stock. It is a good sign that this company has reinstated dividend increases. With the earnings increasing it would seem that they can now afford dividend increases. See my spreadsheet at pow.htm.

I do not own this stock of Power Corp of Canada (TSX-POW, OTC-PWCDF). I started following this stock because it was on the Dividend Achievers, the Dividend Aristocrats lists and also on Mike Higgs' list. I would not buy it because I have shares in Power Financial, which this company controls.

As with other stocks in financial services, they stopped increasing their dividends in 2008. They have a good record of dividend increases since 1994 to 2008. The growth in dividends over the past 5 and 10 years is at 1.1% and 7.7% per year. For the 10 years prior to 2008, dividend growth was at 17.6% per year.

The current dividend yield is good at 3.8%. The 5 year median dividend yield is good at 4.14%. Prior to 2008, when dividends where being increased the dividend yields were lower. The 10 year median dividend yield to 2008 was at 2.1%.

The last dividend increase was 7.3% and the increase occurred in 2015. If they continue with this sort of increases, in 10 years' and 15 years' time your dividend yield could be 7.8% and 11% on today's stock price of $32.43.

If you had bought this stock 5, 10, 15 or 20 years ago at a median price, the dividends paid to date would cover 21%, 35%, 95% and 289% of the cost of your stock at the time of purchase. If you had bought this stock 5, 10, 15 or 20 years ago at a median price your dividend yield would be 4.4%, 4%, 8.7% and 24% on your original cost of your stock.

This stock's price also peaked around 2008 and then fell some 62% in 2009. It is still some 18% off the peak in 2008. The 5 and 10 year total return is 7.21% and 3.64% per year with 3.23% and 0.24% per year attributable to capital gains and 3.99% and 3.40% per year attributable to dividends. Not a great showing, but a lot of stocks are still having problems.

The outstanding shares increased at a very low rate (under 1% per year) over the past 5 and 10 years. Shares have increased due to stock options. Revenues are up moderately. Earnings growth is moderate to good. Cash Flow growth is low to moderate.

Revenue is up by 5.2% and 5.7% per year over the past 5 and 10 years. Revenue per Share is up by 5% and 5.4% per year over the past 5 and 10 years. Analysts expect good growth in revenue in 2015. They expect revenue to grow by almost 20% this year. If you look at the 12 months to the end of 2014 and the 12 months to the end of the first quarter, Revenue has grown at 6.7%.

EPS is up by 14.5% and 3.1% per year over the past 5 and 10 years. Analysts expect good growth in EPS at around 12% this year. If you look at the 12 months to the end of 2014 and the 12 months to the end of the first quarter, EPS has grown at 8.7%.

Cash Flow has grown at 1.8% and 5.5% per year over the past 5 and 10 years. CFPS has grown at 1.6% and 5.1% per year over the past 5 and 10 years. There are no Analysts estimates for cash flow for 2015.

The Return on Equity in 2014 was 11.6% and the 5 year median ROE is 11.6%. The ROE on comprehensive income is somewhat better at 13.7% with a 5 year median ROE at 13.6%. When the ROE on comprehensive income is similar to that of net income it suggests that earnings are of a good quality.

The Liquidity Ratio has generally been good for this stock and the one I calculate for 2015 is 1.55. This is not considered to be an important ratio for financial stocks. The Debt Ratio is good for a financial stock at 1.09. The Leverage and Debt/Equity Ratios at 31.53 and 28.90 are even rather high for a financial stock.

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

Power Corporation of Canada is a diversified international management and holding company with interests in companies in the financial services, communications and other business sectors in North America, Europe and Asia. Some of it subsidiary companies include Power Financial, the Pargesa group and Gesca and Square Victoria Digital Properties. Its web site is here Power Corp.

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, June 22, 2015

IGM Financial Inc. 2

On my other blog I am today writing investing and Mutual Funds continue...

Sound bite for Twitter and StockTwits is: Stock price is probably relatively cheap. This stock could become a good dividend growth stock again. The time to buy good stocks is when the price is low. See my spreadsheet at igm.htm.

I do not own this stock of IGM Financial Inc. (TSX-IGM, OTC- IGIFF), but I used to. I originally bought this stock to replace AGF Management (TSX-AGF.B). IGM was known as a dividend growth stock and it was on a lot of lists of good stocks, including Mike Higgs' and Dividend Aristocrats. I sold this 2011 because I had Power Financial, of which this company is partially owned by and I wanted to rationalize my portfolio. So I sold this stock and bought more of Power Financial.

When I look at insider trading, I see $3.1M of insider selling and no insider buying. This insider selling is some 0.03% of the stock's market cap and so relatively small. In 2014 some 747,000 shares were issued for stock options. This has a book value of $35.1M and the value of this number of shares at the end of 2014 was $30.9M. This number of shares is 0.30% of outstanding shares and is relatively fine.

As far as insider ownership, the Desmarais Family owns some 62.5% of the company's outstanding stock. The company is part of Power Corp (TSX-POW) and Power Financial (TSX-PWF).

The 5 year low, median and high median Price/Earnings per Share Ratios are 13.30, 14.80 and 16.30. The 10 year corresponding ratios are close at 13.47, 15.72 and 17.53. The current P/E Ratio is 12.34 based on a stock price $41.33 and 2015 estimate EPS of $3.35. This stock price test suggests that the stock price is relatively cheap.

This EPS estimate is some 12.4% higher than the 2014 EPS. If you look at the EPS for the 12 months to the end of 3014 and the 12 months to the end of the first quarter, EPS is up just 1%. For 2014 the EPS was $3.36, but EPS for 2014 was lower at $2.98. The EPS estimate for 2013 was $3.07 and came in at $3.02. This was a better estimate but still low. If you use the last 12 month EPS, P/E Ratio is 13.73. By this measure the stock price is still low, but in the reasonableness range.

I get a Graham Price of $37.48. The 10 year low, median and high median Price/Graham Price Ratios are 1.17, 1.33 and 1.60. The current P/GP Ratio is 1.10 based on a stock price of $41.33. This stock price testing suggests that the stock price is relatively cheap.

The 10 year Price/Book Value per Share Ratio is 2.68. The current P/B Ratio is 2.22, a value some 17.4% lower. The current P/B Ratio is based on BVPS of $18.64 and a stock price of $41.33. This stock price testing suggests that the stock price is relatively reasonable. For the stock to be considered cheap, the current P/B Ratio would have to be 20% lower than the 10 year ratio. It is getting close.

The current Dividend Yield is 5.44% based on dividends at $2.25 and a stock price of $41.33. The 5 year median, historical average and historical median Dividend Yields are 4.55%, 3.95% and 3.33%. The current Dividend Yield is some 19.6%, 387.8% and 63.5% lower than these yields. All this suggests that the current stock price is relatively cheap.

When I look at analysts' recommendations, I find Strong Buy, Buy, Hold and Underperform recommendations. Most of the recommendations are a Hold and the consensus recommendation is a Hold. The 12 month stock price is $49.00. This price implies a total return of 24% with 5.44% from dividends and 18.56% from capital gains. It is rather a high return considering the recommendations.

The Stock House site is announcing growth in Assets under Management for IGM Financial for May 2015. Nelson Smith of the Motley Fool thinks that people will turn away from Mutual Funds. I must admit, I wonder about this. Recent changes to analysts' rating is discussed at Sleek Money.

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

This is a mutual fund, managed asset and personal financial services company. The company has three operating units, Investors Group, Mackenzie Financial Corporation and Investment Planning Counsel Inc. IGM Financial Inc. is a member of the Power Financial Corporation group of companies. Its web site is here IGM Financial.

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, June 19, 2015

IGM Financial Inc.

Sound bite for Twitter and StockTwits is: Dividend Growth Financial Service Stock. It has not raised their dividends much over the last little while, but I would expect that dividend increases will be in the future for this company. See my spreadsheet at igm.htm.

I do not own this stock of IGM Financial Inc. (TSX-IGM, OTC- IGIFF), but I used to. I originally bought this stock to replace AGF Management (TSX-AGF.B). IGM was known as a dividend growth stock and it was on a lot of lists of good stocks, including Mike Higgs' and Dividend Aristocrats. I sold this 2011 because I had Power Financial, of which this company is partially owned by and I wanted to rationalize my portfolio. So I sold this stock and bought more of Power Financial.

This is a dividend growth stock, but it has not always raised its dividends every year. A lot of financial companies have had problems with the last recession. Recently dividends were not raised in 2010, 2013 and 2014. The last dividend increase was in 2015 for 4.65%. The dividend growth over the past 5 and 10 years is at 1% and 6.5% per year. The dividend increases were much higher in the past. For the 10 years to 2008, the dividend growth was 15.1% per year.

On the other side of the coin, the Dividend Payout Ratios for EPS have been much higher recently. The 5 year median DPRs for ESP to 2014 was 71.9%, but the 5 year median DPRs for EPS prior to 2008 was 52.9%. The DPRs for EPS hit a peak in 2009 at 96.7%. The DPRs for EPS for 2014 was 72.1% and is expected to be around 67% for 2015. As earnings grow they will be able to increase dividends.

Currently the dividend is quite good, but the growth is low. The dividend yield used to be lower with a higher growth. The current dividend yield is 5.4% with 5 and 10 years growth at 1% and 6.5%. The 5 year median dividend yield is 4.6%. The historical median dividend is 3.3%. I would expect in the future that dividend yield will go lower and the dividend growth will go higher.

The total return over the past 5 and 10 years was at 4.06% and 3.69% per year. The portion of this total return attributable to dividends was 5.06% and 4.60% per year. The portion of this total return attributable to capital loss was at 1.005 and 0.90% per year. This stock used to do much better at total returns, and I expect it to do better in the future, but it has been a long slow recovery for financial stocks.

The outstanding shares have not changed much over the past 5 and 10 years. The change in outstanding shares is less than 1% per year. The shares increased due to Stock Options and have decreased due to Buy Backs. The growth in Assets under Management (AUM), Revenue and Cash Flow has been moderate. The Growth in EPS has been moderate to low.

AUM has grown at 3.3% and 5.1% per year over the past 5 and 10 years. Revenue has grown at 4.8% and 3.3% per year over the past 5 and 10 years. Revenue per Share has grown at 5.7% and 3.8% per year over the past 5 and 10 years. Analysts expect moderate growth at 6.2% for 2015. If you compare the 12 months to the end of 2014 and the 12 months to the end of the first quarter, Revenue has grown at 1.57% and AUM has grown at 7.8%.

EPS has grown at 7.1% and 2.9% per year over the past 5 and 10 years. Analysts expect good growth in EPS for 2015 at 12.4%. If you compare the 12 months to the end of 2014 and the 12 months to the end of the first quarter, EPS has grown at only 1 %. With such a low growth in the first quarter, you have to wonder about the 2015 estimates.

The Cash Flow has grown at 4.5% and 3.1% per year over the past 5 and 10 years. CFPS has grown at 5.4% and 3.6% per year over the past 5 and 10 years. Analysts expect growth in CFPS at around 25% in 2015. If you compare the 12 months to the end of 2014 and the 12 months to the end of the first quarter, Cash Flow has grown at 0.3%. Here again, with such low growth in the first quarter, you have to wonder about the 2015 estimates.

Return on Equity has always been good, that is above 10%. The ROE for 2014 is 16.1% and it has a 5 year median of 16.7%. The ROE on comprehensive income is slightly lower for 2014 is 15.7% and it 5 year median is 16.8%. I see no problems here.

Liquidity Ratios are not very important in financial companies. The Debt Ratio has been good with the one for 2014 at 1.51 and the 5 year median at 1.59. The Leverage and Debt/Equity Ratios are fine at 2.98 and 1.98. I see no problem with debt ratios.

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

This is a mutual fund, managed asset and personal financial services company. The company has three operating units, Investors Group, Mackenzie Financial Corporation and Investment Planning Counsel Inc. IGM Financial Inc. is a member of the Power Financial Corporation group of companies. Its web site is here IGM Financial.

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, June 18, 2015

Ensign Energy Services 2

Sound bite for Twitter and StockTwits is: Price probably cheap. The stock is cheap based on P/B Ratio and dividend yield. These are tests that do not involve estimates. The time to buy good companies is when they are cheap. They have now a stronger balance sheet since the Liquidity Ratio has moved above 1.00 and it is now at a healthier 1.53. I like this ratio to be at least 1.50. My main concern was previously the Liquidity Ratio. See my spreadsheet at esi.htm.

I do not own this stock of Ensign Energy Services (TSX-ESI, OTC- ESVIF), but I used to. I bought this stock in June 2012. Stock was rather cheap in June of 2012. I had been following this stock for some time. I sold this stock in December 2014 to buy Mullen instead. Details of why is in a December 2014 post. I know I would be selling Ensign at a loss, but I also could buy Mullen cheaply. This is my first review of this stock after selling it.

Under insider trading over the past year there has been 0.1M of insider buying and 0.4M of insider selling. Net insider selling is at 0.02% of the market cap. There is insider ownership with the CEO owing shares worth some $5.4M, the CFO owing shares worth $10.6M and the chairman owning shares worth around $260.7M. It is only the chairman that has a significant amount of the outstanding shares at 16.8%.

The 5 year low, median and high median Price/Earnings per Share Ratios are 14.67, 18.03 and 21.38. These are higher than the 10 year corresponding ratios at 10.10, 14.99 and 14.29. The current P/E Ratio is 62.37 and is based on a stock price of $11.85 and 2015 EPS estimate of $0.19. This stock price testing suggests that the stock price is relatively expensive.

Analysts are expecting EPS to drop significantly in 2015. The EPS has dropped significantly in the first quarterly results. Analysts also expect EPS to begin to rise again in 2016 with a P/E Ratio at 28.90 based on current stock price of $11.85 and 2016 EPS estimate of $0.41. The P/E Ratio would be at 14.63 for 2017 with a stock price of $11.85 and 2017 EPS estimate of $0.48. So the current high P/E Ratio will not last and probably is not a valid test.

I get a Graham Price of $7.81. The 10 year low, median and high median Price/Graham Price Ratios are 0.82, 1.07 and 1.29. The current P/GP Ratio is 1.52. This testing suggests that the stock price is relatively expensive. However, the Graham Price for 2016 would be $11.47 and its P/GP Ratio would be 1.03 suggesting a better P/GP Ratio and a relatively reasonable stock price.

The 10 year Price/Book Value per Share Ratio is 1.44. The current P/B Ratio is 0.83 a value some 42% lower than the current P/B Ratio. The current P/B Ratio is based on BVPS of $14.25 and a stock price of $11.85. This test suggests that the stock price is relatively cheap. Also a stock would be absolutely cheap when the P/B Ratio is below 1.00. This would mean that the stock is selling below is break up worth.

Really the only dividend yield test needed on this stock is looking at the historically high dividend yield. The historically high dividend yield is 3.90% and the current dividend yield is 4.05%. The current dividend yield is based on a stock price of $11.85 and dividends of $0.48. This testing suggests that the stock price is relatively cheap.

The 10 year Price/Cash Flow per Share Ratio is 7.01 and the current P/CF Ratio is 5.81 based on 2015 CFPS estimate of $2.07 and a stock price of $11.85. The current P/CF Ratio is some 17% lower than the 10 year P/CF Ratio. This testing suggests that the stock price is relatively reasonable. To be cheap under this test, the current P/CF Ratio would have to be 20% lower than the 10 year P/CF Ratio. It is getting close.

The 10 year median Price/Sales Ratio is 1.60. The current P/S Ratio is 1.13 based on 2015 Revenue estimate of $1.603M or $10.52 per share and a stock price of $11.85. The current P/S Ratio is some 30% lower than the 10 year median ratio. This testing suggests that the stock price is relatively cheap.

When I look at analysts' recommendations, I find few Buy and few Underperform recommendations and lots of Hold recommendations. The consensus is a Hold recommendation. The 12 month consensus stock price is 11.80. This is a price below the current price of $11.85. The 12 month stock price of $11.80 implies a total return of 3.63% with a capital loss of 0.42% and dividends of $4.05%.

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

Ensign Energy Services Inc. is an industry leader in the delivery of oilfield services in Canada, the United States and internationally. They are one of the world's leading land-based drilling and well servicing contractors serving crude oil, natural gas and geothermal operators. Its web site is here Ensign Energy.

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, June 17, 2015

Ensign Energy Services

On my other blog I am today writing Motley Fool Booklets on investing continue...

Sound bite for Twitter and StockTwits is: Earnings are going down. Personally, I would rather a company stop increases or decrease dividends when they cannot afford the increases and/or the dividends. I know a lot of dividend investors are against this, but it can ensure the long term health of a company. See my spreadsheet at esi.htm.

I do not own this stock of Ensign Energy Services (TSX-ESI, OTC- ESVIF), but I used to. I bought this stock in June 2012. Stock was rather cheap in June of 2012. I had been following this stock for some time. I sold this stock in December 2014 to buy Mullen instead. Details of why is in a December 2014 post. I know I would be selling Ensign at a loss, but I also could buy Mullen cheaply. This is my first review of this stock after selling it.

Since this company started to pay dividends in 1995, it raised its dividend every year. The dividends started off low and have been rising, as have the Dividend Payout Ratios. This is especially true of the DPR for EPS. The DPR for EPS was not really a problem until 2014 when the DPR for EPS was 102%. It is expected to be quite a bit higher in 2015 at 252%.

The dividend increases have been slowing down recently. The 5 and 10 year growth in dividends are at 12.5% and 6.5%. The last dividend increase in 2015 was for 2.1%. They really should stop increasing dividends until they can again afford them.

The Dividend Payout Ratio for CFPS is better than for EPS. The 5 year median DPR for CFPS is 15.43, for 2014 is 16.9% and expected for 2015 is 23.5%. Because of the strong Cash Flow I do not think that the company needs to cut dividends, but I do think that they need to stop increasing dividends.

This company is in the oil services industry and with the low price for oil it is not surprising it is having problems. The 5 and 10 years total returns are losses. The total loss over the past 5 and 10 years is at 1.42% and 4.32% per year. The portion of this loss from capital losses is 4.64% and 6.60% per year. The portion of the total return from dividends is 3.22% and 2.28% per year.

The outstanding shares have not really changed over the past 5 and 10 years. Shares have increased due to stock options and decreased due to Buy Backs. Both Revenue and Cash Flow has shown good growth over the past 5 and 10 years. However, the Earnings have been declining especially over the past 2 years.

Revenue is up by 15.3% and 8.2% per year over the past 5 and 10 years. Revenue per Share is up by 15.5% and 8.1% per year over the past 5 and 10 years. Analysts are expecting a 30% drop in revenues for 2015. If you compared the 12 month period to the end of 2014 and the 12 month period to the end of the first quarter, Revenue is down by 7.5%.

EPS is down by 10.95 and 5.01% per year over the past 5 and 10 years. EPS has declined by 40% and 45% over the past 2 years. Analysts expect EPS to decline by around 59% in 2015. If you compared the 12 month period to the end of 2014 and the 12 month period to the end of the first quarter, EPS is down by 63%.

CFPS is up by 10.6% and 8.3% per year over the past 5 and 10 years. Analysts expect CFPS is be down around 31% in 2015. If you compared the 12 month period to the end of 2014 and the 12 month period to the end of the first quarter, CFPS is down by 6.4%.

The Return on Equity has been quite low lately with the ROE for 2014 at 3.5% and with a 5 year median at 7.7%. Interestingly, the ROE on comprehensive income has been a lot higher. The ROE on comprehensive income is 7.8% in 2014 with a 5 year median of 8.7%. This would suggest that earnings for this company may not be as bad as they first appear.

One of the things that I did not like about this company was the low Liquidity Ratio. This was often below 1.00 which means that the current assets could not cover current liabilities. This ratio was 0.89 in 2013. It is much better in 2014 at 1.46 and getting close to what I like as a minimum of 1.50. The first quarterly report has a Liquidity Ratio of 1.53.

The thing is if a company is in such a volatile area such as resources a strong balance sheet is a very good thing to have. A weak Liquidity Ratio can leave a company vulnerable in bad times and we are always going to have bad times. This company does have strong cash flow which can make up for a weak Liquidity Ratio, but cash flow could weaken in the bad times.

The other debt ratios are just fine. The Debt Ratio is 2.22 for 2014 and it has a 5 year median of 2.38. This is a strong Debt Ratio. The Leverage and Debt/Equity Ratios for 2014 are 1.82 and 0.82 with 5 year medians of 1.62 and 0.62.

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

Ensign Energy Services Inc. is an industry leader in the delivery of oilfield services in Canada, the United States and internationally. They are one of the world's leading land-based drilling and well servicing contractors serving crude oil, natural gas and geothermal operators. Its web site is here Ensign Energy.

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, June 16, 2015

Hammond Power Solutions Inc. 2

Sound bite for Twitter and StockTwits is: Price is cheap to reasonable. To my mind you buy good companies when they are relatively cheap. For a small cap, I think that this stock has a very good chance of success. See my spreadsheet at hps.htm.

I own this stock of Hammond Power Solutions Inc. (TSX-HPS.A, OTC- HMDPF). I bought this stock as my main purchase for the TFSA in 2013 and 2014. I picked Hammond initially in 2013 as my main buy because it has good growth and reasonable dividend.

Over the past year in insider trading there was $149,000 of insider buying and $88,000 of insider selling with net insider buying of $61,000 or 0.08% of the outstanding market cap. On a relative basis there is a lot of insider buying. There is some insider ownership with the CEO and Chairman owning shares worth $7.7M and around 9% of the outstanding shares.

The 5 year low, median and high median Price/Earnings per Share Ratios are 12.62, 16.79 and 20.96. They are lot higher than the corresponding 10 year Ratios of 7.47, 10.15 and 12.89. The current P/E Ratio is 14.66 based on a stock price of $6.89 and 2015 EPS estimate of $0.47. This stock price test suggests that the stock price is relatively reasonable.

I get a Graham Price of $10.43. The 10 year low, median and high median Price/Graham Price Ratios are 0.60, 0.77 and 1.01. The current P/GP Ratio is 0.66 based on a stock price of $6.89. This stock price test suggests that the stock price is relatively reasonable. Note that according to Graham when the P/GP Ratio is less than 1.00 then the stock is intrinsically undervalued.

The 10 year Price/Book Value per Share Ratio is 1.21 and the current P/B Ratio at 0.67 is some 45% lower. The P/B Ratio is based on a BVPS $10.28 and a stock price $6.89. This stock price test suggests that the stock price is relatively cheap.

The historical average Dividend Yield is 2.39% and the current Dividend Yield is some 46% higher than the current dividend yield of 3.48%. The current dividend yield is based on dividends of $0.24 and a stock price of $6.89. The historical median dividend yield is just 1.06% and the current dividend is some 107% higher. This stock price test suggests that the stock price is relatively cheap.

Note that dividend yield on this stock started low both in both percentage and Dividend Payout Ratios. Both have grown over the short time that this stock has paid dividends. The thing is you might wonder how valid this testing is.

The 10 year median Price/Sales Ratio is 0.44. This is a low P/S Ratio; in fact any P/S Ratio below 1.00 is rather low. The current P/S Ratio is 0.31 based on 2015 Revenue estimate of $257 or $22.18 Revenue per Share. The current P/S Ratio is some 30% lower than the 10 year P/S Ratio. This stock price test suggests that the stock price is relatively cheap.

As far as I can see only one analyst has given this stock a rating and it is a Hold. The target price given is $8.00. This implies a total return of 19.59% with 16.11% from capital gains and 3.48% from dividends.

On Market Wire Hammond Power Solutions announces first quarterly results saying they have solid bookings and backlog growth. Market Wire makes an announcement of a joint venture agreement between Hammond Power Solutions and National Material LP. On Guru Focus Ryan Irvine of KeyStone Financial gives a review of Hammond. Go to the bottom of the page.

This is the second of two parts. The first part was posted on Monday, June 15, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.

Hammond Power Solutions Inc. is the largest manufacturer of dry-type transformers in North America. They engineer and manufacture a wide range of custom transformers that are exported globally in electrical equipment and systems. They support solid industries such as oil and gas, mining, steel, waste and water treatment, and wind power-generation. Its web site is here Hammond Power Solutions.

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.