Newfoundland Capital Corp.

On my other blog I am today writing about stocks I looked at more closely in my monthly update, part 2 continue...

Sound bite for Twitter and StockTwits is: Stock price is reasonable, but above median. I think that the current stock price looks reasonable. I do not know why the one analyst thinks that the stock price will go down or maybe he just sees the whole marketing going down. We are probably overdue for a bear market. This is not a dividend growth stock, so at the moment I am not interested in it. See my spreadsheet at ncc.htm.

I do not own this stock of Newfoundland Capital Corp. (TSX-NCC, OTC-none). I started to follow this stock as it was suggested as a decent dividend paying stock for investment purposes in the latter part of 2009. It is not on any dividend lists that I follow so I took a look at it.

This is a dividend paying stock, but not a dividend growth stock. Dividends have gone down as well as up and the current dividend is the same as was paid in 2008 before the dividend was cut in 2009 and then restarted in 2010. Over the longer term, dividends have gone but, but not so over the shorter term. The Dividend growth over the past 10 years is at 16% per year.

For me to consider a stock to be a dividend growth one, it would have to be consistent in paying dividends as well as increasing them over time. In 2009 the dividend cut was not the only one in recent history. This stock paid dividends from 1997 to 1999 and then stopped them from 2000 to 2003. They may have had a good reason to do so, but this is hard on shareholders who invest in stock to get a dividend income.

This stock has done well over the past 5 and 10 years to date. The 5 and 10 year total return is at 12.41% and 9.21% per year. The portion of this total return from dividends is at 1.71% and 1.59% per year. The portion of this total return from capital gains is at 10.70% and 7.63% per year.

The outstanding shares have decreased over the past 5 and 10 years at 3.1% and 2.2% per year. The shares have increased due to Stock Options and have decreased due to Buy Backs. This means that I will focus on Revenue, Earnings and Cash Flows not the per share values. Revenue growth is good. Earnings growth is non-existent to low and cash flow growth is good.

Revenue has grown at 8% and 9% per year over the past 5 and 10 years. It is expected to grow about 5.5% in 2015. Net Income or Earnings have declined by 6.1% and grown by 1% per year over the past 5 and 10 years. Earnings have fluctuated a lot, so it is worthwhile look at the 5 year running average growth and this is good at 11.6% and 13.8% per year over the past 5 and 10 years. Strong earnings growth of 19% is expected in 2015.

Cash Flow has grown by 12.2% and 12.3% per year over the past 5 and 10 years. Analysts do not expect much growth from cash flow for 2015 at less than 1%. However, cash flow has grown by 10.7% if you compare the 12 month period to the end of the second quarter to the 12 month period to the end of 2014.

Of the debt ratios, the Liquidity Ratio is the weakest. For 2014 it is just 0.94. This means that current assets cannot cover current liabilities. However, if you add in cash flow after dividends it becomes 1.47. This means that the company will rely on cash flow to cover current liabilities. The Debt Ratio for 2014 was good at 1.65. The Leverage and Debt/Equity Ratios are a little high at 2.47 and 1.45 for 2014.

The 5 year low, median and high median Price/Earnings per Share Ratios are 20.16, 22.58 and 25.00. The 10 years ratios are lower at 13.06, 15.86 and 18.66 and are more reasonable for this sort of stock. The current P/E ratio is 15.09 based on a stock price of $11.47 and 2015 EPS estimate of $0.76. This stock price testing suggests that the stock price is relatively reasonable, even relatively cheap.

I get a Graham Price of $9.40. The 10 year Price/Graham Price Ratios are 1.14, 1.29 and 1.44. The current P/GP Ratio is 1.22 based on a stock price of $11.47. This stock price testing suggests that the stock price is relatively reasonable. Stock price is below the relative median.

I get a 10 year Price/Book Value per Share Ratio of 2.03. The current P/B Ratio is 2.22 based on a stock price of $11.47 and current BVPS of $5.17. The current P/B Ratio is some 9.2% higher than the 10 year P/B Ratio. This stock price testing suggests that the stock price is relatively reasonable. Stock price is above the relative median.

The current dividend yield is 1.31% based on dividends of $0.15 and a stock price of $11.47. The 5 year median dividend yield is 1.75% and the current dividend yield is some 25% lower. This stock price testing suggests that the stock price is expensive. However, this historical median dividend yield at 1.54% is just 15% higher. This stock price testing suggests that the stock price is relatively reasonable. Stock price is above the relative median.

There is just one analyst following this stock and the rating given is a Hold. The 12 month stock price is $10.00. This implies a negative total return of 11.51% with a capital loss of 12.82% and dividends of 1.31%.

In this news article in The Chronicle Heard Newfoundland Capital Corp says their profits dropped in the second quarter due to an income tax increase. This interesting article in Business in Vancouver talks about investors seeing ratio as a better business than TV.

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.

Newfoundland Capital Corporation Limited also owns and operates Newcap Radio. Newcap Radio is one of Canada's leading radio broadcasters with 79 licenses across Canada. The Company reaches millions of listeners each week through a variety of formats and is a recognized industry leader in radio programming, sales and networking. Its web site is here Newfoundland Capital 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.

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