Is it a good company at a reasonable price? The stock price is reasonable. I own some shares in this stock. REITs are good for portfolio diversification and passive income. This fits that profile.
I own this stock of SmartCentres REIT (TSX-SRU.UN, OTC-CWYUF). Once you have 5 or 6 stocks, you might want to consider a REIT for diversification. REITs are an easy way to investment in real estate. I am therefore following a few REIT stocks and in 2009 I decided to look at a few on the Dividend Achiever's List. It is not always on this list because of periods of flat dividends.
When I was updating my spreadsheet, I noticed that as the case is lots of REITs that the EPS amount does not reflect what a REIT is really earning. You really must look at the Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO).
If you had invested in this company in December 2011, $1,017.26 you would have bought 38 shares at $26.77 per share. In December 2021, after 10 years you would have received $642.02 in dividends. The stock would be worth $1,223.22. Your total return would have been $1,865.24.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $26.77 | $1,017.26 | 38 | 10 | $642.02 | $1,223.22 | $1,865.24 |
The dividend yields are good with dividend growth low. The current dividend is good (5% and 6% ranges) at 6.69%. The 5, 10 and historical dividend yields are also good at 5.80%, 5.60% and 5.90%. The dividend growth over the past 5 year dividends have grown at 2.2% per year. The last dividend increase was in 2019 and it was for 2.8%. Over the past 19 years, this company has raised their dividends 12 times and they have been flat for 7 years. This is a REIT and they tend to have good dividend yields and low growth.
The Dividend Payout Ratios (DPR) are fine as the important ratios are for AFFO and FFO. The DPR for EPS for 2021 is 39% with 5 year coverage at 79%. Because this is a REIT, I also look at DPR for Adjusted Funds from Operations (AFFO) and Funds from Operations (FFO). The DPR for AFFO for 2021 is 90% with 5 year coverage at 85%. The DPR for FFO for 2021 is 84% with 5 year coverage at 82%. The DPR for Cash Flow per Share (CFPS) for 2021 is 68% with 5 year coverage at 63%. The DPR for Free Cash Flow (FCF) for 2021 is 72% with 5 year coverage at 62%.
There is a problem with the Liquidity Ratio, but they do have a very good coverage of assets over liabilities. The problem is lack of liquidity which can be a problem in a recession. Otherwise, debt ratios are fine. Because it is a REIT, I am looking at Debt/Covering Assets Ratio and for 2021 it is 0.42. The Long Term Debt/Market Cap Ratio is fine at 0.76. Assets/Current Liabilities Ratio is 12.12. The Liquidity Ratio is very low at 0.24 and with Cash Flow after dividends it is 0.35 and with current portion of debt added back it is 1.29. The Debt Ratio is 2.07. The Leverage and Debt/Equity Ratios are 1.93 and 0.93.
The Total Return per year is shown below for years of 5 to 24 to the end of 2021. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2016 | 5 | 2.21% | 5.49% | -0.06% | 5.55% |
| 2011 | 10 | 1.80% | 7.64% | 1.86% | 5.78% |
| 2006 | 15 | 1.54% | 6.53% | 1.03% | 5.50% |
| 2001 | 20 | 2.67% | 16.32% | 6.66% | 9.67% |
| 1997 | 24 | 27.06% | 13.08% | 13.98% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 13.65, 14.63 and 15.61. The corresponding 10 year ratios are 12.72, 13.80 and 15.05. The corresponding historical ratios are 13.65, 15.85 and 19.07. The current P/E Ratio is 7.17 based on a stock price of $28.03 and EPS estimate for 2022 of $3.91. The current ratio is below the low of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
Because this is a REIT, I look at Adjusted Funds from Operations (AFFO). The 5-year low, median, and high median P/AFFO Ratios are 13.23, 14.18 and 15.70. The corresponding 10 year ratios are 13.77, 15.14 and 16.29. The current P/AFFO ratio is 14.91 based on a stock price of $28.03 and AFFO estimate for 2022 of $1.88. This ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.
Because this is a REIT, I look at Funds from Operations (FFO). The 5-year low, median, and high median P/FFO Ratios are 12.40, 13.29 and 15.23. The corresponding 10 year ratios are 12.98, 14.33 and 15.42. The current P/FFO ratio is 13.74 based on a stock price of $28.03 and AFFO estimate for 2022 of $2.04. This ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a Graham Price of $37.36. The 10-year low, median, and high median Price/Graham Price Ratios are 0.80, 0.87 and 0.96. The current P/GP Ratio is 0.75 based on a stock price of $28.03. the current ratio is below the low the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a 10-year median Price/Book Value per Share Ratio of 1.20. The current P/B Ratio is 0.92 based on a Book Value of $5,176M, Book Value per Share of $30.41 and a stock price of $28.03. The current ratio is 23% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a 10-year median Price/Cash Flow per Share Ratio of 15.54. The current P/CF Ratio is 12.66 based on Cash Flow for the last 12 months of $376.8M, Cash Flow per Share of $2.21 and a stock price of $28.03. The current ratio is 19% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 5.90%. The current Dividend Yield is 6.60% based on dividends of $1.85 and a stock price of $28.03. The current dividend yield is 11.9% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 5.60%. The current Dividend Yield is 6.60% based on dividends of $1.85 and a stock price of $28.03. The current dividend yield is 17.9% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10-year median Price/Sales (Revenue) Ratio is 6.57. The current P/S Ratio is 6.02 based on Revenue estimate for 2022 of $793M, Revenue per Share of $4.66 and a stock price of $28.03. The current ratio is 8% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
Results of stock price testing is that the stock price is reasonable and below the median. The dividend yield tests say this and it is confirmed by the P/S Ratio test. Test results say that the stock price is from cheap to relatively reasonable but above the median. None say the stock price is expensive.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (1) and Hold (5). The consensus would be a Buy. The 12 month consensus target price is $31.18. This implies a total return of 17.84% with 11.24% from capital gains and 6.60% from dividends based a stock price of $28.03.
There are recent comments on Stock Chase and analysts like this stock. Stock Chase gives this stock 4 stars out of 5. It is not on Money Sense list. Adam Othman on Motley Fool says its retail properties are more attractive because of properties anchored by Walmart. Amy Legate-Wolfe Motley reviews this stock and thinks it is good for passive income. The companies released results on Global Newswire for the fourth quarter of 2021. The company release results on Global Newswire for their second quarter of 2022.
Simply Wall Street via Yahoo Finance talks about who owns this company. Simply Wall Street gives two warnings of debt is not well covered by operating cash flow and large one-off items impacting financial results
SmartCentres Real Estate Investment Trust is a Canadian fully integrated commercial and residential REIT. The company is developing complete, connected, mixed-use communities on its existing retail properties, under its wholly-owned residential sub-brand, SmartLiving. Its web site is here SmartCentres REIT.
The last stock I wrote about was about was Titanium Transportation Group Inc (TSX-TTR, OTC-TTTGF) ... learn more. The next stock I will write about will be xJust Energy Group Inc (TSX-JE, NYSE-JE) ... learn more on Friday, September 9, 2022 around 5 pm. Tomorrow on my other blog I will write about Something to Buy September 2022 .... learn more on Thursday, September 08, 2022 around 5 pm.
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