Is it a good company at a reasonable price? Personally, when a stock is cheap and/or it has a high dividend yield, it does not necessarily mean it is a good stock to buy. I would worry about the high debt. The stock price is testing as cheap.
I do not own this stock of CI Financial Corp (TSX-CIX, NYSE-CIXX). 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. When they became a Unit Trust in 2006, dividends were significantly increased, but these dividends proved to be unsustainable. They changed back to a corporation in 2009 and dividends were decreased in 2010. I started to follow this stock in 2009.
When I was updating my spreadsheet, I noticed while most of the insiders I follow have been buying up shares, the company has also. The company bought over 17% of outstanding shares in 2023. They have bought a median of 6.7% per year over the past 10 years.
The buying back shows up clearly in Revenue. Revenue has grown over the past 5 and 10 years at 4.2% and 5.34% per year. However, Revenue per Share is showing up over the past 5 and 10 years as 14.2% and 12.1% per year.
If you had invested in this company in December 2013, for $1,025.15 you would have bought 29 shares at $35.35 per share. In December 2023, after 10 years you would have received $288.45 in dividends. The stock would be worth $403.94. Your total return would have been $719.42. This would be a total loss of 4.27% per year with 8.30% from capital loss and 4.03% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $35.35 | $1,025.15 | 29 | 10 | $288.48 | $430.94 | $719.42 |
The current dividend yield is good with dividend growth restarting. The current dividend yield is good (5% to 6% ranges) at 5.61%. The 5, 10 and historical median dividend yields are moderate (2% to 4% ranges) at 3.69%, 3.94% and 3.67%. Dividends were cut by 49% in 2018 and changed from monthly to quarterly. Dividend increases were restarted in 2024 and the dividend increase was for 11%.
The Dividend Payout Ratios (DPR) are good. The DPR for 2023 for Earnings per Share (EPS) is good at 46% with 5 year coverage at 44%. The DPR for 2023 for Adjusted Earnings per Share (AEPS) is good at 23% with 5 year coverage at 21%. The DPR for 2023 for Cash Flow per Share (CFPS) is good at 20% with 5 year coverage at 24%. The DPR for 2023 for Free Cash Flow (FCF) is good at 32% with 5 year coverage at 29%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 45.57% | 44.28% |
| AEPS | 23.15% | 21.11% |
| CFPS | 19.69% | 23.81% |
| FCF | 31.54% | 28.87% |
I do not like the Debt Ratios. The Long Term Debt/Market Cap Ratio for 2023 is too high at 1.34and currently at 1.43. You want this to be at least below 1.00. The Intangible and Goodwill Ratio is far too high at 3.31 and 3.48. You also want this to be below 1.00. The Liquidity Ratio for 2023 is far too low at 0.56 and 0.33 currently. If you added in Cash Flow after dividends and current portion of the debt, the ratios are still awful at 0.44 and currently at 0.47. The Debt Ratio for 2023 is too low at 1.12 and 1.20 currently.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 1.34 | 1.43 |
| Intang/GW | 3.31 | 3.48 |
| Liquidity | 0.56 | 0.33 |
| Liq. + CF | 0.40 | 0.43 |
| Liq CF DB | 0.44 | 0.47 |
| Debt Ratio | 1.12 | 1.20 |
The Total Return per year is shown below for years of 5 to 29 to the end of 2023. 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. |
|---|---|---|---|---|---|
| 2018 | 5 | -8.46% | 1.45% | -2.97% | 4.42% |
| 2013 | 10 | -3.66% | -4.27% | -8.30% | 4.03% |
| 2008 | 15 | -6.80% | 8.27% | 0.16% | 8.10% |
| 2003 | 20 | 4.65% | 10.16% | 1.12% | 9.05% |
| 1998 | 25 | 15.41% | 15.99% | 5.56% | 10.42% |
| 1994 | 29 | 16.50% | 19.02% | 8.36% | 10.66% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 7.48, 11.26 and 15.05. The corresponding 10 year ratios are 10.28, 13.62 and 16.24. The corresponding historical ratios are 14.84, 17.09 and 19.90. The current P/E Ratio is 11.35 based on a stock price $14.25 and EPS estimate for 2024 of $1.26. This is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 4.56, 7.25 and 9.08. The corresponding 10 year ratios are 7.11, 8.98 and 11.52. The current ratio is 3.98 based on a stock price of $14.25 and AEPS estimate for 2024 of $3.58. This ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $29.00. The 10-year low, median, and high median Price/Graham Price Ratios are 0.93, 1.17 and 1.41. The current P/GP Ratio is 0.49 based on a stock price of $14.25. 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 3.29. The current P/B Ratio is 1.36 based on a stock price of $14.25, Book Value of $1,606M, and Book Value per Share of $10.44. The current ratio is 59% below the 10 year median ratios. 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 8.58. The current P/CF Ratio is 3.48 based on Cash Flow per Share estimate for 2024 of $4.10, Cash Flow of $631M, and a stock price of 14.25. The current ratio is 60% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 3.67%. The current dividend yield is 5.61% based on dividends of $0.80 and a stock price of $14.25. The current dividend yield is 53% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year dividend yield of 3.94%. The current dividend yield is 5.61% based on dividends of $0.80 and a stock price of $14.25. The current dividend yield is 32% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10-year median Price/Sales (Revenue) Ratio is 2.30. The current P/S Ratio i0.74 based on Revenue estimate for 2024 of $2,267M, Revenue per Share of $19.29 and a stock price of $14.25. The current ratio is 68% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. The problem with this test is that the company has been buying back a lot of shares, so the current ratio looks a lot better than it would have if they had not bought back shares. Although, this test would probably show the stock price as cheap, in any case.
Results of stock price testing is that the stock price is probably cheap, with the P/S Ratio test confirming the dividend yield tests. Most of the rest of the testing is saying the same thing, that is the stock price is relatively cheap.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (2), Hold (5). The consensus would be a Buy. The 12 month stock price consensus is $19.00, with a high of $21.00 and low of $16.00. This implies a total return of 38.958% with 33.33% from Capital Gains and 5.62% from dividends based on a current price of $14.25.
There is only one entry on Stock Chase for 2024 and it is a Sell. Analyst says that the company is massively levered. Stock Chase gives this stock 3 stars out of 5. Jitendra Parashar on Motley Fool in May 2024 talks about this stock tanking after releasing its first quarter report in 2024. Ambrose O'Callaghan on Motley Fool in 2023 thought this was a good dividend stock to buy. The company put out a press release about their year-end 2023 results. The company put out a Press Release for their first quarter of 2024.
Zacks via Yahoo Finance put out a recent review of this stock and upgraded it to a Strong Buy. Simply Wall Street via Yahoo Financenotes that the first quarter results miss expectations. Simply Wall Street has two warnings of debt is not well covered by operating cash flow; and dividend of 5.71% is not well covered by earnings. I cannot find any star score from Simply Wall Street.
CI Financial is a diversified provider of wealth management products and services, primarily in the Canadian market. The company operates its fund business through CI Global Asset Management, which offers a broad selection of investment funds. On the wealth management side, the company operates through CI Assante Wealth Management, Aligned Capital Partners, CI Private Wealth, as well as a large group of acquired US-based advisors, providing financial advice primarily to high-net-worth clients. Its web site is here CI Financial Corp .
The last stock I wrote about was about was Waste Connections Inc (TSX-WCN, NYSE-WCN) ... learn more. The next stock I will write about will be Computer Modelling Group Ltd (TSX-CMG, OTC-CMDXF) ... learn more on Monday, June 24, 2024 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. I am not a licensed professional investment advisor. 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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