Is it a good company at a reasonable price? Since this is a real estate stock, you might buy it for diversification. I have some REITs for this reason, but I do not own this one. If this is a stock you want for your portfolio, the best time to buy it is when the stock price is relatively cheap. A negative is the debt and a positive is insider buy by management. Currently the stock price is relative cheap.
I do not own this stock of Artis REIT (TSX-AX.UN, OTC-ARESF). Early in 2013, this company was mentioned as a good REIT to own. Several people I correspond with mentioned this REIT. However, my first view of it is not positive. It is also not a dividend growth stock.
When I was updating my spreadsheet, I noticed this stock has not been doing well lately. For example, Revenue is down 8% per year over the past 5 years, AFFO is down 7% per year over past 5 years and FFO is down 3.6% per year over the past 5 years. However, over the past year all the management people I am following increased their units in this REIT. None of the Directors that I follow increased their units. Currently, Real Estate stocks are having a hard time.
You can see below the beauty of dividend paying stocks. Even when the stock tanks, you seldom loss money or loss much money because of the dividends.
If you had invested in this company in December 2013, for $1,010.48 you would have bought 68 shares at $14.86 per share. In December 2023, after 10 years you would have received $588.82 in dividends. The stock would be worth $450.84. Your total return would have been $1,039.66. This would be a total return of 14.03% per year with 12.56% from capital gain and 1.47% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $14.86 | $1,010.48 | 68 | 10 | $588.82 | $450.84 | $1,039.66 |
The current dividend yield is high with dividend growth negative to flat. The current dividend yield is high (7% and higher) at 906%. The 5 year median dividend yield is good (5% to 6%) at 5.31%. The 10 year median and historical dividend yields are high at 7.38% and 7.15%. The dividends are quite high after dividends have been cut 80%. Dividends have been flat for the last couple of years.
The Dividend Payout Ratios (DPR) are generally not good, but are expected to improve over the next few years. The DPR for 2023 for Earnings per Share (EPS) are not good as there has been a number of earnings losses lately. The DPR for 2023 for Adjusted Funds from Operations (AFFO) is high at 95% with 5 year coverage at 65%. The DPR for 2023 for Funds from Operations (FFO) is good at 56% with 5 year coverage at 45%. The DPR for 2023 for Cash Flow per Share (CFPS) is too high at 81% with 5 year coverage at 53%. The DPR for 2023 for Free Cash Flow (FCF) is too high at 101% with 5 year coverage at 60%. Analysts expect the DPR for AFFO, FFO and CFPS to go lower over the next few years.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | -19.35% | 1080.34% |
| AFFO | 95.24% | 65.08% |
| FFO | 55.56% | 45.25% |
| CFPS | 80.50% | 53.09% |
| FCF | 100.55% | 59.97% |
Debt Ratios are fine, but the company does have a lot of debt. The Long Term Debt/Market Cap Ratio for 2023 is too high at 1.46 and currently at 1.61. However, we need also to look at the Long Term Debt/Covering Assets Ratio for 2023 which is good at 0.38 and currently at 0.45 because this is an important one for a REIT. The Liquidity Ratio for 2023 is far too low at 0.67 and 1.00 currently. If you added in Cash Flow after dividends, the ratios still too low 0.68 and currently at 1.01. I am also looking at the Liquidity taking into account the current portion of the long term debt which is fine at 5.97 and 10.83. The Debt Ratio for 2023 is good at 1.85 and 1.84 currently. The Leverage and Debt/Equity Ratios for 2023 are fine at 2.18 and 1.18 and currently at 2.20 and 1.20.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 1.46 | 1.61 |
| Lg Term R +A | 0.38 | 0.45 |
| Intang/GW | 0.00 | 0.00 |
| Liquidity | 0.67 | 1.00 |
| Liq. + CF | 0.68 | 1.01 |
| Liq,CF,DB | 5.97 | 10.83 |
| Debt Ratio | 1.85 | 1.84 |
| Leverage | 2.18 | 2.20 |
| D/E Ratio | 1.18 | 1.20 |
The Total Return per year is shown below for years of 5 to 19 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 | -9.53% | 1.78% | -6.42% | 8.21% |
| 2013 | 10 | -5.71% | 0.40% | -7.75% | 8.15% |
| 2008 | 15 | -3.77% | 13.50% | -0.69% | 14.19% |
| 2004 | 19 | -1.20% | 16.20% | 0.40% | 15.80% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 3.60, 3.92 and 4.23. The corresponding 10 year ratios are 9.27, 10.27 and 11.11. The corresponding historical ratios are 3.39, 3.76 and 4.12. Ratios are very low in some cases because of earning losses. The current P/E Ratio is negative, as is the ratio for 2025, so I cannot do testing here.
I also have Adjusted Funds from Operations (AFFO) data. The 5-year low, median, and high median Price/ Adjusted Funds from Operations Ratios are 9.40, 11.67 and 13.40. The corresponding 10 year ratios are 9.49,11.78 and 13.35. The current ratio is 10.85 based on AFFO estimate for 2024 of $0.61 and a stock price of $6.62. The current ratio 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 Funds from Operations (FFO) data. The 5-year low, median, and high median Price/Funds from Operations Ratios are 6.42, 7.80 and 9.06. The corresponding 10 year ratios are 7.03, 8.28 and 9.76. The current ratio is 6.55 based on AFFO estimate for 2024 of $1.01 and a stock price of $6.62. The current 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 $13.42. The 10-year low, median, and high median Price/Graham Price Ratios are 0.51, 0.59 and 0.72. The current P/GP Ratio is 0.49 based on a stock price of $6.62. The current 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 10-year median Price/Book Value per Share Ratio of 0.69. The current P/B Ratio is 0.50 based on a Book Value of $1,417M, Book Value per Share of $13.12 and a stock price of $6.62. The current ratio is 27% 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 8.43. The current P/CF Ratio is 9.65 based on the Cash Flow for the last 12 months of $74M, Cash Flow per Share of $0.69 and a stock price of $6.62. The current ratio is 14% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get an historical median dividend yield of 7.15%. The current dividend yield is 9.06% based on a stock price of $6.62 and dividends of $0.60. The current dividend yield is 27% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 7.38%. The current dividend yield is 9.06% based on a stock price of $6.62 and dividends of $0.60. The current dividend yield is 23% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10-year median Price/Sales (Revenue) Ratio is 3.38. The current P/S Ratio is 2.41 based on a stock price of $6.62, Revenue estimate for 2024 of $297 and Revenue per Share of $2.75. The current ratio is 29% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
Results of stock price testing is that the stock price is probably cheap. The dividend yield testing says that the stock price is cheap. The P/S Ratio test confirms this by saying the stock price is cheap. The rest of the testing says that the stock price is either cheap or reasonable.
When I look at analysts’ recommendations, I find only Holds (3). The consensus would be a Hold. The 12 month stock price consensus is $6.67 with a high of $7.00 and a low of $6.50. The consensus stock price of $6.67 implies a total return of 9.82% with 0.76% from capital gains and 9.06% from dividends.
In 2023 for this REIT on Stock Chase there was a lot of Do Not Buys. Stock Chase give this stock 3 stars out of 5. Apparently, they are trying to decide on strategy and are selling assets. Ambrose O'Callaghan on Motley Fool thinks you should buy this to provide income in a TFSA. Jitendra Parashar on Motley Fool thinks you should buy this stock for reliable passive income. The company put out a press release via Newswire about their fourth quarter of 2023. The company put out a press release via Newswire about their first quarter of 2024.
Simply Wall Street via Yahoo Finance talks about who owns shares in this company. Simply Wall Street give this stock 1 and one half star out of 5. Simply Wall Street has 3 warnings of earnings have declined by 35.6% per year over past 5 years; interest payments are not well covered by earnings; and unstable dividend track record.
Artis Real Estate Investment Trust is an unincorporated closed-end REIT based in Canada. Artis REIT's portfolio comprises properties located in Central and Western Canada and selects markets throughout the United States, including regions such as Alberta, British Columbia, Manitoba, Ontario, Saskatchewan, Arizona, Minnesota, Colorado, New York, and Wisconsin. The properties are divided into three categories: office, retail, and industrial. Its web site is here Artis REIT.
The last stock I wrote about was about was Obsidian Energy Ltd (TSX-OBE, NYSE-OBE) ... learn more. The next stock I will write about will be Dorel Industries Inc (TSX-DII.B, OTC-DIIBF) ... learn more on Wednesday, July 17, 2024 around 5 pm. Tomorrow on my other blog I will write about Smart Investing.... learn more on Tuesday, July 16, 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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