Is it a good company at a reasonable price? This seems to be have done well for its shareholders over time. It has provided a good total return with dividends growing moderately. However, the stock price testing I have done is showing that the stock is relatively expensive. To me, the only reason to buy a stock showing as expensive is that it is growth rapidly. That is around 20% per year. See the chart below. It seems the only item growing that rapidly is the stock price.
In the chart below, I am showing 5 and 10 year total growth and per year growth in columns 3 and 4. Column 5 shows growth expected over 12 months to the first quarter in 2024 and expected growth over the next year.
| Yr | Item | Tot. Gwth | Per Year | Gwth | Coverage |
|---|---|---|---|---|---|
| 5 | Revenue Growth | 46.14% | 7.88% | 3.92% | <-12 mths |
| 5 | AEPS Growth | 41.47% | 7.19% | 1.37% | <-12 mths |
| 5 | Net Income Growth | 24.48% | 4.48% | 14.19% | <-12 mths |
| 5 | Cash Flow Growth | 51.22% | 8.62% | 5.40% | <-12 mths |
| 5 | Dividend Growth | 58.04% | 9.58% | 5.93% | <-12 mths |
| 5 | Stock Price Growth | 126.57% | 17.77% | 26.05% | <-12 mths |
| 10 | Revenue Growth | 70.46% | 5.48% | 18.33% | <-this year |
| 10 | AEPS Growth | 115.98% | 8.00% | 8.90% | <-this year |
| 10 | Net Income Growth | 187.79% | 11.15% | 16.85% | <-this year |
| 10 | Cash Flow Growth | 109.62% | 7.68% | 5.40% | <-this year |
| 10 | Dividend Growth | 121.25% | 8.27% | 11.58% | <-this year |
| 10 | Stock Price Growth | 214.03% | 12.12% | 26.05% | <-this year |
I do not own this stock of TMX Group Ltd (TSX-X, OTC-TMXXF). I looked at this stock in 2008 after I found it on a list of Strongest Dividend Growth stocks. I am interested in such stocks.
When I was updating my spreadsheet, I noticed that although this has not been a stock I have been interested in owning, I must admit that shareholders have done well with this stock. See the Total Return chart below.
They made an acquisition VettaFi on January 2, 2024. In the first quarter the outstanding debt increased by 354%, but the Debt/Market Cap Ratio is still fine at 0.19. The intangible and Goodwill Ratio also increase by 74%, but the Intangible/Market Cap Ratio is still fine at 0.68. See the Press Release.
If you had invested in this company in December 2013, for $1,000.19 you would have bought 98 shares at $10.21 per share. In December 2023, after 10 years you would have received $472.56 in dividends. The stock would be worth $3,140.90. Your total return would have been $3,613.46. This would be a total return of 14.85% per year with 12.12% from capital gain and 2.72% from dividends. This calculation takes into consideration stock splits, which means that the original cost would be lowered by these splits.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $10.21 | $1,000.19 | 98 | 10 | $472.56 | $3,140.90 | $3,613.46 |
The current dividend yield is low with dividend growth moderate. The current dividend yield is low (below 2%) at 1.88%. The 5, 10 and historical dividend yields are moderate (2% to 4% ranges) at 2.43%, 2.65% and 2.82%. The dividend growth is moderate (8% to 14% ranges per year) at 9.6% per year over the past 5 years. The last dividend increase was for 5.6% and it occurred in 2024. Over the past 20 years, the dividends have increased 14 time and there were no decreases.
The Dividend Payout Ratios (DPR) are fine. The DPR for 2023 for Earnings per Share (EPS) is fine at 55% with 5 year coverage at 48%. The DPR for 2023 for Adjusted Earnings per Share (AEPS) is good at 48% with 5 year coverage at 48%. The DPR for 2023 for Cash Flow per Share (CFPS) is good at 30% with 5 year coverage at 30%. The DPR for 2023 for Free Cash Flow (FCF) is good at 43% with 5 year coverage at 45%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 55.31% | 48.04% |
| AEPS | 48.49% | 48.07% |
| CFPS | 29.92% | 29.66% |
| FCF | 42.83% | 44.53% |
Debt Ratios are fine, but Liquidity Ratio could be improved. The Long Term Debt/Market Cap Ratio for 2023 is good at 0.05 and currently at 0.19. The Liquidity Ratio for 2023 is too low at 1.00 and 1.00 currently. If you added in Cash Flow after dividends, the ratios still much too low at 1.00 and currently at 1.01. The Debt Ratio for 2023 is fine for a financial at 1.07 and 1.09 currently.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.05 | 0.19 |
| Intang/GW | 0.46 | 0.66 |
| Liquidity | 1.00 | 1.00 |
| Liq. + CF | 1.00 | 1.01 |
| Debt Ratio | 1.07 | 1.09 |
The Total Return per year is shown below for years of 5 to 21 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 | 9.58% | 20.85% | 17.77% | 3.07% |
| 2013 | 10 | 8.27% | 14.85% | 12.12% | 2.72% |
| 2008 | 15 | 5.80% | 16.81% | 13.13% | 3.69% |
| 2003 | 20 | 12.27% | 13.98% | 10.60% | 3.37% |
| 2002 | 21 | 20.67% | 13.78% | 6.89% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 18.06, 21.99 and 23.71. The corresponding 10 year ratios are 14.85, 18.62 and 23.71. The corresponding historical ratio is 16.71, 21.69 and 24.89. The current P/E Ratio is 28.02 based on a stock price of $40.40 and EPS estimate for 2024 of $1.44. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Earnings per Share Ratios are 17.11, 19.66 and 21.95. The corresponding 10 year ratios are 14.53, 17.06 and 18.66. The current ratio is 25.41 based on a stock price of $40.40 and AEPS estimate for 2021 of $1.59. This ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $22.85. The 10-year low, median, and high median Price/Graham Price Ratios are 0.87, 1.08 and 1.20. The current P/GP Ratio is 1.77 based on a stock price of $40.40. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a 10-year median Price/Book Value per Share Ratio of 1.42. The current P/B Ratio is 2.77 based on a stock price of $40.40, Book Value of $4,037M and Book Value per Share of $14.59. The current ratio is 95% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I also have a Book Value per Share estimate for 2027 of $16.00. This implies a ratio of 2.53 with a stock price of $40.40 and Book Value of $4,460M. This ratio is 78% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 10-year median Price/Cash Flow per Share Ratio of 14.93. The current P/CF Ratio is 20.20 based on Cash Flow per Share estimate for 2024 of $2.00, Cash Flow of $553M and a stock price of $40.40. The current ratio is 35% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 2.82%. The current dividend yield is 1.88% based on dividends of $0.76 and a stock price of $40.40. The current yield is 33% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median dividend yield of 2.65%. The current dividend yield is 1.88% based on dividends of $0.76 and a stock price of $40.40. The current yield is 29% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10-year median Price/Sales (Revenue) Ratio is 6.24. The current P/S Ratio is 7.91 based on Revenue estimate for 2024 of $1,413M, Revenue per Share of $5.11 and a stock price of $40.40. The current ratio is 27% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
Results of stock price testing is that the stock price is relatively expensive. The dividend yield tests say that the stock price is relatively expensive. The P/S Ratio test confirms this. All my testing is pointing to the stock price as being relatively expensive.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (1), and Hold (7). The consensus would be a Hold. The 12 month stock price consensus is $40.00 with a high of $44.00 and low of $37.00. The $40.00 consensus stock price implies a total return 0.89% with a capital loss of 0.99% and dividends of $1.88%.
For 2024, there is only one entry on Stock Chase and it is a Buy. Entries for 2023 were mixed between Buy, Hold and Sell. Stock Chase gives this stock 4 stars out of 5. Robin Brown on Motley Fool expects this stock to grow steadily in the coming years. Brian Paradza on Motley Fool says this stock just raised their dividends and it can afford to do so. The company put out a Press Release about their 2023 results. The company put out a Press Release on their results for the first quarter of 2024.
Simply Wall Street via Yahoo Finance reviews this stock. Simply Wall Street has one warning on this stock of interest payments are not well covered by earnings. Simply Wall Street has 3 and one half stars out of 5 on this stock.
TMX Group Ltd is a company that operates several markets to provide investment opportunities for its clients. TMX Group provides listing markets, trading markets, clearing facilities, depository services, technology solutions, data products, and other services to the world-wide financial community. TMX Group operates offices across North America (Montreal, Calgary, Vancouver, and New York), as well as in key international markets including London and Singapore. The company has four segments namely: Global Solutions, Insights & Analytics, which derives the key revenue; Capital Formation; Derivatives Trading & Clearing; and Equities and Fixed Income Trading & Clearing. Its web site is here TMX Group Ltd.
The last stock I wrote about was about was Suncor Energy Inc (TSX-SU, NYSE-SU) ... learn more. The next stock I will write about will be Obsidian Energy Ltd (TSX-OBE, NYSE-OBE) ... learn more on Friday, July 12, 2024 around 5 pm. Tomorrow on my other blog I will write about Dividend Monk Blogger .... learn more on Thursday, July 11, 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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