Is it a good company at a reasonable price? The price maybe cheap, but I do not like the amount of debt this company has. Not only is the debt too high, but the Intangible and Goodwill/Market Cap Ratio is far too high. The stock price might be relatively low, but I believe it is low for these reasons. Personally, I would not own this stock. However, it is testing as quite cheap.
I do not own this stock of Cogeco Communications Inc (TSX-CCA, OTC-CGEAF). This stock was on the Money Sense list when I was looking for a new stock to follow.
When I was updating my spreadsheet, I noticed this stock has been a mediocre performer. Its dividends are good, in the 5% ranges and they are increasing. They are not paying out too much in dividends, but capital gains have been low.
If you had invested in this company in December 2014, for $1,002.96 you would have bought 14 shares at $71.64 per share. In December 2024, after 10 years you would have received $320.60 in dividends. The stock would be worth $942.90. Your total return would have been $1,263.50. This would be a total return of 2.60% per year with 0.62% from capital loss and 3.21% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $71.64 | $1,002.96 | 14 | 10 | $320.60 | $942.90 | $1,263.50 |
The current dividend yield is good with dividend growth moderate. The current dividend yield is good (5% to 6% ranges) at 6.05%. The 5 and 10 year median dividend yields are moderate (2% to 4% ranges) at 2.82% and 2.40%. The historical median dividend yield is low (below 2%) at 1.77%. The dividend growth is moderate (8% to 14% per year) at 10.2% per year over the past 5 years. The last dividend increase was 2024 and it was for 8%.
The Dividend Payout Ratios (DPR) are good. The DPR for 2024 for Earnings per Share (EPS) is good at 43% with 5 year coverage at 34%. The DPR for 2024 for Adjusted Earnings per Share (AEPS) is good at 36% with 5 year coverage at 32%. The DPR for 2024 for Cash Flow per Share (CFPS) is good at 10% with 5 year coverage at 10%. The DPR for 2024 for Free Cash Flow (FCF) is good at 30% with 5 year coverage at 29%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 43.63% | 34.07% |
| AEPS | 36.53% | 32.01% |
| CFPS | 10.36% | 9.90% |
| FCF | 30.49% | 28.62% |
Debt Ratios are mostly quite ugly. The Long Term Debt/Market Cap Ratio for 2024 is far too high at 1.56 and currently at 1.78. Then Intangible and Goodwill/Market Cap Ratio for 2024 is far too high at 2.09 and currently at 2.37. The Liquidity Ratio for 2024 is far too low at 0.28 and 0.37 currently. If you added in Cash Flow after dividends, the ratios are fine at 1.48 and currently at 1.71. The Debt Ratio for 2024 is good at 1.56 and 1.58 currently. The Leverage and Debt/Equity Ratios for 2024 are too high at 3.25 and 2.08 and currently at 3.20 and 2.03.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 1.56 | 1.78 |
| Intang/GW | 2.09 | 2.37 |
| Liquidity | 0.28 | 0.37 |
| Liq. + CF | 1.48 | 1.71 |
| Debt Ratio | 1.56 | 1.58 |
| Leverage | 3.25 | 3.20 |
| D/E Ratio | 2.08 | 2.03 |
The Total Return per year is shown below for years of 5 to 31 to the end of 2024. 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. |
|---|---|---|---|---|---|
| 2019 | 5 | 10.22% | -5.86% | -9.20% | 3.34% |
| 2014 | 10 | 11.03% | 3.80% | 0.29% | 3.50% |
| 2009 | 15 | 13.98% | 9.55% | 5.95% | 3.60% |
| 2004 | 20 | 0.00% | 8.92% | 5.93% | 2.99% |
| 1999 | 25 | 11.21% | 6.28% | 4.16% | 2.12% |
| 1994 | 30 | 0.00% | 8.35% | 6.16% | 2.20% |
| 1993 | 31 | 8.03% | 5.95% | 2.07% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 9.04, 11.02 and 12.99. The corresponding 10 year ratios are 9.11, 11.17 and 13.23. The corresponding historical ratios are 9.39, 11.49 and 13.63. These are all pretty consistent. The current P/E Ratio is 7.63 based on a stock price of $60.98 and EPS estimate for 2025 of $8.00. 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 also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 8.60, 10.47 and 12.35. The corresponding 10 year ratios are 8.85, 11.39 and 13.06. The current ratio is 7.52 based on a stock price of $60.98 and AEPS estimate for 2025 of $8.11. 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 $115.79. The 10-year low, median, and high median Price/Graham Price Ratios are the 0.85, 1.05 and 1.21. The current ratio is 0.53 based on a stock price of $60.98. The current ratio is below the low ratio of 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 1.94. The current P/B Ratio is 0.83 based on a stock price of $60.98, Book Value of $3,103M, and Book Value per Share of $73.48. The current ratio is 57% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I also have a Book Value per Share estimate for 2025 of $89.42. This implies a ratio of 0.68 with a stock price of $60.98 and a Book Value of $3,776M. This ratio is 65% 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 4.52. The current ratio is 2.14 based on Cash Flow per Share estimate for 2025 of $28.45, Cash Flow of $1,201M and a stock price of $60.98. The current ratio is 53% 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 1.77%. The current dividend yield is 6.05% based on dividends of $3.688 and a stock price of $60.98. The current dividend yield is 242% 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 2.40%. The current dividend yield is 6.05% based on dividends of $3.688 and a stock price of $60.98. The current dividend yield is 152% 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 1.60. The current P/S Ratio is 0.87 based on a stock price of $60.98, Revenue estimate for 2025 of $2,959M and Revenue per Share of $70.08. The current ratio is 46% 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 tests are saying that the stock price is relatively cheap. The P/S Ratio testing confirms this. All the testing is pointing to a relatively cheap price.
When I look at analysts’ recommendations, I find Strong Buy (5), Buy (1), Hold (5). The consensus would be a Buy. The 12 month stock price consensus is $78.95 with a high of $92.00 and low of $71.00. The consensus stock price of $78.95 implies a total return of 35.52% with 29.47% from capital gains and 6.05% from dividends.
Analyst on Stock Chase likes this Telcom because of its dividend increases. Stock Chase gives this company 4 stars out of 5. Sneha Nahata on Motley Fool likes this stock for its growing dividends. Adam Othman on Motley Fool thinks this is a Telcom to buy and hold forever. The company put out a press release via Newswire about their fourth quarter of 2024.
Simply Wall Street via Yahoo Finance reviews this company. They have one warnings of Interest payments are not well covered by earnings on this company. Simply Wall Street gives this stock 3 and one half stars out of 5.
Cogeco Communications Inc is a communication corporation. The company is a cable operator in North America operating in Canada. The company earns majority of its revenue from Canadian telecommunications. The company operates in Canada and United States. Its web site is here Cogeco Communications Inc.
The last stock I wrote about was about was AGF Management Ltd (TSX-AGF.B, OTC-AGFMF) ... learn more. The next stock I will write about will be EQB Inc (TSX-EQB, OTC-EQGPF) ... learn more on Monday, February 3, 2025 around 5 pm.
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