Is it a good company at a reasonable price? I looked up the risk level for this financial and it is listed a medium. It is not on the Money Sense dividend list. If you like this company, you should buy at a reasonable price. The current stock price seems reasonable.
I do not own this stock of First National Financial Corporation (TSX-FN, OTC-FNLIF). I found this stock looking through dividend Stocks on G&M Stock Screener. It is also on the Dividend Aristocrat list, but not on the Money Sense list.
When I was updating my spreadsheet, I noticed insiders own a lot of the outstanding shares. Just the sample that I follow of officers and directors, there is a 71% ownership. This bank has given out special dividends in the last few years (except for 2022).
If you had invested in this company in December 2014, for $1,010.93 you would have bought 43 shares at $23.51 per share. In December 2024, after 10 years you would have received $1115.91 in dividends. The stock would be worth $1,734.62. Your total return would have been $2,850.53. This would be a total return of 14.08% per year with 5.55% from capital gain and 8.53% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $23.51 | $1,010.93 | 43 | 10 | $1,115.91 | $1,734.62 | $2,850.53 |
The current dividend yield is good with dividend growth low. The current dividend yield is good (5% to 6% ranges) at 6.30%. The 5, 10 and historical dividend yields are also good at 6.12%, 6.46% and 6.61%. If you add in special dividends, the historical dividend yield is high (7% and above) at 7.32%. The dividend increases are low (less than 8% per year) at 5.2% per year over the past 5 years. The last dividend increase was in 2024 and it was for 2.04%.
The Dividend Payout Ratios (DPR) are too high. The DPR for 2024 for Earnings per Share (EPS) is too high at 89% with 5 year coverage at 85%. The DPR for 2024 for Cash Flow per Share (CFPS) is too high at 109% with 5 year coverage much better at 49%. The DPR for 2024 for Free Cash Flow (FCF) is too high at 113% with 5 year coverage at 223%. There is no agreement on what the FCF is.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 88.71% | 84.58% |
| CFPS | 109.00% | 49.37% |
| FCF | 112.70% | 223.38% |
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2024 is high at 20.65 and currently at 20.99. However, we need also to look at the Long Term Debt/Covering Assets Ratio for 2024 which is fine at 0.98 and currently at 0.98 because this is a more important ratio for a bank. The Liquidity Ratio for 2024 is good at 4.20 and 2.73 currently. The Debt Ratio for 2024 is good at 1.68 and 1.68 currently. The bank reported leverage for 2024 at 6% and currently at 6%.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R A | 0.98 | 0.98 |
| Lg Term R | 20.65 | 20.99 |
| Intang/GW | 0.00 | 0.00 |
| Liquidity | 4.20 | 2.73 |
| Liq. + CF | 3.79 | 2.72 |
| Debt Ratio | 1.01 | 1.02 |
| Bk Leverage | 6.00% | 6.00% |
The Total Return per year is shown below for years of 5 to 18 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 | 5.21% | 8.55% | 1.16% | 7.39% |
| 2014 | 10 | 5.22% | 14.08% | 5.55% | 8.53% |
| 2009 | 15 | 3.91% | 12.93% | 5.18% | 7.75% |
| 2004 | 18 | 11.32% | 14.80% | 6.18% | 8.62% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 10.06, 12.04 and 13.47. The corresponding 10 year ratios are 9.33, 10.99 and 13.39. The corresponding historical ratios are 9.32, 10.14 and 13.31. The current ratio is 9.98 based on a stock price of $38.90 and EPS estimate for 2025 of $3.90. 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 get a Graham Price of $32.13. The 10-year low, median, and high median Price/Graham Price Ratios are 1.18, 1.35 and 1.61. The current ratio is 1.21 based on a stock price of $38.90. 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 get a 10-year median Price/Book Value per Share Ratio of 3.78. The current ratio is 3.31 based on a stock price of $38.90, Book Value of $705.68M, and Book Value per Share of $11.77. The current ratio is 13% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I also have a Book Valuer per Share estimate for 2025 of $12.01. This implies a ratio of 3.24 based on a stock price of $38.90 and Book Value of $720M. This ratio is 14% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10-year median Price/Cash Flow per Share Ratio of 4.65. The current ratio is negative, so I cannot do any testing here.
I get an historical median dividend yield of 6.61%. The current dividend yield is 6.43% based on a stock price of $38.90 and dividends of $2.50. The current dividend yield is 3% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10 year median dividend yield of 6.61%. The current dividend yield is 6.43% based on a stock price of $38.90 and dividends of $2.50. The current dividend yield is 0.5% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10 year median total dividend yield of 7.49%. The current total dividend yield is estimated at 7.71% based on a stock price of $38.90 and dividends of $2.50 plus special dividend of $0.50. The current dividend yield is 3% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median. I included a special dividend because this stock often pays a special dividend. It is paid at the end of the year, so I estimated special dividend.
The 10-year median Price/Sales (Revenue) Ratio is 2.83. The current P/S Ratio is 2.52 based on Revenue estimate for 2025 of $927.4M, Revenue per Share of $15.47 and a stock price of $38.90. The current ratio is 11% 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 probably reasonable. Both the 10 year dividend yield testing (for current dividend and total dividend) says the stock prices are reasonable. The P/S Ratio test confirms this. The rest of the testing says that the stock price is reasonable.
When I look at analysts’ recommendations, I find Strong Buy (1), and Hold (4). The consensus would be a Buy. The 12 month stock price consensus is $43.80 with a high of $45.00 and low of $42.00. The consensus stock price of $43.80 implies a total return of 19.02% with 12.60% from capital gains and 6.43% from dividends based on a current price of $38.20. (There also might be an extra dividend, but the company has not confirmed that yet.)
There are two recommendations on Stock Chase for 2024 and they are both buys. One thought the dividends were too high. Stock Chase gives this stock 5 stars out of 5. (Makes you wonder if their star system is still working.) Brian Paradza on Motley Fool thought this would be a good stock for reliable monthly income. Sneha Nahata on Motley Fool says buy for a reliable month stream of income. The company put out a Press Release on their fourth quarter of 2024.
Simply Wall Street on Yahoo Finance looks at this stock and feels it is undervalued. They think that the fair value would be $75.50. Simply Wall Street on Yahoo Finance looks at this stock and thinks they pay out too much and thinks there are better opportunities. Simply Wall Street has two warnings of debt is not well covered by operating cash flow; and dividend of 7.56% is not well covered by free cash flows.
First National Financial Corp is a Canadian originator, underwriter, and servicer of predominantly prime residential and commercial mortgages. The Company operates in two business segments, Residential and Commercial. These segments are organized by mortgage type and contain revenue and expenses related to origination, underwriting, securitization, and servicing activities. It derives maximum revenue from Residential segment. Its web site is here First National Financial Corporation.
The last stock I wrote about was about was Manulife Financial Corp (TSX-MFC, NYSE-MFC) ... learn more. The next stock I will write about will be BCE Inc (TSX-BCE, NYSE-BCE) ... learn more on Wednesday, April 2, 2025 around 5 pm. Tomorrow on my other blog I will write about Dividend Stocks April 2025 learn more on Tuesday, April 1, 2025 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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