Friday, September 24, 2021

BRP Inc

Sound bite for Twitter and StockTwits is: Dividend Growth Consumer. The stock price seems to be to be on the expensive side. The dividend yield is so low, you wonder about it being a dividend stock. Analysts see total return at 13% and I wonder if the return is worth of risk of buying this stock. However, analysts do feel the stock will rise dramatically in the future. Book Value is negative and this is never good. See my spreadsheet on BRP Inc.

I do not own this stock of BRP Inc (TSX-DOO, OTC-DOOO). Robin Speziale, author of Market Masters and Capital Compounders had mentioned this stock in Capital Compounders, Table 3 (page 93 in my copy) as a possible next Capital Compounder. Inter Pipeline Ltd (TSX-IPL, OTC-IPPLF) is being bought out, so I decided to replace it with BRP Inc. The financial year ends at January 31 each year, so the year I am reviewing is for January 31, 2021. This stock went public May 2013.

When I was updating my spreadsheet, I noticed that they have a negative book value. They mostly have had negative book values since their initial public offering in 2013. The larges liabilities are Trade Payables and Long Term Debt. Trade Payables involve receiving goods and services which have not been paid for. I do not like to see negative book values, but this does not seem to bother analysts. They see a great future for this company, including a quick rise in EPS.

The dividend yields are low with dividend growth good. The current dividend yield is low (under 2%) at just 0.43%. The dividend growth is good (15% and above) for the past 3 years at 23.6% per year. The last dividend increase was in 2022 for 18%. Dividends were suspended for a period in 2021.

The Dividend Payout Ratios (DPR) are good. The DPR for 2021 is 2.7% with 3 year coverage at 7.3%. The DPR for Cash Flow per Share for 2021 is 1.1% with 3 year coverage at 3.2%. The DPR for Free Cash Flow for 2021 is 1.4% with 3 year coverage at 4%. Dividends were started in 2019.

Debt Ratios need improvement. The Long Term Debt/Market Cap Ratio for 2021 is 0.33 which is good. The Liquidity Ratio is low at 1.31, but is much better at 1.73 when you add in cash flow after dividends. The Debt Ratio is 0.91. This means that the assets cannot cover the liabilities and there is a balance sheet deficit. The Leverage and Debt/Equity Ratios cannot be calculated with a negative book value. Analysts do not seem worried about the negative book value.

The Total Return per year is shown below for years of 5 to 7 to the end of 2020. 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.
2015 5 23.62% 34.02% 33.43% 0.59%
2013 7 16.06% 15.78% 0.28%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 8.99, 13.49 and 19.54. The corresponding 8 year and historical ratios are 12.33, 22.81 and 26.60. The current P/E Ratio is 13.31 based on a stock price of $123.08 and EPS estimate for 2022 of 9.25. The current ratio is between the low and median ratios of the 8 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I cannot calculate the Graham Price because the Book Value is negative. I cannot do any P/B Ratio testing because the Book Value is negative.

I get an 8 year median Price/Cash Flow per Share Ratio of 7.85. The current P/CF Ratio is 9.25 based on Cash Flow per Share estimate for 2022 of $13.30, Cash Flow of $1,151M and a stock price $123.08. The current P/CF Ratio is 18% 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 8 year and historical median dividend yield of 0.67%. The current dividend yield is 0.42% based on dividends of $0.52 and a stock price of $123.08. The current yield is 37% below the 8 and historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.

The 10 year median Price/Sales (Revenue) Ratio is 0.83. The current P/S Ratio is 1.36 based on Revenue estimate for 2022 of $7,823M, Revenue per Share of $90.39 and a stock price of $123.08. The current P/S Ratio is 64% 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 I probably expensive. The dividend yield test is saying the stock price is expensive, and this is confirmed by the P/S Ratio test. The P/E Ratio test and the P/CF Ratio test is showing the stock price as reasonable but above the median. I cannot do a P/GP Ratio test nor a P/B Ratio test because of the negative Book Value.

Is it a good company at a reasonable price? I do not think that the current stock price is reasonable. Considering the risks of this stock you have to wonder if buying it for a 13% total return is worth it.

When I look at analysts’ recommendations, I find Strong Buy (8), Buy (6) and Hold (1). The Consensus is a Strong Buy. The 12 months stock price is $138.85. This implies a total return of 13.24% with 12.81% from capital gains and 0.42% from dividends.

Recently 5i Research on Stock Chase says to buy on weakness. Chris MacDonald on Motley Fool says this cyclical stock appears to be well positioned to ride the momentum forward. The executive summary on Simply Wall Street gives this stock 3 stars out of 5 and list 3 risks. They do mention the negative book value. A writer on Simply Wall Street talks about insider buying by an independent director. A writer on Simply Wall Street says the CEO is paid less than similarly capitalized companies. However, he also says that the company has no earnings, but that is untrue.

BRP Inc designs, develops, manufactures, distributes, and markets snowmobiles, all-terrain vehicles, and personal watercraft under the Ski-Doo, Sea-Doo, Can-Am, and Lynx brand names. It also builds engines under the Rotax brand and offers parts, accessories, and clothing that cater to its core consumers. In 2018, BRP acquired boat manufacturers Alumacraft, Triton and Telwater (in Australia). Its web site is here BRP Inc.

The last stock I wrote about was about was K-Bro Linen Inc (TSX-KBL, OTC-KBRLF) ... learn more. The next stock I will write about will be Linamar Corporation (TSX-LNR, OTC-LIMAF) ... learn more on Monday, September 27, 2021 around 5 pm.

This blog is meant for educational purposes only and is not to provide investment advice. 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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Wednesday, September 22, 2021

K-Bro Linen Inc

Sound bite for Twitter and StockTwits is: Dividend Paying Consumer. Stock price is reasonable. The DPR rates are improving. Debt Ratios are good. Analysts expect good future growth in Revenue and EPS. See my spreadsheet on K-Bro Linen Inc.

I do not own this stock of K-Bro Linen Inc (TSX-KBL, OTC-KBRLF). People were talking about this stock at the 2009 Toronto Money Show. This was one income trust being touted as currently a good buy with very good yield. It was also recommended by Aaron Dunn who is the Senior Equity Analyst for Keystone Publishing Corp, a publisher of Canadian investment newsletters.

When I was updating my spreadsheet, I noticed 2020 the EPS was not as bad as analysts expected. The consensus EPS for 2020 was an earnings loss of $0.04. The EPS for 2020 came in at $0.36. This is still lower than EPS for 2018 and 2019 of $0.59 and $1.03. However, the EPS for this company has always been quite volatile.

The dividend yields are moderate with dividend growth non-existent. The current dividend yield is moderate (2% to 4% ranges) at 2.91%. The 5, 10 and historical dividend yields are also moderate at 3.23%, 3.25% and 3.96%. The dividends have been flat since 2014. The problem is that this company used to be an income trust. Income trusts can afford to pay more in dividends than corporations. They will probably increase the dividends when the DPR rates are better for EPS.

The Dividend Payout Ratios (DPR) are improving. The DPR for EPS for 2020 is 333% with 5 year coverage at 148%. Analysts expect the DPR in 2021 to be 85% and then moving to 50% in 2022. The problem is that this company used to be an income trust and income trusts could pay more in dividends than corporation. The DPR for CFPS for 2020 is 32% with 5 year coverage at 38%. The DPR for Free Cash Flow for 2020 is 32%. The 5 year coverage is 538%. (This is because of negative FCF in the past.)

Debt Ratios are good. The Long Term Debt/Market Cap Ratio for 2020 is 0.10. The Liquidity Ratio for 2020 is 1.72. The Debt Ratio for 2020 is 2.41. The Leverage and Debt/Equity Ratios for 2020 are 1.71 and 0.71.

The Total Return per year is shown below for years of 5 to 16 to the end of 2020. 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.
2015 5 0.00% -2.60% -5.22% 2.88%
2010 10 0.87% 12.67% 7.85% 2.15%
2005 15 1.02% 13.70% 7.73% 2.53%
2004 16 14.12% 7.82% 2.21%

When I was updating my spreadsheet, I noticed the starting values for Dividend Yield, P/E Ratio and P/S Ratio. A low price is when the Dividend Yield is high, the P/E Ratio and P/S Ratio are low. As you can see below, on this stock they had a better return went starting with a high Dividend Yield, and low P/E Ratio and low P/S Ratio.

From Years Total Ret Beg P/E Beg Yield Beg P/S
2015 5 -2.60% 33.52 2.36% 2.82
2010 10 12.67% 16.49 6.01% 1.23
2005 15 13.70% 16.35 8.09% 1.08

The 5 year low, median, and high median Price/Earnings per Share Ratios are 54.44, 62.36 and 70.27. The corresponding 10 year ratios are 27.71, 32.07 and 36.42. The corresponding historical ratios are 19.60, 21.49 and 24.16. The current P/E Ratio is 29.28 based on a stock price of $41.29 and EPS estimate for 2021 of $1.41. The current ratio is between the low and median 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.

The only reasonable ratios are the historical ones. The problem is when a company gets into trouble, the stock price will only go down so far. With this company the EPS has gone down a lot, but the stock price has not. This is a problem with using P/E Ratios.

I get a Graham Price of $23.65. The 10 year low, median, and high median Price/Graham Price Ratios are1.66, 1.95 and 2.26. The current P/GP Ratio is 1.75 based on a stock price of $41.29. The current ratio is between the low and median ratios of the 10 year median P/GP 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 2.46. The current P/B Ratio is 2.34 based on a stock price of $41.29, Book Value of $188M and Book Value per Share of $17.63. The current ratio is 5% 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 13.40. The current P/CF Ratio is 16.00 based on Cash Flow per Share estimate for 2021 of $2.58, Cash Flow of $27.5M and a stock price of $41.29. The current ratio is 19% 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 since this company became a corporation of 3.27%. The current dividend yield is 2.91% based on dividends of $1.20 and a stock price of $41.29. The current yield is 11% below the historical median dividend yield since this company became a corporation. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a 10 year median dividend yield since this company became a corporation of 3.25%. The current dividend yield is 2.91% based on dividends of $1.20 and a stock price of $41.29. The current yield is 11% below the historical median dividend yield since this company became a corporation. This stock price testing suggests that the stock price is relatively reasonable and below the median.

The 10 year median Price/Sales (Revenue) Ratio is 1.88. The current P/S Ratio is 1.96 based on Revenue estimate for 2021 of $225M, Revenue per Share of $21.07 and a stock price of $41.29. The current ratio is 4% above 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 and below the median. The P/S Ratio test says this. I know the Dividend Yield tests say the same thing, but since dividends have been flat, these are not a good test. The P/B Ratios tests says this and it is a good test. The P/CF Ratio is also a good test and it is showing the price as reasonable, but above the median.

Is it a good company at a reasonable price? It would seem that the stock price is currently reasonable. Analysts certainly expect that this company will do better in the future with Revenue and EPS going up. Until recently investors were making money on this stock.

When I look at analysts’ recommendations, I find Strong Buy (2), Buy (4) and Hold (1). The consensus would be a Buy. The 12 months stock price consensus is $52.64. This implies a total return of 30.39% with 27.49% from capital gains and 2.91% from dividends based on a current stock price of $41.29.

Analyst lost interest in this stock on Stock Chase after 2018. Adam Othman on Motley Fool thinks you should buy this stock. The executive summary on Simply Wall Street gives this stock 4 stars out of 5 and lists two risks. A writer on Simply Wall Street does not like the fact that earnings cannot cover the dividends, but at least it is covered well by cash flow. A writer on Simply Wall Street says that the CEO is paid more than the industry’s average.

K-Bro Linen Inc is a healthcare and hospitality laundry and linen processor in Canada. It operates in major cities across Canada, and two distribution centers, providing management services and laundry processing of hospitality, healthcare, and specialty linens. It operates through two divisions, which are the Canadian division and the United Kingdom division. Its web site is here K-Bro Linen Inc.

The last stock I wrote about was about was Granite REIT (TSX-GRT.UN, NYSE-GRP.U) ... learn more. The next stock I will write about will be BRP Inc (TSX-DOO, OTC-DOOO) ... learn more on Friday, September 24, 2021 around 5 pm. Tomorrow on my other blog I will write about Canadian Stocks for September 2021.... learn more on Thursday, September 23, 2021 around 5 pm.

This blog is meant for educational purposes only and is not to provide investment advice. 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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Monday, September 20, 2021

Granite REIT

Sound bite for Twitter and StockTwits is: Dividend Growth REIT. The stock price would seem to be expensive. It has good debt ratios. Recent total returns have been good. See my spreadsheet on Granite REIT.

I do not own this stock of Granite REIT (TSX-GRT.UN, NYSE-GRP.U). I first bought some of this stock in 2003 when it was called MI Developments (TSX-MIM.A). It was a company connected with Frank Stronach and Magna. TD bank also had an Action Buy Call (Strong Buy) on this stock. By the December 2006, it was doing well and my stock was up some 15% per year. I bought some more. The year of 2006 was the last time I did well on this stock. It kept going down and I sold it in 2009; being discourage it would ever do well again.

When I was updating my spreadsheet, I noticed if I had kept my shares, I would have probably made a total return of 9.33% per year. I noticed that it had a mixed record for dividends. Over the past 17 years, dividends went up 13 times, but were cut 4 times.

The dividend yields are moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 3.24%. The 5, and 10 median dividend yields were good (5% to 6% ranges) at 5.17% and 5.47%. The historical median dividend yield was moderate at 4.68%. The dividend increases for the past 5 years is in the low range (below 8%) at 4.74% per year.

The Dividend Payout Ratios (DPR) are fine as the important ones for REITS are the DPRs for FFO and AFFO. The DPR for EPS for 2021 is 38% with 5 year coverage at 36%. Since this is a REIT, I also look at the DPR for Funds from Operations (FFO) which is for 2021 is 73% and with 5 year coverage at 76%. I have also looked at the DPR for Adjusted Funds from Operations (AFFO), which for 2021 is 76% with 5 year coverage at 81%. (Basically, for FFO and AFFO, DPRs from 75% to 95% are acceptable.) The DPR for Cash Flow per Share is 66% with 5 year coverage at 71%. The DPR for Free Cash Flow for 2021 and for 5 year coverage are both negative.

Debt Ratios are good. The Long Term Debt/Market Cap Ratio is 0.40. The Liquidity Ratio for 2021 is 2.26. The Debt Ratio for 2021 is 2.39. Leverage and Debt/Equity Ratios for 2021 is 1.72 and 0.72

The Total Return per year is shown below for years of 5 to 18 to the end of 2020 in CDN$. 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.
2015 5 4.74% 21.25% 15.46% 5.79%
2010 10 19.27% 16.45% 11.14% 5.30%
2005 15 10.75% 7.43% 4.53% 2.90%
2002 18 11.37% 9.03% 6.11% 2.93%

The Total Return per year is shown below for years of 5 to 18 to the end of 2020 in US$. 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.
2015 5 6.51% 23.27% 17.33% 5.94%
2010 10 16.39% 13.35% 8.43% 4.92%
2005 15 10.08% 6.91% 3.92% 2.99%
2002 18 11.47% 10.85% 7.38% 3.47%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 5.42, 6.84 and 7.60. The corresponding 10 year ratios are 7.09, 8.28 and 10.21. The corresponding 10 year ratios are 6.48, 7.92 and 9.38. The current P/E Ratio is 12.23 based on a stock price of $92.70 and EPS for last 12 months of $7.23. The current P/E Ratio is above high of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.

Because this is an REIT, we also need to look at Price/Adjusted Funds from Operations. The 5 year low, median, and high median P/AFFO Ratios are 14.16, 15.85 and 19.03. The corresponding 10 year ratios are 13.26, 15.67 and 17.92. The current P/AFFO is 25.40 based on AFFO estimate for 2021 of $3.65 and a stock price of $92.70. The current P/AFFO ratio is above the high of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.

Because this is an REIT, we also need to look at Price/ Funds from Operations. The 5 year low, median, and high median P/FFO Ratios are 13.09, 14.73 and 15.99. The corresponding 10 year ratios are 11.49, 13.71 and 15.33. The current P/AFFO is 23.53 based on FFO estimate for 2021 of $3.94 and a stock price of $92.70. The current P/FFO ratio is above the high of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.

I get a Graham Price of $81.37. The 10 year low, median, and high median Price/Graham Price Ratios are 0.72, 0.79 and 0.88. The current P/GP Ratio is 1.14 based on a stock price of $92.70. The current ratio is 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/Book Value per Share Ratio of 1.05. The current P/B |Ratio is 1.24 based on a Book Value of $4,607M, Book Value per Share of 74.69 and a stock price of $92.70. The current ratio is 18% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get a 10 year median Price/Cash Flow per Share Ratio of 14.07. The current P/CF Ratio is 22.55 based on Cash Flow for the last 12 months of $253.57, Cash Flow per Share of $6.79 and a stock price of $92.70. The current ratio is 60% 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 4.68%. The current dividend yield is 3.24% based on dividends $3.00 and a stock price of $92.70. The current dividend yield is 31% 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 5.47%. The current dividend yield is 3.24% based on dividends $3.00 and a stock price of $92.70. The current dividend yield is 41% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.

The 10 year median Price/Sales (Revenue) Ratio is 9.07. The current P/S Ratio is 14.63 based on Revenue estimate for 2021 of $391, Revenue per Share of $6.34 and a stock price of $92.70. The current ratio is 61% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.

Note that for the P/S Ratio test to show results of the stock price is relatively reasonable and below the median, the stock price would have to drop around $57.00. At $57.00 then the current ratio would be 0.83% below the 10 year median ratio. Therefore, to get a reasonable price below the median, the stock price would have to fall 38.5%.

Results of stock price testing is that the stock price is a stock price that is expensive. Both the dividend yield test shows this as does the P/S Ratio test. In fact, all the tests show the same thing, a stock price that is relatively expensive.

Is it a good company at a reasonable price? The stock price seems on the expensive side. This REIT seems to be doing much better than when I held it.

When I look at analysts’ recommendations, I find Strong Buy (3) and Buy (8). The current consensus would be a Strong Buy. The 12 month stock price consensus is $97.18. This implies a total return of $8.07% with 4.83% from capital gains and $3.24% from dividends. This is based on a current stock price of $92.70.

Analysts on Stock Chase like this company and say it is a buy. Robin Brown on Motley Fool says this REIT has a great development and acquisition pipeline that should help fuel steady cash flow per share growth. The executive summary on Simply Wall Street gives this stock 3 stars out of 5 and list 3 risks. A writer on Simply Wall Street talks about who owns shares in this company. A writer on Simply Wall Street talks about insider trading.

Granite Real Estate Investment Trust, or Granite, is a real estate investment trust engaged in the acquisition, development, and management of primarily industrial properties in North America and Europe The vast majority of the company's assets are logistics and distribution warehouses and multipurpose buildings split fairly evenly amongst Canadian, Austrian, and U.S. locations. Granite derives nearly all of its revenue in the form of rental income from its properties. The company's largest tenant is Magna International, an automotive parts and systems manufacturer, which accounts for the majority of Granite's lease income. Its web site is here Granite REIT.

The last stock I wrote about was about was Alcanna Inc (TSX-CLIQ, OTC-LQSIF) ... learn more. The next stock I will write about will be K-Bro Linen Inc (TSX-KBL, OTC-KBRLF) ... learn more on Wednesday, September 22, 2021 around 5 pm. Tomorrow on my other blog I will write about Money Sense on Debt.... learn more on Tuesday, September 21, 2021 around 5 pm.

This blog is meant for educational purposes only and is not to provide investment advice. 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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Friday, September 17, 2021

Alcanna Inc

Sound bite for Twitter and StockTwits is: Consumer Sector Stock. The stock price could be cheap as the P/S Ratio test says this. The only other viable test was the P/B Ratio test and it says the stock is relatively expensive. Debt Ratio could be improved. A week balance sheet is especially bad for a small company. See my spreadsheet on Alcanna Inc.

I do not own this stock of Alcanna Inc (TSX-CLIQ, OTC-LQSIF). The idea of following this stock came from a reader of my blog.

When I was updating my spreadsheet, I noticed analysts think that this company will have earnings losses over the next 2 years. However, the second quarterly report shows good earnings. Analysts think that the company will have a loss in 2021 of $0.31, but the EPS to the end of the second quarter is $2.29. However, in the second quarter, the company had an operating loss and only had a profit because of the sale of discontinued business. They also paid off their debts. Analysts are right to suggest that this company will not be making any money from their business this year.

Also, there was only good earnings in 2020 because they sold discontinued business. There was an operating profit, but they used that and the sale of businesses to pay off some of their debt and provide earnings. They sell booze and cannot make money?

This company has a missed record with dividends. They suspended dividends in 2019. They are having a hard time making a profit. Over the past 15 years they have given dividend increases 4 times and have cut dividends 5 times.

Debt Ratios need improving. The Long Term Debt/Market Cap Ratio is good at 0.32. The Liquidity Ratio is 3.19 and that is good. The Debt Ratio is quite low at just 1.36. I prefer this to be at 1.50 or higher. Until the last two years, the Debt Ratio was good. The Leverage and Debt/Equity Ratios are too high at 3.76 and 2.76. I prefer them to be at 3.00 and 2.00 or lower.

The Total Return per year is shown below for years of 5 to 16 to the end of 2020. 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.
2015 5 0.00% -3.53% -6.69% 3.16%
2010 10 0.00% -2.73% -8.99% 6.25%
2005 15 0.00% 1.65% -6.97% 8.62%
2004 16 0.00% 4.48% -5.46% 9.94%

The 5 year low, median, and high median Price/Earnings per Share Ratios are negative and unusable. The corresponding 10 year ratios are 6.44, 7.87 and 9.29. The corresponding historical ratios are 12.45, 16.03 and 17.96. The current P/E Ratio is negative as they are not expected to make a profit this year, nor next year. This company has earning loss 4 of the past 10 years. No testing can be done here.

I estimate a Graham Price of $ 14.74. The 10 year low, median, and high median Price/Graham Price Ratios are 0.76, 1.04 and 1.20. The current P/GP Ratio is 0.56 based on a stock price of $8.28. The current ratio is below the low of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap. It is uncertain how good this test is.

I get a 10 year median Price/Book Value per Share Ratio of 1.25. The current P/B Ratio is 1.96 based on a stock price of 8.28, Book Value of $169, and Book Value per Share of $4.22. The current ratio is 57% 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 9.34. The current P/CF Ratio is 17.93 based on Cash Flow for the past 12 months of $18.5M, Cash Flow per Share of $0.46 and a stock price of $8.28. The current ratio is 92% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.

I cannot do any dividend yield testing as dividends are suspended.

The 10 year median Price/Sales (Revenue) Ratio is 0.48. The current P/S Ratio is 0.44 based on Revenue estimate for 2021 of $756M, Revenue per Share of $18.88 and a stock price of $8.28. The current ratio is 7.7% 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 possibly reasonable. The P/S Ratio test points to that. However, the P/B Ratio says the stock is expensive. This is because it has not been making any money recently. This are the only tests that a good.

Is it a good company at a reasonable price? This is not a company I would personally be interested in. Shareholders have not made much in this stock. They started to have earnings losses 5 years ago in 2015 and are expected to have earning losses this year and next.

When I look at analysts’ recommendations, I find Strong Buy (1), Buy (1) and Hold (1). The consensus would be a Buy (which most of consensus are at). The 12 month stock price consensus is $10.42. This implies a total return of 25.85% based on a current price of $8.28, all from capital gains.

This year an analyst on Stock Chase say the company is a hold. In 2019 they were still saying it is a buy but risky. Christopher Liew on Motley Fool says this company is a screaming buy for a long growth runway. The Executive Summary on Simply Wall Street gives this stock 3 stars out of 5 and list no risks. A writer on Simply Wall Street says the companies intrinsic value is $9.10 but its prospects is negative growth. The company reports second quarterly results on Global Newswire.

Alcanna Inc is a private sector retailer of alcohol in North America and the largest in Canada by number of stores, operating in Alberta and British Columbia under the Wine and Beyond, Ace Liquor Discounters and Liquor Depot banners. The Company's majority-owned subsidiary, Nova Cannabis Inc. cannabis retail stores in Alberta, Ontario, and Saskatchewan. Its web site is here Alcanna Inc.

The last stock I wrote about was about was Great-West Lifeco Inc (TSX-GWO, OTC-GWLIF) ... learn more. The next stock I will write about will be Granite REIT (TSX-GRT.UN, NYSE-GRP.U) ... learn more on Monday, September 20, 2021 around 5 pm.

This blog is meant for educational purposes only and is not to provide investment advice. 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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Wednesday, September 15, 2021

Great-West Lifeco Inc

Sound bite for Twitter and StockTwits is: Dividend Growth Insurance. The stock price is cheap to reasonable. In this report, I am looking at dividends on original stock purchase price and how much of the original purchase price would be paid by dividends. See my spreadsheet on Great-West Lifeco Inc.

I do not own this stock of Great-West Lifeco Inc (TSX-GWO, OTC-GWLIF). This stock seems to be a favorite with investors who like solid, stable, dividend paying stock. It was on Mike Higgs' list and it used to be on the dividend lists. I have been following this stock for some time. However, I will not buy it because I have Power Corp. (TSX-POW). Great West Lifeco Inc. is one of the companies under Power Corp. (TSX-POW).

When I was updating my spreadsheet, I noticed what difference there was in Yield after a number of years if people paid the high, median, or low price when stock was bought. So, if this stock was bought 10 years ago and at purchase time the low price 10 years ago was paid, then the current shareholder would be getting a yield of 7.38% on the purchase price.

Years High Price Med Price Low Price
5 4.67% 5.09% 5.60%
10 6.01% 6.62% 7.38%
15 5.73% 6.11% 6.54%
20 9.47% 13.04% 20.91%
25 48.73% 55.62% 64.77%
30 81.25% 115.60% 200.23%

I also noticed the stock price coverage after a number of years if people paid the high, median, or low price when the stock was bought. So, if this stock was bought 10 years ago and at purchase time the low price 10 years ago was paid, then the current shareholder would have covered by dividends 59.15% of the stock price.

Years High Price Med Price Low Price
5 20.82% 22.70% 24.95%
10 48.12% 53.07% 59.15%
15 64.43% 68.64% 73.45%
20 122.18% 168.18% 269.73%
25 660.53% 753.84% 877.86%
30 1120.16% 1593.63% 2760.40%

The dividend yields are moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 4.49%. The 5, 10 and historical median dividend yields are also moderate at 4.97%, 4.62% and 3.57%. The dividend increases are low (below 8%). The dividend increases for the past 5 years is at 6.08% per year. The last dividend increase was in 2020 and it was for 6.01%. There has not been an increase in dividends in 2021. This company has increased dividends in 22 of the last 32 years.

The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2020 is 55% with 5 year coverage at 58%. The DPR for Cash Flow per Share is 16% with 5 year coverage at 21%. The DPR for Free Cash Flow is 17% with 5 year coverage at 21%.

Debt Ratios are fine. The Long Term Debt/Asset Coverage Ratio is 1.00 for 2020 and is better currently at 0.91. You want long term debt to be cover (i.e., ratio at 1.00 or less) by long term assets. Also, the Liquidity Ratio is not important for financial, but I have calculated it anyway at 1.73. The Debt Ratio is 1.05 and this is fine for a financial.

The Total Return per year is shown below for years of 5 to 32 to the end of 2020. 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.
2015 5 6.08% 2.20% -2.55% 4.74%
2010 10 3.60% 6.32% 1.40% 4.92%
2005 15 5.28% 4.11% -0.08% 4.19%
2000 20 8.79% 6.91% 2.48% 4.42%
1995 25 11.32% 16.55% 8.91% 7.64%
1990 30 11.75% 18.25% 10.47% 7.78%
1988 32 10.98% 16.61% 9.85% 6.76%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 11.07, 12.39 and 13.72. The corresponding 10 year ratios are 10.80, 12.36 and 13.43. The corresponding historical ratios are 11.07, 12.43 and 13.91. The current P/E Ratio is 12.01 based on EPS estimate for 2021 of $3.25 and a stock price of $39.04. The current ratio is between the low and median value of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median. This is a good test because the P/E Ratios have not changed that much during time.

I get a Graham Price of $41.67. The 10 year low, median, and high median Price/Graham Price Ratios are 0.85, 0.97 and 1.07. The current P/GP Ratio is 0.94 based on a stock price of $39.04. The current ratio is between the low and median 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 1.72. The current P/B Ratio is 1.64 based on a Book Value of $22,031M, Book Value per Share of $23.74 and a stock price of $39.04. The current ratio is 4% 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 4.98. The current P/CF Ratio is 3.99 based on the last 12 months Cash Flow of $9,077M, Cash Flow per Share of $9.78 and a stock price of 39.04. The current ratio is 19.8% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get an historical median dividend yield of 3.57%. The current dividend yield is 4.49% based on a stock price of $39.04 and dividends of $1.75. The current dividend yield is 25.7% below the historical median yield. This stock price testing suggests that the stock price is relatively cheap.

I get a 10 year median dividend yield of 4.62%. The current dividend yield is 4.49% based on a stock price of $39.04 and dividends of $1.75. The current dividend yield is 4.6% below the 10 year median yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.

The 10 year median Price/Sales (Revenue) Ratio is 0.74. The current P/S Ratio is 0.54 based on a stock price of $39.04, Revenue estimate for 2021 of $66,951M and Revenue per Share of $72.16. The current ratio is 26% 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 cheap to reasonable and below the median. One dividend yield test says cheap and the other reasonable and below the median. The P/S Ratio says it is cheap. Most of the other testing is say the stock price is reasonable and below the median.

Is it a good company at a reasonable price? I think that the stock price is reasonable. I also think it is a good company, but until we have more normal interest rates, it is hard for Life Insurance companies to provide a good return. However, dividends have been good during these trying times. First interest rates sky rocketed and Life Insurance companies had to change the way they did business and now the interest rates are lower than they have ever been historically.

When I look at analysts’ recommendations, I find Strong Buy (1), Buy (1), and Hold (9). The consensus would be a Hold. The 12 month stock price consensus is $40.00. This implies a total return of 6.95% based on a stock price of $39.04 with 2.46% from capital gains and 4.49% from dividends.

The last entry on Stock Chase the analyst thinks that you should do a partial sell if you own this stock. Other entries say the stock is a buy. Amy Legate-Wolfe on Motley Fool thinks this is a good dividend stock to buy now. The executive summary on Simply Wall Street lists one risk and 3 rewards with this company. A writer on Simply Wall Street is disappointed in the lack of growth in earnings but thinks the stock has positive factors. A writer on Simply Wall Street talks about insider trading at this company.

Great-West Lifeco is one of the three big Canadian life insurance firms. With just under half of the firm's profit and revenue in Canada, Great-West also operates in the U.S. and Europe. Its web site is here Great-West Lifeco Inc.

The last stock I wrote about was about was Trican Well Service Ltd (TSX-TCW, OTC-TOLWF) ... learn more. The next stock I will write about will be Alcanna Inc (TSX-CLIQ, OTC-LQSIF) ... learn more on Friday, September 17, 2021 around 5 pm. Tomorrow on my other blog I will write about Successful Investing.... learn more on Thursday, September 16, 2021 around 5 pm.

This blog is meant for educational purposes only and is not to provide investment advice. 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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Monday, September 13, 2021

Trican Well Service Ltd

Sound bite for Twitter and StockTwits is: Industrial Sector Stock. The stock price is cheap to reasonable. It is a good sign that analysts have not lost interest in this stock. Debt Ratios are very good. They have no long term debt. It is debt more than anything that does companies in. So, they will probably survive. The question is, though, will it thrive? See my spreadsheet on Trican Well Service Ltd.

I do not own this stock of Trican Well Service Ltd (TSX-TCW, OTC-TOLWF). I was following Canyon Services Group Inc. and Trican Well Services Ltd. had a plan of arrangement with Canyon Shareholders. I used to get a newsletter weekly from MPL Communications called Advice Hotline. They wrote up this stock on July 19, 2012 and I was impressed with it so I did a spreadsheet.

When I was updating my spreadsheet, I noticed even though this stock has done badly lately, analysts have not lost interest in it. You can see this because of the number of estimates that are available for the next 3 years. They also expect positive EPS starting in 2022.

I am following this stock from Canyon Services Group and their merger arrangement with Trican Well Service Ltd in 2017. Canyon Services Group started dividends in 2011 but they were never well covered because of so many years of earning losses. Dividends were stopped in 2016 by Canyon Services. It would seem that Trican Well Services stopped dividends in 2014. Their first dividend would have been paid in 2005.

Debt Ratios are very good. The company has paid off its long term debt. Also, Intangibles and Goodwill has decreased by 86% and the Intangibles/Market Cap Ratio is very low at 0.06. The Liquidity Ratio for 2020 is 2.02. The Debt Ratio is 7.94. For both these ratios a ratio of 1.50 is a good one, so these ratios are excellent. The Leverage and Debt/Equity Ratios are good and low at just 1.14 and 0.14.

The Total Return per year is shown below for years of 5 to 14 to the end of 2020. 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.
2015 5 0.00% -6.69% -6.84% 0.15%
2010 10 0.00% -9.44% -12.50% 3.06%
2006 14 0.28% -3.85% 4.13%

The 5 year low, median, and high median Price/Earnings per Share Ratios are negative and therefore useable. The corresponding 10 year ratios are also negative and useable. The corresponding historical ratios are negative and useable. The current P/E Ratio negative and useable. The P/E Ratio for 2022 and 2024 are 29.33 and 9.43. The one for 2022 is high and suggests a stock price that is relatively expensive. The one for 2023 at 9.43 suggests a stock price that is relatively cheap. This ratio is based on a stock price of $2.64 and EPS estimate for 2023 of $0.28.

I estimate a Graham Price for 2021 of $2.09. I get a Graham Price of $2.09 for 2022. The 10 year low, median, and high median Price/Graham Price Ratios are 0.61, 1.03 and 1.25. The current P/GP Ratio is 1.26 based on a stock price of $2.64. This ratio is above high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive, but just into the expensive range.

I get a 10 year median Price/Book Value per Share Ratio of 1.28. The current P/B Ratio is 1.22 based on a Book Value of $552M, Book Value per Share of $2.16 and a stock price of $2.64. The current ratio is 4% 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 9.72. The current P/CF Ratio is 7.34 based on a stock price of $2.64, Cash Flow per Share estimate for 2021 of $0.38 and Cash Flow of $97.2M. The current ratio is 24% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

I cannot do any dividend yield testing as dividends have been suspended.

The 10 year median Price/Sales (Revenue) Ratio is 1.59. The current P/S Ratio is 1.21 based on Revenue estimate for 2021 of $560M, Revenue per Share of $2.19and a stock price of $2.64. The current ratio is 24% 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 to reasonable. The P/S Ratio test says the stock price is cheap. The rest are a mixed bag of results. However, the P/B Ratio test is a good one and it says the stock price is reasonable and below the median.

Is it a good company at a reasonable price? The price seems reasonable. This company services the oil and gas industry and so is risky. They seem to be trying to diversify a bit. This is good. Eventually the oil and gas industry will dry up and it is very hard to say when. If history is any guide, it may take 20 years. These things take longer than you ever image, but when change comes, it usually comes quickly (a tipping point). So, this stock is risky, but it could eventually be a winner. I do not know.

When I look at analysts’ recommendations, I find Strong Buy (3), Buy (4) and Hold (3). The consensus would be a Buy. The 12 month stock price consensus is $3.38. This implies a total return of 28.03%, all from capital gains based on a current stock price of $2.64.

There is one review on Stock Chase in 2021 (February) and it is a Do No Buy recommendation. Christopher Liew on Motley Fool says that this company made a turnaround this year and so has good growth prospects. The executive summary on Simply Wall Street gives this company 4 stars out of 5 and lists no risks, but two possible rewards. A writer on Simply Wall Street expects this company to break even in one year’s time. A writer on Simply Wall Street says that the stock price is up strongly over the past 12 months.

Trican Well Service Ltd is an equipment services company. It provides products, equipment, services, and technology for use in the drilling, completion, stimulation, and reworking of oil and gas wells primarily through its continuing pressure pumping operations in Canada. The company offers services related to coiled tubing, pipeline service, cementing, fracturing and reservoir solution. Its web site is here Trican Well Service Ltd.

The last stock I wrote about was about was Wajax Corp (TSX-WJX, OTC-WJXFF) ... learn more. The next stock I will write about will be Great-West Lifeco Inc (TSX-GWO, OTC-GWLIF) ... learn more on Wednesday, September 15, 2021 around 5 pm. Tomorrow on my other blog I will write about Best Canadian Stocks.... learn more on Tuesday, September 14, 2021 around 5 pm.

This blog is meant for educational purposes only and is not to provide investment advice. 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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Friday, September 10, 2021

Wajax Corp

Sound bite for Twitter and StockTwits is: Dividend Paying Industrial. The stock price seems reasonable. There currently is no dividend growth but EPS is growing. Dividends will be a lower portion of the total return in the future. They have mucked around a lot with the dividends and it has been flat for the past 5 years. See my spreadsheet on Wajax Corp.

I do not own this stock of Wajax Corp (TSX-WJX, OTC-WJXFF). TD Waterhouse put out a report on good dividend paying stocks to own in November 2011. This was a stock they named. I had not heard of it before, so I decided to investigate it.

When I was updating my spreadsheet, I noticed if you look at Dividend Yields compared to Total Returns for the 5, 10, 15, 20, 25, 30 and 34 year periods, I find the following. For example, total return over the past 5 years is 6.27% per year, the starting Dividend yield (the one from 5 years ago) was 7.05%. From the point of view of this chart, the highest dividend yields generally got the highest total return. Unfortunately for this stock there were years of no dividends (and therefore no dividend yields).

Year Tot Return Start Div
5 6.27% 7.05%
10 -1.05% 4.89%
15 6.85% 4.05%
20 28.30% 0.00%
25 9.47% 0.00%
30 10.24% 7.54%
34 5.67% 5.60%

The dividend yields are moderate with dividend growth non-existent. The current dividend yield is moderate at 4.18%. The 5 and 10 year median dividend yields are good (5% and 6% ranges) at 5.12% and 5.90%. This company used to be an income trust. (2005 to 2011). Income Trust companies tend to have higher dividend yields than corporations. The historical dividend yield is moderate at 4.50%. The historical dividend yield since becoming a corporation is higher at 5.90%. This is because this company paid no dividends from 1992 to 2003.

This company cut dividends in 2009 and then cut them again in 2013 and 2015. The dividends have been flat since 2016. It is hard to tell if the company will become a dividend growth company again or not. However, it would seem that there will be no dividend increases in the near term.

The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2020 is 63% with 5 year coverage at 68%. The DPR for CFPS for 2020 is 18% with 5 year coverage at 22%. The DPR for Free Cash Flow for 2020 is 19% with 5 year coverage at 76%. Sites I look at for FCF do not agree on what it is. This is a problem when looking at FCF.

Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2020 is 0.50 and is lower in 2021 at 0.29 due to lower debt and higher market cap. The Liquidity Ratio is very good at 2.34. The Debt Ratio is good at 1.50. The Leverage and Debt/Equity Ratios are too high at 3.01 and 2.01, but just above what I like. I prefer them to be below 3.00 and below 2.00

The Total Return per year is shown below for years of 5 to 34 to the end of 2020. 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.
2015 5 -3.31% 6.27% 0.35% 5.92%
2010 10 -5.71% -1.05% -7.39% 6.34%
2005 15 -1.45% 6.85% -3.83% 10.68%
2000 20 0.00% 28.30% 7.53% 20.76%
1995 25 0.00% 9.47% 1.64% 7.83%
1990 30 2.41% 10.24% 3.27% 6.97%
1986 34 1.72% 5.67% 0.48% 5.19%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 8.76, 12.23 and 15.69. The corresponding 10 year ratios are 9.38, 11.99 and 14.61. The corresponding historical ratios are 8.71, 11.01 and 13.52. The current P/E Ratio is 9.80 based on EPS estimate for 2021 of $2.44 and a stock price of $23.90. 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 $30.99. The 10 year low, median, and high median Price/Graham Price Ratios are 0.92, 1.14 and 1.34. The current P/GP Ratio is 0.77 based on a stock price of $23.90. 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 1.61. The current P/B Ratio is 1.37 based on a Book Value of $375M, Book Value per Share of $17.50, and a stock price of $23.90. The current ratio is 15% 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 6.83. The current P/CF Ratio is 2.60 based on a stock price of $23.90, Cash Flow for the last 12 months of $196.8M, and Cash Flow per Share of $9.19. The current ratio is 62% 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 4.50%. The current dividend yield is 4.18% based on dividends of $1.00 and a stock price of $23.90. The current ratio is 7% below the historical median ratio. 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 5.90%. The current dividend yield is 4.18% based on dividends of $1.00 and a stock price of $23.90. The current ratio is 29% below the historical median ratio. This stock price testing suggests that the stock price is relatively expensive.

The 10 year median Price/Sales (Revenue) Ratio is 0.36. The current P/S Ratio is 0.31 based on Revenue estimate for 2021 of $1,670M, Revenue per Share of $78.00 and a stock price of 23.90. The current ratio is 16% 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. The P/S Ratio test is good and it says the stock price is reasonable and below the median. They have mucked around a lot with the dividends and it has been flat for the past 5 years. The dividend tests work best with dividend growth stocks. The P/B Ratio test is a good one and it says the stock price is reasonable and below the median.

Is it a good company at a reasonable price? The stock price seems reasonable. This has not been a good dividend stock. I prefer dividend growth stocks. It was an income trust that had to change to a corporation. A lot of these companies have had difficulty getting the dividend payouts right. The EPS is expected to grow in the future and this is good.

When I look at analysts’ recommendations, I find Buy (2) and Hold (1). The consensus is a Buy. The 12 month stock price consensus is $28.23. This implies a total return of 22.30% with 18.12% from capital gains and 4.18% from dividends.

The two latest analysts say on Stock Chase that this stock is their top pick. Nikhil Kumar on Motley Fool thinks that this is a company to buy and hold for the long term. The executive summary on Simply Wall Street gives this stock 2 stars out of 5 and list 4 risks. A writer on Simply Wall Street thinks this stock should be considered because EPS are growing. A writer on Simply Wall Street says the ROE for this company is 10% and that is at the average for the company’s industry. The company on Cision talks about the results for the second quarter of 2021. A writer on Simply Wall Street is worried about the debt of this company.

Wajax Corp is a Canadian distributor of industrial components. Its core business is the sale of parts and service support of equipment, power systems, and industrial components through a network of branches in Canada. Its web site is here Wajax Corp.

The last stock I wrote about was about was Telus Corp (TSX-T, NYSE-TU) ... learn more. The next stock I will write about will be Trican Well Service Ltd (TSX-TCW, OTC-TOLWF) ... learn more on Monday, September 13, 2021 around 5 pm.

This blog is meant for educational purposes only and is not to provide investment advice. 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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Wednesday, September 8, 2021

Telus Corp

Sound bite for Twitter and StockTwits is: Dividend Growth Telecom. The stock price would seem to be in the reasonable range. I would like to see the DPRs and Debt Ratios improved, but it seems no worse than BCE which I hold. See my spreadsheet on Telus Corp.

I do not own this stock of Telus Corp (TSX-T, NYSE-TU). I started to follow this stock because of a list of stock John Sartz talked about in 2008. At the Toronto Money Shows in 2009 and 2010 Aaron Dunn from KeyStone Financial Publishing Corp talked about having recommended this stock. Aaron Dunn says he likes companies with resilient business models, which are profitable and are growing their earnings. He also like companies with strong management teams, health balance sheets and compelling valuations. They look at the P/E and the Price/Cash Flow ratios. Telus Corp (TSX-T) was one of three stocks he recommended in 2009.

When I was updating my spreadsheet, I noticed that the revenue went up, but earnings were down. The problem was extra expenses. They also only are giving values only in the millions. This annoys me. For example, last they said the number of outstanding shares in 2019 was 655M. They did a 2 for 1 split in 2020. My spreadsheet gives the current outstanding shares as 1210M. However, their statements for 2020 says that the outstanding shares for 2019 was 1209M. So, my calculation of shares is 1M out? What about other previous years?

The dividend yields are moderate with dividend growth moderate. The current dividend yield is moderate (2% to 4% ranges) at 4.33%. The 5, 10 and historical dividend yields are also moderate at 4.48%, 4.22% and 3.96%. The dividend growth over the past 5 years is moderate (below 8%) at 7.28% per year. The last dividend increase was in 2021 and it was for 7.3%. Dividend growth has varied a lot over the past 30 years. See chart below.

The Dividend Payout Ratios (DPR) need improving. The DPR for EPS for 2020 is 124% with 5 year coverage at 86%. Analysts do not expect the DPR will be below 100% until 2023 and some analysts think this will happen later. The DPR for Cash Flow per Share is 35% with 5 year coverage at 32%. Any DPR for CFPS at or below 40% is good. The DPR for Free Cash Flow for 2020 is 53% with 5 year coverage at 130%. There is disagreement among the sites as to what the FCF is.

Debt Ratios could be improved, but probably fine. The Long Term Debt/Market Cap Ratio for 2020 is 0.58. The Liquidity Ratio for 2020 is 0.79. If you add in cash flow after dividends it is still low at 1.31. The Debt Ratio for 2020 is 1.41. For both these ratios I prefer them to be at 1.50 or higher. However, they have been lower than what I like for a long time and in the case of the Liquidity Ratio it has seldom been at or above 1.50. The Leverage and Debt/Equity Ratios for 2020 are 3.44 and 2.44. I prefer these to be lower than 3.00 and 2.00, but again these have been too high for a while, since 2014.

The Total Return per year is shown below for years of 5 to 30 to the end of 2020. 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.
2015 5 7.28% 10.50% 5.67% 4.82%
2010 10 19.14% 13.36% 8.29% 5.07%
2005 15 12.47% 8.90% 5.10% 3.81%
2000 20 6.20% 7.61% 4.53% 3.07%
1995 25 5.47% 9.83% 5.95% 3.88%
1990 30 10.71% 9.69% 5.68% 4.01%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 17.20,18.51 and 19.83. The corresponding 10 year ratios are 16.15, 17.37 and 18.82. The corresponding historical ratios are 13.87, 16.76 and 18.69. The current P/E Ratio is 28.33 based on a stock price of $29.18 and EPS estimate of $.1.03. The current ratio is above the high of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.

I get a Graham Price of $16.28. The 10 year low, median, and high median Price/Graham Price Ratios are 1.40, 1.52 and 1.65. The current P/GP Ratio is 1.79 based on a stock price of $29.18. The current ratio is above the high 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 2.76. The current P/B Ratio is 2.55 based on a stock price of $29.18, Book Value of $14,756M and Book Value per Share of $11.43. The current P/B Ratio is 7% 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 6.88. The current P/CF Ratio is 8.82 based on Cash Flow per Share estimate for 2021 of $3.31, Cash Flow of $4,273M and a stock price of $29.18. The current ratio is 28% above the 10 year median ratio. This stock price testing suggests that the stock price is expensive.

I get an historical median dividend yield of 3.96%. The current dividend yield is 4.33% based on dividends of $1.2548, and a stock price of $29.18. The current yield is 9.5% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a 10 year median dividend yield of 4.22%. The current dividend yield is 4.33% based on dividends of $1.2548, and a stock price of $29.18. The current yield is 2.7% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.

The 10 year median Price/Sales (Revenue) Ratio is 1.97. The current P/S Ratio is 2.23 based on Revenue estimate for 2021 of $16,901M, Revenue per Share of $13.09 and a stock price of $29.18. The current ratio is 13% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.

Results of stock price testing is that the stock price is probably reasonable. The dividend yield tests say it is below the median and the P/S Ratio test says it is above the median. The P/B Ratio test says it is reasonable, but other tests say it is expensive.

Is it a good company at a reasonable price? The stock price would seem to be reasonable. I do wonder about the telecom sector on whether there might be future disruptions due new technology. This business has changed a lot over the past few years and I do not expect this to stop. I have no plans to buy in this sector, but I will retain the BCE shares that I have.

When I look at analysts’ recommendations, I find Strong Buy (5), Buy (7) and Hold (5). This stock price testing suggests that the stock price is relatively reasonable and below the median. The consensus would be a Buy. The 12 month stock price consensus is $30.18. This implies a total return of 7.76% with 3.43% from capital gains and 4.33% from dividends.

Analysts on Stock Chase have very different opinions on this stock. Nicholas Dobroruka on Motley Fool says this company offers growth and passive income. The executive summary on Simply Wall Street gives this stock 3 stars out of 5 and list 3 risks. A Canadian Press article in the Moose Jaw Today is interesting as this company with BCE is complaining about Quebecor’s purchase of 5G spectrum in Western Canada . Kwhen Finance Editors via the Nasdaq site talks about some indicators on this stock.

Telus Corp is one of the big three wireless service providers in Canada. It is also the ILEC (incumbent local exchange carrier; the legacy telephone provider) in the western Canadian provinces of British Columbia and Alberta, where it provides Internet, television, and landline phone services. It also has a small wireline presence in eastern Quebec. Telus' other businesses participate in the international business services, health, security, and agriculture industries. Its web site is here Telus Corp.

The last stock I wrote about was about was Accord Financial Corp (TSX-ACD, OTC-ACCFF) ... learn more. The next stock I will write about will be Wajax Corp (TSX-WJX, OTC-WJXFF) ... learn more on Friday, September 10, 2021 around 5 pm. Tomorrow on my other blog I will write about Something to Buy September 2021.... learn more on Thursday, September 09, 2021 around 5 pm.

This blog is meant for educational purposes only and is not to provide investment advice. 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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