Monday, February 26, 2024

Nuvei Corp

This morning, I sold Neighbourly Pharmacy Inc (TSX-NBLY, OTC-NBLYF). It is being bought out and I see no reason to hold it any longer for the few extra cents per share I could get at buyout time. I have replaced this stock with Nuvei Corp (TSX- NVEI, OTC- NVEI). I am using my fooling around money as this is a highly speculative stock.

Sound bite for Twitter and StockTwits is: Dividend Paying Tech. Results of stock price testing is that the stock price is testing as cheap, but the company only when public in September 2020 and it is a Tech stock. Debt Ratios mostly fine, but all the ratios have declined between 2022 year-end and the third quarter of 2023. The Dividend Payout Ratios (DPR) are good with dividends just starting in 2023. The current dividend yield is Low with dividend growth for the future unknown. See my spreadsheet on Nuvei Corp.

Is it a good company at a reasonable price? This company has only been around for a few years, so it is really hard to tell the future. However, Caisse de depot et placement du Quebec has invested in this company. Quebec does seem to be able to grow companies. This company is a speculative buy. The stock price is quite volatile. It is testing as cheap, but has only been around since September 2020 and is down from its IPO price.

I own this stock of Nuvei Corp (TSX- NVEI, NASDAQ- NVEI). I was looking for another stock to follow and used G&M Stock Screener to find a dividend paying stock that looked interesting.

When I was updating my spreadsheet, I noticed that this stock went public September 17, 2020 on TSX and Nasdaq. See article on Bloomberg. Also see article on Newswire. This company reports in US$ and is listed on the TSX and NASDAQ.

If you had invested in this company in December 2020, for $1,011.27 you would have bought 13 shares at $77.79 per share. In December 2023, after 2 years you would have received $0.00 in dividends. The stock would be worth $447.33. Your total return would have been $447.33. This would be a total loss of 33.49% per year with 33.49% from capital loss and 0% from dividends.

Cost Tot. Cost Shares Years Dividends Stock Val Tot Ret
$77.79 $1,011.27 13 2 $0.00 $447.33 $447.33

The current dividend yield is Low with dividend growth for the future unknown. The current dividend yield is low (below 2%) at 1.60%. Dividend were just started in halfway through 2023. Future dividend is up to discretion of the Board. This is the usual case.

The Dividend Payout Ratios (DPR) are good with dividends just starting in 2023. The DPR for 2023 for Earnings per Share (EPS) are awful, but it is the DPR for AEPS that counts. The DPR for 2023 for Adjusted Earnings per Share (AEPS) is good at 12%. The DPR for 2023 for Cash Flow per Share (CFPS) is good at 10%. The DPR for 2023 for Free Cash Flow (FCF) is good at 9%. They just started to pay dividends in 2023 and these are the values for 2023.

Item Cur 5 Years
EPS -194.86% -16.23%
AEPS 11.92% 2.38%
CFPS 9.95% 2.61%
FCF 9.22% 3.28%

Debt Ratios mostly fine, but all the ratios have declined between 2022 year-end and the third quarter of 2023. The Long Term Debt/Market Cap Ratio for 2023 is good at 0.14 and currently at 0.34. The Liquidity Ratio for 2023 is good at 1.69 and too low currently at 1.03. I like this to be at 1.50 or higher. If you added in Cash Flow after dividends, the ratios are good at 1.96 and too low currently at 1.00. The Debt Ratio for 2023 is good at 1.69 and too low at 1.0. currently. I also like to see this ratio at 1.50 or higher. The Leverage and Debt/Equity Ratios for 2023 are good at 1.79 and 0.78 and fine currently at 2.32 and 1.31.

Type Year End Ratio Curr
Lg Term R 0.14 0.34
Intang/GW 0.51 0.90
Liquidity 1.69 1.03
Liq. + CF 1.96 1.00
Debt Ratio 1.69 1.03
Leverage 1.79 2.32
D/E Ratio 0.78 1.31

The Total Return per year is shown below for 2 years to the end of 2023 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.
2020 2 0.00% -33.49% -33.49% 0.00%

The Total Return per year is shown below for 2 years to the end of 2023 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.
2020 2 0.00% -35.31% -35.31% 0.00%

The 2-year low, median, and high median Price/Earnings per Share Ratios are 61.77, 122.23 and 182.88. The 2023 P/E Ratio is negative and so unusable. The P/E Ratio for 2024 is 57.90 based on a stock price of $33.64 and EPS estimate for 2024 of $0.58 ($0.43 US$). This ratio is below the low ratio of the 2 year median ratios. This stock price testing suggests that the stock price is relatively cheap. The ratios are very high, so if you buy, it is best to keep an eye on this stock. This testing was in CDN$.

I also have Adjusted Earnings per Share data. The 2-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 27.96, 54.63 and 71.44. The current P/AEPS Ratio is 11.82 based on a stock price of $24.93 and a AEPS estimate for 2024 of $2.11. The current ratio is below the low ratio of the 2 year median ratios. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$.

I get a Graham Price of $30.37. The 2-year low, median, and high median Price/Graham Price Ratios are 1.82, 3.06 and 3.80. The current P/GP Ratio is 0.82 based on a stock price of $24.93. This ratio is below the low ratio of the 2 year median ratios. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$.

I get a 2-year median Price/Book Value per Share Ratio of 4.66. The current P/B Ratio is 0.94 based on Book Value of $1,200M, Book Value per Share of $26.43 and a stock price of $24.93. The current ratio is 80% below the 2 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$.

I get a 2-year median Price/Cash Flow per Share Ratio of 24.47. The current P/B Ratio is 8.17 based on Cash Flow per Share for 2024 of $3.05 and a stock price of $24.93. The current ratio is based on Cash Flow per Share estimate for 2024 of $3.05, Cash Flow of $425.6M and a stock price of $24.93. The current ratio is 83% below the 2 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$.

The stock just started to pay a dividend in 2023, so there are no real comparisons to be made. What I can say is that the dividend yield in 2023 was 1.52% and it is now 1.60% and therefore 5% higher.

The 4-year median Price/Sales (Revenue) Ratio is 17.99. The current P/S Ratio is 2.52 based on Revenue estimate for 2024 of $1,381, Revenue per Share of $9.90, and a stock price of $24.93. the current ratio is 86% below the 4 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$.

Results of stock price testing is that the stock price is testing as cheap, but the company only when public in September 2020 and it is a Tech stock. When looking at stock prices, everything is relative. I have Revenue information going back 4 years and P/S Ratio tests says the stock is relatively cheap. Also, the P/GP Ratio is below 1.00 at 0.82.

When I look at analysts’ recommendations, I find Strong Buy (7), Buy (8) and Hold (3). The consensus would be a Strong Buy. The 12 months stock price consensus is $38.59 ($28.47 US$) with a high of $46.09 ($34.00 US$) and low of $27.11 ($20.00 US$). The consensus price of $38.59 CDN$ implies a total return of 16.34% with 14.73% from capital gains and 1.61% from dividends based on a current stock price of $33.64.

The two recent recommendations on Stock Chase from analysts are Do Not Buy and Buy. Stock Chase gave this stock 4 stars out of 5. Adam Othman on Motley Fool thinks this is a good stock for your TFSA. Brian Paradza on Motley Fool says this stock is beaten down but has recovery potential. The company put out a Press Release on their fourth quarter results. The company put out a press release via Newswire about their third quarter of 2023. The company talks about their payment systems via Yahoo Finance.

Simply Wall Street via Yahoo Finance talks about who owns shares in the company. Nuvei Corp is a provider of payment technology solutions to merchants and partners. The solutions provided are mobile payments, online payments, and In-store payments. Its geographical segments are North America; Europe, the Middle East, and Africa; Latin America; and the Asia Pacific. The vast majority of its revenue is generated from North America and EMEA. Its web site is here Nuvei Corp.

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 Choice Properties REIT (TSX-CHP.UN, OTC-PPRQF) ... learn more on Wednesday, February 28, 2024 around 5 pm. Tomorrow on my other blog I will write about Can You Live on Dividends.... learn more on Tuesday, February 27, 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.

See my site for an index to these blog entries and for stocks followed. 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. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Friday, February 23, 2024

Manulife Financial Corp

Sound bite for Twitter and StockTwits is: Dividend Growth Insurance. Results of stock price testing is that the stock price is probably reasonable. Debt Ratios are fine. I see no problems with The Dividend Payout Ratios (DPR). The current dividend yield is moderate with dividend growth moderate. See my spreadsheet on Manulife Financial Corp.

Is it a good company at a reasonable price? This is a life insurance stock. I consider it a long term hold. I have not done that well on this stock, but I have no intentions of selling it. Many analysts think it will do better in the future. The stock price seems reasonable at this time based on the 10 year dividend yield test.

I own this stock of Manulife Financial Corp (TSX-MFC, NYSE-MFC). This has not been a great investment as I have had it for almost 19 years and I have made a total return of 3.87% per year with 1.01% from capital gains and 2.86% from dividends. Basically, I bought some of this stock in 2016 at prices higher than the current price. Generally, buying a stock over time rather than a single purchase works out best, but not in this case at present.

This company has not always done well for long term investors. See the chart on Total Return below. What you like to see that Total Return is at least 8% for all long term periods. Although, I knew that the very low interest rates we had for many years would be detrimental to life insurance companies. Bye the way, I have no intentions of selling my shares in this company.

When I was updating my spreadsheet, I noticed that this life insurance company also made big changes because of new versions of IFRS. I do not update my spreadsheets because a previous was restated, unless there was an accounting error. This is because I cannot change all the previous years. Fortunately, I did find some continuity. It will be interesting to see how all these new changes work out in future years.

If you had invested in this company in December 2013, for $1,004.64 you would have bought 48 shares at $20.93 per share. In December 2023, after 10 years you would have received $469.92 in dividends. The stock would be worth $1,405.44. Your total return would have been $1,875.36. This would be a total return of 7.27% per year with 3.41% from capital gain and 3.86% from dividends.

Cost Tot. Cost Shares Years Dividends Stock Val Tot Ret
$20.93 $1,004.64 48 10 $469.92 $1,405.44 $1,875.36

The current dividend yield is moderate with dividend growth moderate. The current dividend yield is moderate (2% to 4% ranges) at 4.45%. The 5 year median dividend yield is good (5% to 6% ranges) at 5.37%. The 10 and historical median dividend yields are also moderate at 4.17% and 3.20%. The dividend increases are moderate (8% to 14% ranges) at 9.9% per year over the past 5 years.

I see no problems with The Dividend Payout Ratios (DPR). The DPR for 2023 for Earnings per Share (EPS) is fine at 56% with 5 year coverage good at 39%. The DPR for 2023 for Adjusted Earnings per Share (AEPS) is good at 12% with 5 year coverage at 39%. The DPR for 2023 for Cash Flow per Share (CFPS) is fine at 13% with 5 year coverage at 11%. The DPR for 2023 for Free Cash Flow (FCF) is good at 7% with 5 year coverage at 7%.

Item Cur 5 Years
EPS 55.94% 39.09%
AEPS 11.85% 39.01%
CFPS 12.91% 11.32%
FCF 6.99% 6.89%

Debt Ratios are fine. The Long Term Debt/Covering Assets Ratio for 2023 is fine at 0.97 and currently at 0.97. The Liquidity Ratio for 2023 is a bit low at 1.12 and 1.12 currently, but unimportant for financials. If you added in Cash Flow after dividends, the ratios are good at 1.98 and currently at 1.40. The Debt Ratio for 2023 is fine at 1.06 as this is a financial.

Type Year End Ratio Curr
Lg Term R A 0.97 0.97
Lg Term R 7.64 6.82
Intang/GW 0.19 0.17
Liquidity 1.12 1.12
Liq. + CF 1.98 1.40
Debt Ratio 1.06 1.06

The Total Return per year is shown below for years of 5 to 24 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 9.92% 13.88% 8.61% 5.26%
2013 10 10.88% 7.27% 3.41% 3.86%
2008 15 2.56% 5.58% 2.31% 3.27%
2003 20 6.62% 4.88% 1.69% 3.19%
1999 24 8.64% 9.11% 4.93% 4.18%

The 5-year low, median, and high median Price/Earnings per Share Ratios are 6.53, 7.14 and 9.46. The corresponding 10 year ratios are 8.53, 9.99 and 11.45. The corresponding historical ratios are 10.82, 13.74 and 15.72. The current P/E Ratio is 9.31 based on a stock price of $32.81 and EPS estimate for 2024 of $3.53. The current ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Earnings per Share Ratios are 6.86, 7.71 and 8.88. The corresponding 10 year ratios are 6.96, 8.14 and 10.01. The current P/AEPS Ratio is 8.87 based on a stock price of $32.81 and AEPS estimate for 2024 of $3.70. The current ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get a Graham Price of $43.13. The 10-year low, median, and high median Price/Graham Price Ratios are 0.52, 0.63 and 0.73. The current P/GP Ratio is 0.70 based on a stock price of $32.81. The current ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get a 10-year median Price/Book Value per Share Ratio of 1.04. The current P/B Ratio is 1.47 based on Book Value of $40,349M, Book Value per Share of $22.34 and a stock price of $32.81. The current P/B Ratio is 42% 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 2024 of $24.80. This implies a ratio of 1.32 with a stock price of $32.81 and Book Value of $43,886M. This ratio 28% 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 2.35. The current P/CF Ratio is 7.12 based on Cash Flow per Share estimate for 2024 of $4.61, Cash Flow of $8,326M and a stock price of $32.81. the current ratio is 203% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. However, the Cash Flow per Share estimate seems out of line with the past history for CVPS, I would think that this test is suspect.

I get an historical median dividend yield of 3.20%. The current dividend yield is $4.88% based on Dividends of $1.60 and a stock price of $32.81. The current dividend yield is 52% 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 4.17%. The current dividend yield is $4.88% based on Dividends of $1.60 and a stock price of $32.81. The current dividend yield is 17% 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 0.80. The current P/S Ratio is 1.39 based on Revenue of $42,480M, Revenue per Share of $23.52 and a stock price of $32.81. The current ratio is 75% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. However, the Revenue figures have been very volatile lately. I do wonder how good this test is.

Results of stock price testing is that the stock price is probably reasonable. I am going with the 10 year dividend yield test. I note that there is no problem with the DPRs. The P/E Ratio, P/AEPS Ratio and P/GP Ratio tests are good and the stock price is shown as reasonable. The P/B Ratio tests are good and they say the stock price is expensive. I do not think that the P/S Ratio or P/CF tests are good.

When I look at analysts’ recommendations, I find Strong Buy (3), Buy (8), Hold (4) and Underperform (1). The consensus recommendation is a Buy. The 12 month stock price consensus is $34.05 with a high of $40.00 and low of $26.20. The consensus stock price of $34.05 implies a total return of 8.66% with 3.78% from capital gain and 4.88% from dividends.

Analyst on Stock Chase have mixed views of this company. Stock Chase gives this stock 5 stars out of 5. It is on my dividend lists. Kay Ng on Motley Fool thinks this stock was too depressed for too long. It had good earnings, price popped and it has a good dividend. Amy Legate-Wolfe on Motley Fool thinks this stock is a long term buy as it finds more opportunities in Asia. The company put out a press release via Newswire about their 2023 results.

Simply Wall Street via Yahoo Finance talks about this company’s dividends. Simply Wall Street gives this stock 4 stars out of 5. It lists no warning messages.

Manulife Financial provides life insurance, annuities, and asset management products to individuals and group customers in Canada, the United States, and Asia. The U.S. business, which primarily operates under the John Hancock brand, contributes about 30% of earnings. The Asia segment contributes around 30% of earnings. The Canadian business segment contributes approximately 20% of earnings. Its web site is here Manulife Financial Corp.

The last stock I wrote about was about was Intact Financial Corp (TSX-IFC, OTC-IFCZF) ... learn more. The next stock I will write about will be Nuvei Corp (TSX- NVEI, OTC- NVEI) ... learn more on Monday, February 26, 2023 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.

See my site for an index to these blog entries and for stocks followed. 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. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Wednesday, February 21, 2024

Intact Financial Corp

Sound bite for Twitter and StockTwits is: Dividend Growth Insurance. Results of stock price testing is that the stock price is probably still reasonable, but at the high end of the reasonable range. Some Debt Ratios are good like the important Liquidity Ratio, but the Debt Ratio is too low and Leverage and Debt/Equity Ratios are too high. The Dividend Payout Ratios (DPR) are fine. The current dividend yield is moderate with dividend growth moderate. See my spreadsheet on Intact Financial Corp.

Is it a good company at a reasonable price? This company has grown it dividends with moderate yield and moderate growth. They have done well for their shareholders over the longer term. This is a General Insurance company and as such will be more volatile that say a Life Insurance company. If you plan to buy, be cautious as the stock price is relatively high. It is testing still as reasonable but above the median.

I do not own this stock of Intact Financial Corp (TSX-IFC, OTC-IFCZF). I am following this stock because in November 2011, the TD Bank put out a special report on the merits of dividend investing. At the end of the report, they listed a number of Canadian stocks as Equity Yield ideas. This was one stock listed that I did not follow. This and Wajax are from TD Report on dividend investing.

When I was updating my spreadsheet, I noticed that they totally revamped their income statement and it was hard to find in continuity with all the Revenue data that I had for past years. I did the best I could. I looked at sites that usually update financial statements online and found only one who had updated their sites for 2023 income financials. I cannot figure out where they get their revenue data from for 2023.

The company has put out all sorts of data for 2023, but sometimes more data is just that, more data. It does not always been better data. I did find a reasonable Revenue figure. This will probably become clearer with the annual report next year.

Revenue was not the only part of the annual statements with no continuity. It was quite frustrating to update the spreadsheet. I notice that a number of sites updated their financials for other statements, but not for Income.

If you had invested in this company in December 2013, for $1,040.55 you would have bought 15 shares at $69.37 per share. In December 2023, after 10 years you would have received $448.20 in dividends. The stock would be worth $3,057.90. Your total return would have been $3,506.10. This would be a total return of 13.96% per year with 11.38% from capital gain and 2.58% from dividends.

Cost Tot. Cost Shares Years Dividends Stock Val Tot Ret
$69.37 $1,040.55 15 10 $448.20 $3,057.90 $3,506.10

The current dividend yield is moderate with dividend growth moderate. The current dividend yield is moderate (2% to 4% ranges) at 2.12%. The 5, 10 and historical dividend yields are moderate at 2.21%, 2.53% and 2.56%. The dividend growth is moderate (8% to 14%) at 9.5% per year over the past 5 years. The last dividend increase was for 10% and it occurred in 2024.

The Dividend Payout Ratios (DPR) are fine. The DPR for 2023 for Earnings per Share (EPS) is fine at 63% with 5 year coverage good at 40%. The DPR for 2023 for Adjusted Earnings per Share (AEPS) is good at 47% with 5 year coverage at 37%. The DPR for 2023 for Cash Flow per Share (CFPS) is high at 54% with 5 year coverage good at 29%. The DPR for 2023 for Free Cash Flow (FCF) is fine at 62% with 5 year coverage good at 30%.

Item Cur 5 Years
EPS 62.95% 40.24%
AEPS 47.36% 37.35%
CFPS 53.85% 29.17%
FCF 62.10% 29.68%

Some Debt Ratios are good like the important Liquidity Ratio, but the Debt Ratio is too low and Leverage and Debt/Equity Ratios are too high. The Long Term Debt/Market Cap Ratio for 2023 is good at 0.14 and currently at 0.13. The Liquidity Ratio for 2023 is a bit good at 2.82 and 2.82 currently. The Debt Ratio for 2023 is low at 1.42. I prefer this to be at 1.50 or higher. The Leverage and Debt/Equity Ratios for 2023 are too high at 3.40 and 2.40. I prefer these ratios to be below 3.00 and below 2.00.

Type Year End Ratio Curr
Lg Term R 0.14 0.13
Intang/GW 0.25 0.22
Liquidity 2.82 2.82
Liq. + CF 4.38 4.27
Debt Ratio 1.42 1.42
Leverage 3.40 3.40
D/E Ratio 2.40 2.40

The Total Return per year is shown below for years of 5 to 19 to the end of 2023. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.

From Years Div. Gth Tot Ret Cap Gain Div.
2018 5 9.46% 18.23% 15.50% 2.74%
2013 10 9.60% 13.96% 11.38% 2.58%
2008 15 8.81% 13.23% 13.23% 3.17%
2004 19 11.21% 10.75% 10.75% 2.66%

The 5-year low, median, and high median Price/Earnings per Share Ratios are 15.06, 18.45 and 21.84. The corresponding 10 year ratios are 15.96, 17.94 and 20.35. The corresponding historical ratios are 13.98, 15.57 and 16.95. The current P/E Ratio is 18.64 based on a stock price of $227.80 and EPS estimate for 2024 of $12.22. The current ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Earnings per Share Ratios are 12.78, 15.66 and 18.54. The corresponding 10 year ratios are 15.38, 16.68 and 18.59. The current ratio is 15.89 based on a AEPS estimate for 2024 of $14.34 and a stock price of $227.80. The current ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get a Graham Price of $171.15. The 10-year low, median, and high median Price/Graham Price Ratios are 1.16, 1.27 and 1.37. The current ratio is 1.33 based on a stock price of $227.80. The current ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get a 10-year median Price/Book Value per Share Ratio of 2.09. The current ratio is 2.51 based on a Book Value of $16,190M, Book Value per Share of $90.79 and stock price of $227.80. The current ratio is 19.9% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I also have a Book Value per Share (BVPS) estimate of $89.00 for 2024. This implies a ratio of 2.56 with a stock price of $227.80 and Book Value of $15,871M. This ratio is 22% 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 12.87. The current ratio is 22.01 based on Stock Price of $227.80, Cash Flow for the last 12 months of $1,846, and Cash Flow per Share of $10.35. The current ratio is 71% 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 2.56%. The current dividend yield is 2.12% based on dividends of $4.84 and a stock price of $227.88. The current yield is 17% 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 2.53%. The current dividend yield is 2.12% based on dividends of $4.84 and a stock price of $227.88. The current yield is 16% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.

The 10-year median Price/Sales (Revenue) Ratio is 1.65. The current ratio is 1.89 based on Revenue estimate for 2024 of $21,497M, Revenue per Share of $120.55 and a stock price of $227.80. The current dividend is 14% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. Although, with the trouble I had reconciling the new accounting with the old accounting for revenue, I have to wonder about this test. The place where I got the estimate from did not include revenue values for 2023 (but did for prior years). They do give an estimate close to what I get as the Revenue figure.

Results of stock price testing is that the stock price is probably still reasonable, but at the high end of the reasonable range. The dividend yield tests say that the stock price is reasonable but above the median. the P/S Ratio test says this as do most of the rest of my testing.

When I look at analysts’ recommendations, I find Strong Buy (3), Buy (8), Hold (3) and Underperform (1). The consensus would be a Buy. The 12 month stock price is $237.50 with a high of $256.00 and low of $221.00. The consensus price of $237.50 implies a total return 6.38% with 4.26% from capital gains and 2.12% from dividends.

Analyst on Stock Chase like this stock. The only recommendation in 2024 is to buy on weakness Stock Chase gives this stock 5 stars out of 5. It is on my dividend lists. Amy Legate-Wolfe on Motley Fool says this stock has climbed to an all-time high on buybacks. Adam Othman on Motley Fool thinks this is a stock to buy and hold forever. The company put out a press release via Newswire about their year-end results for 2023.

Simply Wall Street via Yahoo Finance talk about dividend payments under this stock. Simply Wall Street list 3 warnings for this stock of large one-off items impacting financial results; profit margins (5.2%) are lower than last year (11.5%), and significant insider selling over the past 3 months.

Intact Financial Corp is a property and casualty insurance company that provides written premiums in Canada. Most of the company's direct premiums are written in the personal automotive space. Its web site is here Intact Financial Corp.

The last stock I wrote about was about was First National Financial Corporation (TSX-FN, OTC-FNLIF) ... learn more. The next stock I will write about will be Manulife Financial Corp (TSX-MFC, NYSE-MFC) ... learn more on Friday, February 17, 2024 around 5 pm. Tomorrow on my other blog I will write about Brian Feroldi.... learn more on Thursday, February 22, 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.

See my site for an index to these blog entries and for stocks followed. 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. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Monday, February 19, 2024

First National Financial Corporation

Sound bite for Twitter and StockTwits is: Dividend Growth Financial. Results of stock price testing is that the stock price is probably reasonable. Debt Ratios could improve, especially the Debt Ratio. The Dividend Payout Ratios (DPR) are high, but they are giving out special dividends. The current dividend yield is good with dividend growth low with some special dividends. See my spreadsheet on First National Financial Corporation .

Is it a good company at a reasonable price? This financial company pays a lot in dividends (and special dividends) and has given shareholders good returns. A high portion of the returns on this company is paid in dividends. It is probably a bit risky, but if you want dividend income this stock has that. It looks like this stock is still selling at a reasonable price.

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. This is a new stock for me to cover.

When I was updating my spreadsheet, I noticed this company pays a lot of dividends and it often pays a special dividend.

If you had invested in this company in December 2012, for $1015.20 you would have bought 54 shares at $18.80 per share. In December 2023, after 10 years you would have received $1,225.58 in dividends. The stock would be worth $1.966.68. Your total return would have been $3,192.26. This would be a total return of 15.43% per year with 6.84% from capital gain and 5.59% from dividends.

Cost Tot. Cost Shares Years Dividends Stock Val Tot Ret
$18.80 $1,015.20 54 10 $1,225.58 $1,966.68 $3,192.26

The current dividend yield is good with dividend growth low with some special dividends. The current dividends are good (5% to 6% ranges) at 6.17%. The 5, 10 and historical dividend yields are also good at 6.01%, 6.49% and 6.70%. The company has given out 8 special dividends in the last 16. The dividend increases are low (below 8% per year) at 5.4% per year over the past 5 years. The last dividend increase was in 2023 and it was for 2.1%. This was a second increase in 2023.

The Dividend Payout Ratios (DPR) are high, but they are giving out special dividends. The DPR for 2023 for Earnings per Share (EPS) is high at 72% with 5 year coverage at 89%. The DPR for 2023 for Cash Flow per Share (CFPS) is high at 926% with 5 year coverage acceptable at 48%. The DPR for 2023 for Free Cash Flow does not really matter. The company has chosen high Dividend Payout Ratios, especially considering their special dividends.

Item Cur 5 Years
EPS 72.44% 89.31%
CFPS 925.91% 48.30%
FCF 28.99% -1084.92%

Debt Ratios could improve, especially the Debt Ratio. The Long Term Debt/Covering Assets Ratio for 2023 is fine at 0.98 and currently at 0.98. The Long Term Debt/Market Cap Ratio for 2023 is not important. The Liquidity Ratio for 2023 very good at 3.57 and 2.73 currently, but this ratio does not matter. If you added in Cash Flow after dividends, the ratios are fine at 1.53 and 1.76. The Debt Ratio for 2023 is low at 1.02 and 1.02 currently. This ratio matters and I would prefer to see it at least at 1.04 for this financial.

Type Year End Ratio Curr
Lg Term R A 0.98 0.98
Lg Term R 19.54 19.07
Intang/GW 0.00 0.00
Liquidity 3.57 2.73
Liq. + CF 5.07 2.89
Debt Ratio 1.02 1.02

The Total Return per year is shown below for years of 5 to 16 to the end of 2022. 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.
2017 5 7.85% 13.46% 4.81% 8.66%
2012 10 6.53% 15.43% 6.84% 8.59%
2007 15 10.50% 15.53% 6.63% 8.90%
2002 16 10.25% 14.88% 6.30% 8.58%

The Total Return per year is shown below for years of 5 to 17 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 5.33% 15.76% 6.93% 8.83%
2013 10 5.73% 13.68% 5.44% 8.24%
2008 15 4.23% 20.15% 9.03% 11.12%
2003 17 11.89% 14.85% 6.25% 8.61%

The 5-year low, median, and high median Price/Earnings per Share Ratios are 9.33, 12.04 and 14.02. The corresponding 10 year ratios are 9.33, 10.99 and 13.61. The corresponding historical ratios are 9.32, 10.14 and 13.31. The current P/E Ratio is 9.65 based on a stock price of $40.87 and EPS of $4.24. 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 $33.49. The 10-year low, median, and high median Price/Graham Price Ratios are 1.18, 1.35 and 1.66. The current ratio is 1.22 based on a stock price of $40.87. This 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 3.86. The current ratio is 3.47 based on a Book Value of $706M, Book Value per Share of $11.77 and a stock price of $40.87. The current ratio is 10% 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 Value per Share estimate for 2023 of $11.20. This ratio implies a Book Value of $672M and a ratio of 3.65 with a stock price of $40.87. This 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 4.65. The current P/CF Ratio is 10.45 based on Cash Flow for the Third Quarter of 2023 of $234.6M, Cash Flow per Share of $3.91 and a stock price of $40.87. The current ratio is 125% 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 6.70%. The current dividend yield is 5.99% based on dividends of $2.45 and a stock price of $40.87. The current dividend yield is 11% 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 6.49%. The current dividend yield is 5.99% based on dividends of $2.45 and a stock price of $40.87. The current dividend yield is 8% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.

The 10-year median Price/Sales (Revenue) Ratio 2.83. The current P/S Ratio is 2.72 based on Revenue estimate for 2023 of $900M, Revenue per Share of $15.01 and a stock price of $40.87. 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.

Results of stock price testing is that the stock price is probably reasonable. The two dividend yield tests are showing the stock price as reasonable but above the median. The P/S Ratio test is showing the stock price as reasonable and below the median. The other testings are basically showing the stock price as reasonable and below the median.

When I look at analysts’ recommendations, I find Hold (6). The consensus would be a Hold. The 12 month stock price consensus is $42.23 with a high of $45.00 and low of $40.00. The 12 month stock price of $42.23 implies a total return of $9.32% with 5.99% from dividends and 3.33% from capital gains.

The last recommendations are dated 2019 on Stock Chase. However, the analysts seem to like this company. Stock Chase gives this stock 1 star out of 5. Andrew Button on Motley Fool thinks this stock could go parabolic in 2024. Christopher Liew on Motley Fool says this is a fundamentally strong company with an impressive dividend track record. The company put out a press release on their fourth quarter of 2022 results. The company put out a Press Release on their Q3 2023 results.

Simply Wall Street has a report on Yahoo Finance about this company. Simply Wall Street has one warning of debt is not well covered by operating cash flow. Simply Wall Street gives this stock 4 stars out of 5.

First National Financial Corp is the parent company of First National Financial LP, a Canadian originator, underwriter, and servicer of predominantly prime residential and commercial mortgages. Most mortgages originated by First National are funded either by placement with institutional investors or through securitization conduits, in each case with retained servicing. Its web site is here First National Financial Corporation .

The last stock I wrote about was about was Russel Metals Inc (TSX-RUS, OTC-RUSMF) ... learn more. The next stock I will write about will be Intact Financial Corp (TSX-IFC, OTC-IFCZF) ... learn more on Wednesday, February 21, 2024 around 5 pm. Tomorrow on my other blog I will write about China and Their Stock Markets.... learn more on Tuesday, February 20, 2023 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.

See my site for an index to these blog entries and for stocks followed. 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. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Friday, February 16, 2024

Russel Metals Inc

Sound bite for Twitter and StockTwits is: Dividend Growth Industrial. Results of stock price testing is that the stock price is probably expensive. Debt Ratios are very good. The Dividend Payout Ratios (DPR) are good. The current dividend yield is moderate with dividend growth low. See my spreadsheet on Russel Metals Inc.

Is it a good company at a reasonable price? This stock is volatile. They do pay dividends and they have good debt ratios. It will probably never be a star but it is solid and has made shareholders money over the long term. I bought it before I was into dividend growth stocks. It pays a good dividend, but dividends do not grow much. I would probably not buy it today, but I have no intentions of selling this stock either. Currently, it would seem that the stock price is expensive.

I own this stock of Russel Metals Inc (TSX-RUS, OTC-RUSMF). In 2007 I needed to reduce my holdings of Loblaws and buy something to help replace the dividends I had been earning. With Russel Metals, both Mike and TD recommend buying at this time.

When I was updating my spreadsheet, I noticed there has been some volatility in my returns on this stock. To the end of January this year, my total return is 8.03%, with 3.58% from capital gains and 4.45% from dividends. Last year at this time, my total return was 6.61%.

When I was looking at Officers and Directors and insider buying and selling, I found some were buying and some were selling and some kept what stocks they held. This was of the people I was following. Of the officers I was following, the CEO and two officers were buying shares. The CFO and one officer were selling shares. Of the directors I was following the Chairman and one other director was selling shares and two directors kept what they had. The company is currently buying shares. Of course, the thing is that people buy shares because they feel good about a company’s future, but people sell for all sorts of reasons.

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. This shows good growth in the past, but analysts do not seem to be expected good growth this year.

Year Item Tot. Grth Per Yr Gwth Coverage
5 Revenue Growth 8.17% 1.58% -1.44% <-12 mths
5 EPS Growth 23.01% 4.23% -4.39% <-12 mths
5 Net Income Growth 21.78% 4.02% -2.96% <-12 mths
5 Cash Flow Growth 425.26% 39.34%
5 Dividend Growth 3.95% 0.78% 1.27% <-12 mths
5 Stock Price Growth 111.11% 16.12% 4.82% <-12 mths
10 Revenue Growth 41.32% 3.52% 5.77% <-this year
10 EPS Growth 216.06% 12.20% -8.78% <-this year
10 Net Income Growth 220.94% 12.37% -22.01% <-this year
10 Cash Flow Growth 225.83% 12.54% -44.54% <-this year
10 Dividend Growth 12.86% 1.22% 3.80% <-this year
10 Stock Price Growth 43.45% 3.67% 4.82% <-this year

If you had invested in this company in December 2013, for $1,004.48 you would have bought 32 shares at $31.39 per share. In December 2023, after 10 years you would have received $486.40 in dividends. The stock would be worth $1,440.96. Your total return would have been $1,927.36. This would be a total return of 7.85% per year with 3.67% from capital gain and 4.18% from dividends.

Cost Tot. Cost Shares Years Dividends Stock Val Tot Ret
$31.39 $1,004.48 32 10 $486.40 $1,440.96 $1,927.36

The current dividend yield is moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 3.39%. The 5, 10 and historical median dividend yields are good (5% to 6% ranges) at 5.09%, 5.75% and 5.08%. The dividend growth is low (below 8%) at just 0.78% over the past 5 years. That is because dividends were flat between 2015 and 2022. The last dividend increase was in 2023 and it was for 5.3%.

The Dividend Payout Ratios (DPR) are good. The DPR for 2023 for Earnings per Share (EPS) is good at 36% with 5 year coverage at 41%. The DPR for 2023 for Cash Flow per Share (CFPS) is good at 24% with 5 year coverage at 24%. The DPR for 2023 for Free Cash Flow 1 (FCF) from TD WebBroker is good at 24.58% with 5 year coverage at 31%. The DPR for 2023 for Free Cash Flow 2 (FCF) from the company is good at 24.58% with 5 year coverage at 29%.

Item Cur 5 Years
EPS 36.49% 40.85%
CFPS 23.80% 24.13%
FCF 1 24.58% 30.74%
FCF 2 24.58% 29.17%

Debt Ratios are very good. The Long Term Debt/Market Cap Ratio for 2023 is very good at 0.11. The Liquidity Ratio for 2023 is very good at 4.14 and 4.14. The Debt Ratio for 2023 is very good at 2.76. The Leverage and Debt/Equity Ratios for 2023 are good at 1.57 and 0.57.

Type Year End Ratio Curr
Lg Term R 0.11 0.11
Intang/GW 0.04 0.04
Liquidity 4.14 4.14
Liq. + CF 4.92 4.48
Debt Ratio 2.76 2.76
Leverage 1.57 1.57
D/E Ratio 0.57 0.57

The Total Return per year is shown below for years of 5 to 33 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 0.78% 21.62% 16.12% 5.51%
2013 10 1.22% 7.85% 3.67% 4.18%
2008 15 -0.87% 10.99% 5.92% 5.07%
2003 20 0.98% 17.56% 8.51% 9.05%
1998 25 2.57% 19.82% 10.76% 9.06%
1993 30 0.00% 9.42% 5.82% 3.60%
1990 33 4.67% 9.70% 6.21% 3.50%

The 5-year low, median, and high median Price/Earnings per Share Ratios are 6.68, 8.56 and 10.45. The corresponding 10 year ratios are 9.34, 10.96 and 12.58. The corresponding historical ratios are 6.16, 9.13 and 9.99. The current P/E Ratio is 11.95 based on a stock price of $47.20 and EPS estimate for 2024 of $3.95. The current ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get a Graham Price of $49.13. The 10-year low, median, and high median Price/Graham Price Ratios are 0.72, 1.06 and 1.20. The current P/GP Ratio is 0.96 based on a stock price of $47.20. 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 1.54. The current P/B Raio is 1.74 based on a stock price of $47.20, Book Value of $1,639M and Book Value per Share of $27.16. The current ratio is 12.5% above the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I have a Book Value per Share estimate for 2024 of $29.70. This implies a ratio of 1.59 with a Book Value of $1,794M and stock price of $47.20. The current ratio is 2.9% 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 5.29. The current P/CF Ratio is 11.13 based on Cash Flow per Share estimate for 2024 of $4.24, Cash Flow of $256M, and stock price of $47.20. The current ratio is 110% 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 5.08%. The current dividend yield is 3.39% based on a stock price of $47.20 and dividends of $1.60. The current dividend 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 5.75%. The current dividend yield is 3.39% based on a stock price of $47.20 and dividends of $1.60. The current dividend yield is 41% 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 0.46. The current P/S Ratio is 0.60 based on Revenue estimate for 2024 of $4,765M, Revenue per Share of $78.91 and a stock price of $47.20. The current ratio is 30% 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 probably expensive. The dividend yield tests are saying this. They have not been growing their dividends much over the last 10 years, but the dividend yields have big difference. The P/S Ratio test confirms what the dividend yield tests are saying. Other tests are saying that the stock price is reasonable but above the median or expensive.

When I look at analysts’ recommendations, I find Buy (4) and Hold (4). The consensus would be a Buy. The 12 months stock price consensus is $49.88 with a high of $56.00 and low of $46.00. The consensus price of $459.88 implies a total return of 9.07% with 5.68% from capital gains and 3.39% from dividends.

The analysts in 2023 on Stock Chase liked the company. There was a sell recommendation in 2022 because of flat dividends at that time. Stock Chase gives this stock 3 stars out of 5. It is on the Money Sense Dividend List. Ambrose O'Callaghan on Motley Fool likes this stock because it is cheap and has a great dividend. Brian Paradza on Motley Fool says this is a good stock for income-oriented dividend investors. The company put out a press release on Newswire about their fourth quarter of 2023 results.

Simply Wall Street via Yahoo Finance reviews this stock. Simply Wall Street has one warning of earnings are forecast to decline by an average of 5.4% per year for the next 3 years

Russel Metals Inc is a Canada-based metal distribution company. The company conducts business primarily through three metals distribution segments: metals service centers; energy products; and steel distributors. The company generates all of its revenue from the North American market. Its web site is here Russel Metals Inc.

The last stock I wrote about was about was ARC Resources Ltd (TSX-ARX, OTC-AETUF) ... learn more. The next stock I will write about will be First National Financial Corporation (TSX-FN, OTC-FNLIF) ... learn more on Monday, February 19, 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.

See my site for an index to these blog entries and for stocks followed. 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. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Wednesday, February 14, 2024

ARC Resources Ltd

Sound bite for Twitter and StockTwits is: Dividend Growth Resource. Results of stock price testing is that the stock price could be reasonable. Debt Ratios are fine. The Dividend Payout Ratios (DPR) are good. The current dividend yield is moderate with dividend growth low. See my spreadsheet on ARC Resources Ltd.

Is it a good company at a reasonable price? There are a number of resource stocks on dividend lists. Personally, I do not like resource stocks and do not buy much of them. What I do not like is their volitivity and when I have bought them, it has been for the short term and I keep an eye on them. But analyst and some conservative investor like resource stocks. The testing of this stock as too price seems to point to a reasonable price, although I saw problems with some of my testing. This stock is below its last high reached in 2014.

I do not own this stock of ARC Resources Ltd (TSX-ARX, OTC-AETUF). When TFSA first came out, this stock was recommended for this account as it was an income trust at that point and most of the distributions were taxable. This stock is no longer an income trust and the distributions are now dividends and taxed as normal Canadian dividends.

When I was updating my spreadsheet, I noticed that it seems that timing is everything when buying this stock. It is a resource stock and so it is probably cyclical. It is interesting that the stock price 25 years ago and 5 years ago are close. See charts below.

If you had invested in this company in December 2013, for $1,005.38 you would have bought 34 shares at $29.57 per share. In December 2023, after 10 years you would have received $219.84 in dividends. The stock would be worth $668.78. Your total return would have been $888.62. This would be a total loss of 1.41% per year with 3.99% from capital loss and 2.58% from dividends.

Cost Tot. Cost Shares Years Dividends Stock Val Tot Ret
$29.57 $1,005.38 34 10 $219.84 $668.78 $888.62

If you had invested in this company in December 2018, for $1,004.40 you would have bought 124 shares at $8.10 per share. In December 2023, after 5 years you would have received $268.58 in dividends. The stock would be worth $2,439.08. Your total return would have been $2,707.66. This would be a total gain of 23.28% per year with 19.42% from capital gain and 3.86% from dividends.

Cost Tot. Cost Shares Years Dividends Stock Val Tot Ret
$8.10 $1,004.40 124 5 $268.58 $2,439.08 $2,707.66

If you had invested in this company in December 1998, for $1,000.40 you would have bought 164 shares at $6.10 per share. In December 2023, after 25 years you would have received $5,388.38 in dividends. The stock would be worth $3,225.888. Your total return would have been $8,614.26. This would be a total gain of 29.56% per year with 4.79% from capital gain and 24.77% from dividends. This company used to be a Income Trust and so had very high dividends when it was an Income Trust.

Cost Tot. Cost Shares Years Dividends Stock Val Tot Ret
$6.10 $1,000.40 164 25 $5,388.38 $3,225.88 $8,614.26

The current dividend yield is moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 3.18%. The 5 and 10 year median dividend yields are moderate at 3.38% and 3.85%. The historical median dividend yield is high (7% and above) at 7.65%. This company used to be an income trust and so had high dividends, but all income trusts had to lower the dividends on becoming a corporation. All the old income trusts have had trouble getting the dividend level right. Over the past 5 years, dividends have increased by just 1.3%. However, in the last 5 years dividends have been cut and increased. The last dividend increase was for 13% and it was in 2023.

The Dividend Payout Ratios (DPR) are good. The DPR for 2023 for Earnings per Share (EPS) is good at 24% with 5 year coverage at 38%. The DPR for 2023 for The DPR for 2023 for Funds from Operations (FFO) is good at 15% with 5 year coverage at 12%. The DPR for 2023 for The DPR for 2023 for Free Funds Flow (FFF) is fine at 50% with 5 year coverage good at 28%. The DPR for 2023 for Cash Flow per Share (CFPS) is good at 14% with 5 year coverage at 12%. The DPR for 2023 for Free Cash Flow (FCF) is good at 33% with 5 year coverage at 18%.

Item Cur 5 Years
EPS 24.52% 38.00%
FFO 14.81% 12.29%
FFF 49.61% 27.73%
CFPS 14.47% 12.20%
FCF 33.05% 17.69%

Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2023 is good at 0.10 and currently at 0.09. The Liquidity Ratio for 2023 is a low at 0.91 and 0.91 currently. If you added in Cash Flow after dividends, the ratios are fine at 2.96 and for 2024 estimate of 3.22. The Debt Ratio for 2023 is good at 2.50. The Leverage and Debt/Equity Ratios for 2023 are good at 1.67 and 0.67.

Type Year End Ratio Curr
Lg Term R 0.10 0.09
Intang/GW 0.02 0.02
Liquidity 0.91 0.91
Liq. + CF 2.96 3.22
Debt Ratio 2.50 2.50
Leverage 1.67 1.67
D/E Ratio 0.67 0.67

The Total Return per year is shown below for years of 5 to 27 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 1.30% 23.28% 19.42% 3.86%
2012 10 -6.09% -1.41% -3.99% 2.58%
2007 15 -9.08% 4.37% -0.14% 4.51%
2002 20 -5.04% 11.61% 1.65% 9.96%
1997 25 -2.48% 29.56% 4.79% 24.77%
1996 27 -3.38% 12.76% 1.59% 11.17%

The 5-year low, median, and high median Price/Earnings per Share Ratios are 3.42, 4.90 and 6.38. The corresponding 10 year ratios are 5.12, 7.44 and 9.75. The corresponding historical ratios are 9.39, 11.89 and 13.95. The current P/E Ratio is 9.78 based on a stock price of $21.41 and EPS estimate for 2024 of $2.19. 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 Funds from Operations (FFO) data. The 5-year low, median, and high median Price/ Funds from Operations Ratios are 2.12, 3.04 and 4.37. The corresponding 10 year ratios are 3.35, 4.72 and 6.10. The current ratio is 4.56 based on a stock price of $21.41 and FFO estimate for 2024 of $4.70. The current ratio is above the 10 year median high ratio. This stock price testing suggests that the stock price is relatively expensive.

I also have Free Funds Flow (FFF). The 5-year low, median, and high median Price/ Free Funds Flow Ratios are 3.47, 5.96 and 8.98. The corresponding 8 year ratios are 15.54, 22.33 and 29.12. The current ratio is 16.60 based on a stock price of $21.41 and FFF for last 12 months of $1.29. The current ratio is between the low and median ratios the 8 year median high ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a Graham Price of $24.76. The 10-year low, median, and high median Price/Graham Price Ratios are 0.59, 0.84 and 1.09. The current P/GP Ratio is 0.86 based on a stock price of $21.41. This ratio is between the medina and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get a 10-year median Price/Book Value per Share Ratio of 1.55. The current P/B Ratio is 1.72 based on a stock price of $21.41, Book Value of $7,428M and Book Value per Share of $12.44. The current ratio is 11% 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 4.75. The current P/CF Ratio is 4.78 based on a stock price of $21.41, Cash Flow per Share estimate for 2024 of $4.48 and Cash Flow of $2,674M. The current ratio is .5% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but at the median.

I get an historical median dividend yield of 7.65%. The current dividend yield is 3.18% based on a dividend of $0.68 and a stock price of $21.41. The current dividend yield is 58% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. However, this stock used to be an income trust and income trust have very high dividends. Also, this test works best for companies with increasing dividends and during the past while, dividends have been flat, decreased and increased. So, you have to wonder how good this test is.

I get an historical median dividend yield of 3.85%. The current dividend yield is 3.18% based on a dividend of $0.68 and a stock price of $21.41. The current dividend yield is 17% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median. However, this stock used to be an income trust and income trust have very high dividends. Also, this test works best for companies with increasing dividends and during the past while, dividends have been flat, decreased and increased. So, you have to wonder how good this test is.

The 10-year median Price/Sales (Revenue) Ratio is 2.91. The current ratio is 3.08 based on Revenue estimate for 2024 of $4,858M, Revenue per Share of $6.96 and a stock price of $21.41. The current ratio is 9.6% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. However, looking a revenue, sites seem to be changing what they are using as Revenue, from Commodity Sales, to Revenue from Commodity Sales to Total Revenue as shown on the financial statements.

Results of stock price testing is that the stock price could be reasonable. The 10 year dividend yield test says the stock price is reasonable as does the P/S Ratio test, even though I see problems with these tests. A number of the tests seems to point to a reasonable price.

When I look at analysts’ recommendations, I find Strong Buy (7) and Buy (8). The consensus is a Buy. The 12 month stock price consensus is $26.63 with a high of $32.00 and low of $25.00. The consensus price of $26.63 implies a total return of 27.56% with 24.38% from capital gains and 3.18% from dividends.

Analysts on Stock Chase like this company. Stock Chase gives this company 5 stars out of 5. It is on the Money Sense Dividend List. Amy Legate-Wolfe on Motley Fool thinks this is a good choice in the resource sector. Jitendra Parashar on Motley Fool thinks this is a good stock to buy and hold. The company put out a press release on Newswire about their year-end results for 2023.

Simply Wall Street reviews this stock via Yahoo Finance. They put out one warning of unstable dividend track record.

ARC Resources Ltd is an independent energy company engaged in the acquisition, exploration, development, and production of conventional oil and natural gas in Western Canada. The company produces light, medium, and heavy crude, condensate, natural gas liquids, and natural gas. Its web site is here ARC Resources Ltd.

The last stock I wrote about was about was Allied Properties Real Estate Investment Trust (TSX-AP.UN, OTC-APYRF) ... learn more. The next stock I will write about will be Russel Metals Inc (TSX-RUS, OTC-RUSMF) ... learn more on Friday, February 16, 2024 around 5 pm. Tomorrow on my other blog I will write about Victim of Fraud.... learn more on Thursday, February 15, 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.

See my site for an index to these blog entries and for stocks followed. 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. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.