I do not own this stock of Power Corp of Canada (TSX-POW, OTC-PWCDF). I started following this stock because it was on the Dividend Achievers, the Dividend Aristocrats lists and also on Mike Higgs’ list. It is a stock that I notice has been recommended lately as good value (October 2008). I would not buy it because I have shares in Power Financial, which this company controls.
When I was updating my spreadsheet, I noticed that after flat dividends from 2010 to 2014 inclusive, they began to raise dividends again. Increases are not as good as they were before the 2010 bear market. The last bear market and recession with very low interest rates was hard for life insurance companies.
Dividends were flat from 2010 to 2014 inclusive. As far as I know the company has never cut dividends. Increases have not been what where were in the past. See chart below. The last increase was in 2019 and it was for 6%.
Dividend yield is currently in the moderate to good range with the current yield at 5.72%. The 5, 10 and historical yields are 4.55%, 4.56% and 2.32%. The dividend yields have varied over time.
The Dividend Payout Ratios are good. The DPR for EPS for 2018 is 55% with 5 year coverage at 46%. The DPR for CFPS for 2018 is 9.3% with 5 year coverage at 8.9%.
Debt Ratios are fine. This is a financial company so you look at assets that cover the long term liabilities. The Debt/Investment Ratio is 89. Although the Liquidity Ratio is not important, I do calculate it and it is 1.97 in 2018. The Debt Ratio is 1.09 which is fine for a financial company.
The Total Return per year is shown below for years of 5 to 31 to the end of 2018. 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 charts below.
|From||Years||Div. Gth||Tot Ret||Cap Gain||Div.|
The 5 year low, median, and high median Price/Earnings per Share Ratios are 10.26. 11.08 and 11.91. The corresponding 10 year ratios are 10.54, 11.84 and 13.02. The corresponding historical ratios are 10.94, 12.80 and 14.62. The current P/E Ratio is 8.85 based on a stock price of $27.52 and a 2019 EPS estimate of $3.11. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $46.40. The 10 year low, median, and high median Price/Graham Price Ratios are 0.72. 0.83 and 0.91. The current P/GP Ratio is 0.59 based on a stock price of $27.52. 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 1.20. The current P/B Ratio is 0.89 based on a Book Value of $14, 334M, Book Value per Share of $30.76 and a stock price of $27.52. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 2.32%. The current dividend yield is 5.89% based on dividends of $1.49 and a stock price of $27.52. The current yield is 154% below the current dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10 year median Price/Sales (Revenue) Ratio is 0.35. The current P/S Ratio is 0.24 based on 2019 Revenue estimate of $53,977M, Revenue per Share of $104.32 and a stock price of $27.52. The current ratio is 32% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
Results of stock price testing suggests that the stock price is relatively cheap. All the testing is showing up as a cheap stock price. The P/B Ratio is below 1.00 and this implies that the current stock price is below the theoretical breakup value of the company.
When I look at analysts’ recommendations, I find Buy (1) and Hold (6). The consensus would be a Hold. The 12 months stock price is $32.79. This implies a total return of 25.04% with 19.15% from capital gains and 5.89% from dividends based on a current stock price of $27.52.
See what analysts are saying on Stock Chase. Some positive and some negative comments. The Canadian Press via BNN Bloomberg talks about the consolidating Lifecos they own. Daniel Da Costa on Motley Fool says the company is an option for income. A writer on Simply Wall Street. The Canadian Press on Times Colonist talks about shareholders rejecting Say on Pay proposal.
Incorporated in 1925, Power Corp. of Canada is a diversified holding company with interests in financial services, communications, and other business sectors through its controlling interests in Power Financial. Its web site is here Power Corp of Canada.
The last stock I wrote about was about was Lassonde Industries (TSX-LAS.A, OTC-LSDAF) ... learn more. The next stock I will write about will Waste Connections Inc. (TSX-WCN, NYSE-WCN) ... learn more on Monday, June 17, 2019 around 5 pm.
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