Today I will look at this stock (TSX-PCA) from the stand point of a current investment. Insiders were selling off this stock until July 2008. Since that time there has only been insider buying. This is a good sign. Another good sign is that the dividends on this stock were raised from $.52 a share to $.80 a share. This is an increase of over 50%.
I was looking at what analysts are saying about this stock. There are some Buy ratings on this stock, but most the ratings are Hold. Perhaps this is because no one expects that Petro-Canada will earn the same EPS or Cash Flow in 2009 that are expected in 2008. In looking at the charts, this stock has done worse than the TSX Index and the TSX Energy Index in the Year to Date, 1 year, 3 Year and 5 Year periods. It is only when you go to the 10 year period that it has done better than both these indexes. If you compare this stock with Encana, you will see that Encana has done better than Petro-Canada, and also the TSX and TSX Energy Index in all these periods.
If you had held this stock over the past 5 or 10 years, you would have earned money. Currently, the price of this stock is back to where it was in 2003 and 2004, but this will not last. What I see as the negatives for this stock is the low yield, which is running usually always below 1%. The current problem I see is the Accrual Ratio is very high at 9.89%, where anything above 5% is very high. I would also like to see the Current Asset/Current Liability Ratio safely above 1.5. For the most recent quarter, it has improved from .88 to 1.44 and this, of course, is good.
The most positive things are the insider buying, the increase in dividends and with the dividend yield going up to 3%. The P/E ratio is also lower than it has been over the past 10 years.
Petro-Canada is one of Canada’s largest oil and gas company, operating in Canada and internationally. They operate in both upstream (explores and produces) and the downstream (refining and marketing) sectors of the oil and gas industry. Its web site is www.petro-canada.ca. See my spreadsheet at www.spbrunner.com/stocks/pca.htm. I am reloading my spreadsheet with the figures from the most recent quarter of September 2008.
I finally bought some stock in this bear market. I bought Enbridge (TSX-ENB) and Toromont Industries Ltd (TSX-TIH). Enbridge is the better dividend payer and Toromont is the better value. I will talk more on this on Monday.
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. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets on my web site.
Post a Comment