Tuesday, February 24, 2009

Bell Aliant 2

Today I am going to look at what analysts are saying about this stock (TSX-BA.UN). Is it a good buy now? The first thing I looked at was insider buying and selling. There is very little going on as far as insider buying and selling is concerned. There is a bit more insider selling, but the activity is small. Basically, we can learn nothing from this. The last distribution increase was in February 2008 when the distributions were increased by 2.8%. It is likely that the distribution level will have to be cut back when the new tax laws kick in for Income Trusts in 2013. I have updated my spreadsheet for with more estimates.

In looking at earnings, no one seems to expect that Bell Aliant will earn as much in 2009 as it did in 2008. Earnings in 2007 we unusually high, but both 2008 and 2009 is expected to be higher than 2006. More importantly, people expect the cash flow to be quite a bit lower for 2009 than it was in 2008. For Income Trust companies, cash flow is more important than earnings.

As far as the ratings go on this stock, there are some Strong Buy ratings, a few Buy ratings and quite a few Hold ratings on this stock. The consensus rating on this stock is a Buy, but is it just into the Buy territory. (See my site for information on analyst ratings.)

Looking at the ratios on this stock, current P/E of 14 is lower than the 5 year average of 18 and this point to a current good price. Also, the current yield is almost 12% against the 5 year average of 7.5% so this also points to a good price. Also, Graham price is $35.20, which is quite a bit higher than the actual price of $24.35. This also point to a good price. Personally, I see nothing about this stock than would make me want to go out and buy some. This is probably why this stock has so many Hold ratings.

Looking at the charts, I compared this stock with the TSX and TSX Utilities. For the Year-to-date, 1 and 3 year periods, it has done better than both have. When looking at a longer range of the 5 and 10 year periods, this stock has done worse than both these indexes. The basic reason for the above is that Bell Aliant has not done as badly in this latest bear market as the TSX and TSX Utilities indexes.

Aliant is one of North America's largest regional communications providers serving customers in six Canadian provinces with information, communications and technology services, including voice, data, Internet, video and value-added business solutions. Through their information technology division, xwave, they also provide IT professional services in Canada and the United States. Its web site is www.bell.aliant.ca. See my spreadsheet on this company at www.spbrunner.com/stocks/ba.htm.

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.

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