IGM Financial 2

I am continuing my review of this stock (TSX-IGM) today. The first thing to deal with is Insider Buying and Selling. There has been no insider buying during the past year. There has been lots of insider selling. In the main, this insider selling has been by Canada Life and Great West Life companies. These companies are controlled by Power Corp, the same as IGM is. The one insider selling that is more worrisome is that done by the CFO. He sold at the low point in March.

Is this stock at a good price when you look at the ratios? First, I will look at the yield ratio. The current yield is over 6% and the 5 year average is 3.6%. This yield points to the stock price as being at a good price. The next ratio I looked was at the P/E. The current P/E is about 14 and the 5 year average is 15. This is not a really low P/E, but it is lower than the 5 year average. Also, the trailing P/E of 12 is lower than the 5 year average of 17. The trailing P/E is a more accurate figure, as the current P/E is just based on last year’s earnings, this years estimate earnings, or last 12 months earnings.

The next thing to deal with is the Graham Price. This stock is usually quite a bit higher than the Graham Price is. However, with the recent bear market, the stock price has become quite close to the Graham Price. Since one of the things the Graham Price depends on is the earnings, if the earnings fall, then the Graham Price will fall also. The earnings estimates show that they are expected to fall.

The next thing I want to note is that the Globe Investor site gives this stock a 4 star rating out of a possible 5 stars. In looking at the ratings for this stock, they range from Strong Buy to Sell, with most of the ratings from Strong Buy to Hold. However, the consensus rating is a Buy that is very close to a Hold. (See my site for information on analyst ratings.)

When looking at the charts, this company is between the TSX and the TSX Financial indexes, with the TSX being on top for the year to date, 3 year and 5 year periods. If you look at 10 years, then it is between these indexes, with the TSX Financial being on top. However, over the past year, this stock beats both these indexes. What this seems to tell you is that you will probably do as well as the TSX over the long term. Plus, you will get dividends that run just over 3% a year.

As I said yesterday, the only negative thing I found was a high Accrual Ratio. It was 5.5% and anything over 5 is high. I was reading an analyst yesterday who said that he makes it a rule never to buy any stock where there is insider selling and there is lots of insider selling on this stock. I do not know the reason for it, but there is a lot. The other thing is that the current price is not that great for this stock. Because most analysts seem to feel that the earnings will go down over the next two years, the stock price will tend not to do well. The stock price will probably pick up when analysts feel that the earnings will improve. So, if you like this stock, it may not be the time yet to buy.

This is a premier mutual fund, managed asset and personal financial services company. The company has three operating units, Investors Group, Mackenzie Financial Corporation and Investment Planning Counsel Inc. Its web site is www.igmfinancial.com. See my spreadsheet on this company at www.spbrunner.com/stocks/igm.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.