Thursday, January 21, 2010

TMX Group

I have not reviewed this stock (TSX-X) since June of 2008, so I thought it was time for an updated. This is the company that runs the Toronto Stock Exchange and I want to talk about how successful it is as a stock. I do not own this stock and at the present time, I have no current intentions of buying it. The TSX was a non-profit organization before becoming a stock corporation.

The information on the stock company only goes back 5 years. I have some figures for when this was a non-profit organization. This stock is not on the dividend achievers lists that I follow, probably because it has not had enough years as a dividend paying stock. The thing I see about the dividends is that lately, they have not grown much. I do not see them growing much in the next few years as I think that the dividend payouts are too high a percentage of the cash flow.

All the growth figures that I follow are good on this company. What is especially good is the growth in revenue and cash flow as these are important indicators of possible future progress. The stock has been hit by the recent recession as all stocks have. The lowest growth rate is that of total investor’s earnings. This was just over 8% for the year ending 2008 and I see about the same for the year ending in 2009. This is not a bad return. The real negative I see here is the lack of potential dividend increases.

When looking at the Liquidity Ratio and the Asset/Liability Ratio, I see rather low ratios with these ratios being 1.09 and 1.32 respectively at the present time. This means that the current assets can cover the current liabilities. It also means the assets can cover the liabilities. However, it is preferred that both these ratios be at 1.50 or better. The 5 and 10 year averages for these ratios are much better. This is because these ratios have been coming down over the last 5 and 10 years. The best I can say is that these ratios seem to be stabilizing at the present time.

When you look at the Return on Equity for this stock, the numbers are absolutely great. The 5 year average is 50%. This is because of the high ROE between 2004 and 2007. The ROE for 2008 was 23% and the ROE for 2009 so far is at 21%. These latter figures are good ROE figures. The Accrual Ratio is low, so there is nothing much further to say on it. The Accrual Ratio has to be very high or very low to make any difference in stock analysis.

As I said before, I do not intend to buy this stock at the present time, but I do follow it. Tomorrow I will talk about this stock’s price and also talk about what the analysts are saying.

TMX Group operates Canada's two national stock exchanges, Toronto Stock Exchange serving the senior equity market and TSX Venture Exchange serving the public venture equity market, Natural Gas Exchange (NGX), a leading North American exchange for the trading and clearing of natural gas and electricity contracts and Shorcan Brokers Limited, the country's first fixed income interdealer broker. TMX Group also owns The Equicom Group Inc., a leading provider of investor relations and related corporate communication services in Canada. TMX Group has its headquarters in Toronto and maintains offices in Montreal, Calgary and Vancouver. Its web site is See my spreadsheet at

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 for a list of the stocks for which I have put up spreadsheets. Also, look at other investing notes on my website at

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