Tuesday, February 9, 2010

Astral Media Inc 2

I am today continuing my review Astral Media Inc (TSX-ACM.A), to see if it is currently a good buy. I have not invested in this stock, but it is a Canadian Dividend Paying stock. It is not on the dividend lists that I follow, as the company does not consistently increase their dividends.

The first thing to talk about is the P/E Ratio. The 5 year average low is 11.7 and the 5 year average high is 16. For this stock, I get a current P/E Ratio of 11.5. This is a rather low ratio and it is lower than the 5 year average. So this shows a good current price. The sites that show the P/E ratio based on last 12 months earnings do not show one as the earning over the last 12 months were negative. The Price/Book Value Ratio of 1.6 is just 83% of the 10 year average. So this shows a fairly good current price.

I get a current Dividend Yield 1.45%. The 5 year average is 1.12%. The average is higher than normal, as the Dividend Yield has been higher than usual over the last couple of years. The dividend yield on this stock has often been below 1%, so this points to a particularly good stock price. The last thing to look at is the Graham Price and at $38.33, the current price is more than 10% below the Graham. This also points to a good current price.

The above was all the good stuff. What is not so great is all the current insider selling. Over the past year there was over $12m of insider selling. The CEO, CFO and officers seem to have more stock options than shares. The problem with insider selling, is that selling can be done for all sorts of reasons unrelated to how the company is performing or is expected to perform. The other thing is that they have not raised the dividends since 2008. A raise in dividends show that management has faith in the near future earnings of the company.

When I look at the analysts recommendations, I find them from Strong Buy to Hold. However, most of the recommendations are either Buy or Hold. (See my site for information on analyst ratings.) The consensus recommendation would be a Buy. The main concern is the business this company is in. No one seems to think that the company will have a swift recovery. However, it is felt that if you have patience, this might be a good time to buy this stock.

What I personally do not like about this stock is the low dividend yield, and the high Accrual Ratio (of almost 8%). The Accrual Ratio is high because the Net Earnings is considerably higher than the Operations Cash Flow. What you want to see the opposite, which is higher Operations Cash Flow than Net Earnings. Although, if you like to own this stock, you cannot do better than pay a price 10% lower than the Graham price.

Astral Media is a leading Canadian media company, reaching people through a combination of highly targeted media properties in television, radio, outdoor advertising, and interactive media. Its web site is www.astralmedia.com. See my spreadsheet at www.spbrunner.com/stocks/acm.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. Also, look at other investing notes on my website at www.spbrunner.com/investing.html. Follow me on twitter.

No comments:

Post a Comment