Astral Media Inc

I am today reviewing Astral Media Inc (TSX-ACM.A), because I follow it and I have updated its spreadsheet for the latest annual report of August 31, 2009. The first quarterly report is also out and I have updated my spreadsheet for this report also. 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.

Most of the growth figures for this stock are very good. The worst is the Total Return growth figures. The 10 year Total Return growth is quite good at just over 10% per year. However, the 5 year Total Return growth figure is just over 4% per year. The one problem I see with this stock is the low Dividend Yield. This is often below 1% and this is low. When they have given dividend increases they have been very good, but they do not give dividend increases regularly. Also, part of the reason for the low Total Return growth is because of the recession.

When I updated the earnings for this stock, I used the earnings prior to their non-cash impairment charges for 2009. I did this, as I wanted to be able to properly value this stock and get a Graham Price. Therefore, I show earnings for the year ending in August 2009 as $3.15, when the reported earnings for this stock were really a negative $2.82. I am showing the earnings in purple on my spreadsheet to draw attention to the fact that there is a problem with them.

The good thing about the 1st quarterly report is that the Liquidity Ratio has increased favorably from 1.31 at the end of August 2009 to 1.61 at the end of September 2009. I like to see this ratio at 1.51 or higher and so this is a good improvement. The Asset/Liability Ratio has always been quite high and is currently at 2.02 and so this is very good.

The other good thing from the 1st quarterly report is that the book value has increased. The Book Value had come down for the August 2009 annual report, but has now started to increase again. The 5 year growth figure for the book value is just over 6% per year. The 10 year growth figure is much better at just over 10% per year. The book value has increase just over 5% for the first quarter, so this is good.

The Return on Equity for the 1st quarter at 21% was good, as is the 5 year average of almost 16%. (This is a correction from what I originally said on February 7th.) The problem I find with the 1st quarterly report is the increase of the Accrual Ratio to over 5%. But, the year is just beginning.

Even though this is a dividend paying stock, the dividend yield is low and most of the return is from the increase in value of this company. Because of the low dividend yield, the yield on your investment in this company, even after 10 years is not very high. You start to get a more respectable return after 15 years, but this is a long time. If the market goes flat for the next 5 years as lots of people feel it will, there may not be much to be earned in this company for the next while. Tomorrow, I will look at what the analysts say about this company.

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.