Wednesday, February 24, 2010


I am today reviewing this stock, (TSX-BCE) because it has published its fourth quarterly results. I am using their unaudited statements for December 31, 2009. The problem with unaudited statements, such as with BCE’s, is that they do not always put them into the normal format. I could not find everything I wanted. There are items in the spreadsheets that are in purple, and this is because I am unsure of my data.

BCE was one of the first stocks I bought. This stock is hard to get a long term rate of growth. The main problem is that in 2000 they split off their investment in Nortel. At that time, Nortel’s and also BCE’s stock price was very high. I sold off half of Nortel at a very good price and half at a very low price. If I put BCE and Nortel together in Quicken, I get a long term return of 12.7% per year. However, this stock has certainly not performed well over the last 5 and 10 years. My spreadsheet shows return of just 3.5% per year over the last 10 years and 4.5% per year over the past 5 years. This is probably very realistic. BCE will probably do better in the next while. They have just announced a dividend increase of over 7%.

A lot of the growth figures are really bad. The bright point is that the dividends growth for the 5 years ending in 2009 was 5.7%, and the book value growth for the same period is over 10% per year. George Cope is the CEO of BCE and many feel that he will do a very good job. There is a news item that Report on Business is doing an article on BCE in their March 2010 issue due to be on the stands on February 26th, 2010.

The Liquidity Ratio is low at 0.69, but this is typical of this company and other retail stocks. The Asset/Liability ratio is very health at 1.90. I also get a negative Accrual Ratio and this is good. The thing about the Accrual Ratio is that I am not sure of some of the figures I got from the unaudited report. I guess the last thing to talk about is the Return on Equity. The ROE came in at 9.5% for 2009 and this is not bad. It is better than the one for 2008, which was 6.5%. The 5 year average for the ROE is 15% and it is expected that 2010 will be a better year.

BCE is currently less than 1% of by portfolio, so it does not count for much. I used to have more money in telecommunications stocks, but I currently wonder about the long term profitability of this sector. We, in Canada, currently have very high rates for cell phones and cable and I wonder if there is not going to be problems for these companies in the future. I will continue to hold the BCE stock I own. Tomorrow, I will talk about what the analysts say about this stock and if the current stock price is good.

BCE is Canada's largest communications company, providing the most comprehensive and innovative suite of communication services to residential and business customers in Canada. Operating under the Bell and Bell Aliant brands, the Company's services include Bell Home phone local and long distance services, Bell Mobility, Virgin Mobile and Solo Mobile wireless, high-speed Bell Internet, Bell TV direct-to-home satellite and VDSL television, IP-broadband services and information and communications technology (ICT) services. 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 Follow me on twitter.

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