Thursday, February 4, 2010

Newfoundland Capital Corp

I am today reviewing Newfoundland Capital Corp (TSX-NNC.A), because it is a dividend paying stock that I follow. However, I have not invested in this stock. This stock is not on any dividend list that I follow. They stop paying dividends in dividends in 2009. However, they reported dividends for 2009, as they declared dividends to pay in 2010. A lot of company decreased or stopped dividends in 2009.

When you look at the growth figures for this stock, they are mostly good. The growth in revenue is a bit mixed. The 5 year figure is the best at 9.6% per year. The 10 year figure at 6.60% is ok, but not great. Considering the recent recession, the stock has a total return over the last 5 years of just over 10% per year and the one for 2009 is likely to come in just as high. This is very good.

The dividends add only about 2% to this Total Return. There have been recent studies that show that the best returns on dividend paying stock is when the dividends are in the range of 2.5% to 4.5%. The other thing is however, you cannot argue with results, and considering the current recession, this stock has done well. The growth in Book Value and Cash Flow has also been very good over the last 5 and 10 years.

The real problem in growth is with the earnings. I do not have a figure for the year ending in 2008 because they lost money that year. If they earn what is expected for the year ending in 2009, the growth figure for the last 10 years will be good and probably over 9% per year. However, the growth in earnings for the last 5 years will still be negative.

The Liquidity Ratio is low, but it is generally over 1.00. The 5 year average is 1.19, which is ok, but not great. The Liquidity Ratio for the 9 months ending in September 2009 is just 0.37. This is low because some long term debt has just come due. There is some concern over this liquidity ratio. It is expected that the company will be selling shares to raise capital.

The Return On Equity tends not to be very high on this stock at any time. The return last year was negative because they lost money. However, ROE for the last 5 years averages 9.7% and the ROE for the end of September 2009 is about the same, but the figure for the last 5 years will move lower to 9%. This is not bad, but it is not great either.

I guess the last thing to mention is that there was a stock split for 2009 of 3 to 1. Tomorrow, I will talk about what the analysts are saying.

Newfoundland Capital Corporation Limited also owns and operates Newcap Radio. Newcap Radio is one of Canada's leading radio broadcasters with 79 licenses across Canada. The Company reaches millions of listeners each week through a variety of formats and is a recognized industry leader in radio programming, sales and networking. The Company has 58 FM and 21 AM licenses spanning the country employing over 800 radio professionals in Canada. Newfoundland Capital Corporation Limited also owns and operates the Glynmill Inn, Corner Brook, Newfoundland and Labrador. 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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