Power Corp 2

I am continuing today my review of this stock (TSX-POW) because it is a good dividend paying stock. It is on the dividend lists that I follow of Dividend Achievers and Dividend Aristocrats (see indices). I do not own this company as I have Power Financial. It makes no sense to hold both.

The first thing to note is the heavy Insider Selling to the tune of $30M. However, to put this in perspective, it is less than ¼ of 1% of the value of this company. As far as I can see, it all seems to involve options. Except for the Desmarais clan, insiders all seem to have more options than stocks. This is not great, but it does not ring any alarm bells either.

When I look at the 5 year average low P/E, I get a ratio of 10.9 and when I look at the 5 year average high P/E, I get a ratio of 16.9. So the current P/E of 11.2 on a price of $27.07 shows a good current stock price. Looking at the Graham Price, I get one for 2010 of $33.46 based on earnings estimates for 2010. The current stock price of $27.07 is some 19% lower. When the stock price is lower than the Graham Price is, this shows that the stock price is good.

The next thing to look at is the Price/Book Value Ratio. I get a current P/B ratio of 1.32 and the 10 year average is 1.73. So the current stock price looks good on this measure as the current P/B ratio is around 76% of the 10 year average. The Dividend Yield at 4.3% is a good yield for this stock. Not only is it higher than the 5 year average of 3.2%, it is higher than the 10 year average low of 3.4%. The yield on this stock is generally below 3%.

When I look at analysts’ recommendations, I find recommendations of Strong Buy, Buy and Hold. The consensus recommendation would be a Buy. (See my site for information on analyst ratings.) This company holds international investments and some analysts like the European assets that this company holds. This company’s earnings for 2009 and also for the first quarter come in below estimates, and this seems to have upset some analysts. Although, I must admit this is a typical reaction. Most analysts seem to agree that this is a well run company. If you are interesting in a company, I say, get it while it is cheap. I do not think it matters what the reason for the cheapness is.

As I said yesterday, I will not be buying this company because I hold Power Financial Corp. I will continue to follow it. Some people prefer to invest in this company rather than Power Financial Corp as it has more than just financial assets.

This company is an international management and holding company. It has as subsidiaries Power Financial Corp., Power Technology Investment Corp. and Gesca Ltee. The Pargesa Group holds significant positions in five large companies based in Europe of Total (energy), Suez (energy, water, and waste services), Imerys (specialty minerals), Lafarge (cement and building materials and Pernod Ricard (Wines and Spirits). Gesca holds a 100% interest in the Montréal daily newspaper La Presse and six other daily newspapers in the provinces of Québec and Ontario. Gesca also produces television programming, publishes specialty magazines and books, and operates several Internet sites. Controlling shareholder of Power Corp of Canada is Paul Desmarais. They have 30.1%, but have 64.6% voting control. Its web site is here Power Corp. See my spreadsheet at pow.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 for stocks followed and investment notes. Follow me on twitter.