Tuesday, May 25, 2010

Power Financial Corp 2

This is a stock (TSX-PWF) on the dividend lists that I follow of Dividend Achievers and Dividend Aristocrats (see indices). I bought this stock first in 2001 and some more in 2004. I have earned a total return of 8.4% per year on this stock.

When I look at Insider Buying and Insider Selling reports, I see that there has been selling to the tune of $10M this year. On the surface, this seems bad, but looking further, I find that the selling is by Robert Gratton, a director, who is retiring. This makes the selling understandable. There seems to be no other action in this category.

The next thing to review is the P/E ratios. The 5 year average low is 11.2 and the 5 year average high 16.6. This puts the current P/E, at 11, just below the 5 year average low. This is therefore showing a good current stock price. The next thing is the Graham Price. I get a Graham Price of $32.12 for 2010. With a current stock price of $28.03, the current stock price is some 12.7% below the Graham Price. The average low stock price is 12.2% below the stock price. This again shows a good current stock price. Please note that this items use an earning estimate for 2010, which may or may not, be correct.

When I look at the Price/Book Value, I get a 10 year average of 2.14 and a current P/B of just 1.55. This puts the current ratio at some 72% of the 10 year average. Any ratio less than 80% of the current average shows a good current stock price. The last think to look at is the dividend yield. The current yield is 5%. The 5 year average yield is 3.8% and the 10 year average yield on the low stock price is 4.2%. This again says that the current stock price is a good one.

When I look at what the analysts say about this stock, no one says anything bad about it. There is a worry that if the stock market plunges, this company could be hit hard. But the company is solid and it is a low risk stock. When I look at the analysts recommendations, there are lots of Buy recommendations and lots of Hold recommendations. The consensus recommendation is probably a Buy. (See my site for information on analyst ratings.)

I will hold on to what I have. I will not be buying any because I have sufficient stock in this company. I also have shares in IGM Financial, which is owned by Power Financial Corp. I do not like any one company to be too large a part of my portfolio. That said I feel comfortable holding this stock.

This company is a holding and management company. Its operations provide a range of individual and corporate financial and fiduciary services in North America and Europe. It holds interest in the following companies: Great-West Lifeco, Great-West Life, London Life, Canada Life, Great-West Life & Annuity, Putnam Investments, IGM Financial, Investors Group Mackenzie Financial, and Pargesa Group. 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 Financial. See my spreadsheet at pwf.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.

1 comment:

  1. In 2013, by my count of the insider trades listed for him against T.PWF on quotemedia.com, he sold more than 240 million in stock. We retail investors get to keep just a few scraps occasionally!