Friday, May 13, 2011

Sun Life Financial Inc 2

This is yesterday post. I will do today's post shortly.

I first bought this stock (TSX-SLF) in 2000 and then some more 2001, 2003 and 2006. I have made a total return to date of 4.4% per year on this stock. Of this total return, probably 3% per year is from dividends. Most Canadian insurance companies have been hit hard by this recent recession and they have yet to fully recover.

As with a lot of stocks today that give out stock options freely, the insiders of this company have lots more stock options than shares, and there is lots of insider selling. The CEO has sold $7M of shares and the officers of the company have sold $12M shares. This totals $18M of shares sold and this selling has all occurred since the beginning of this year.

It is only the directors that have more shares than options and there has been some minimal buying by directors, but this is too small to even bother with. There are 353 Institutions that own some 55% of this stock. Over the past 3 months there has been net buyers of just over 5M shares by institutions. (See my site for information on Insider Trading.)

When I look at 5 year median Price/Earnings ratios, I find the low at 12.4 and the high at 14.4. The current P/E at 11 is therefore at a relative low and is also absolutely at a relative low. P/Es at 10 or below are generally considered low. I get a Graham Price for this stock of $39.12 and a stock price of $30.46. The stock price is some 22% below the Graham Price. When looking at the median difference between the Graham price and low stock price over the past 10 years, I get a difference of 20%. So this also points to a low stock price.

I get a 10 year median Price/Book Value Ratio of 1.52 and a current P/B Ratio 1.25. The current P/B Ratio is some 82% of the 10 year median P/B Ratio and points to a current low stock price. The last thing is the dividend yield. The dividend yield at 4.7% is higher than the 5 year median dividend yield of 3.9%. So, in summary, every thing is pointing to a low current price.

A low current relative stock price, of course, can mean a lot of different things. It can be low because it is not expected to do well in the near future. And, this would appear to be the case here looking at what the analysts are recommending.

There are quite a number of analysts following this stock. The recommendations vary from Strong Buy, Buy, Hold and Underperform. The consensus recommendations would be a Hold. (See my site for information on analyst ratings.) Analysts’ recommendations can vary also because some look at short term investing and some long term investing.

Many analysts talk about the dividend being safe. It is not expected to raise it dividend in the short term, but it is expected to be a good investment in the long term. Analysts with buy recommendations say that it is a good company at a cheap price. Buy recommendations come with a 12 month stock price of around $35.00 and Hold recommendations come with a 12 month stock price of around $33.00.

I plan to hold on to what stock I have in this company. I will not be buying more because I have enough invested in this company. If you are a long term investor like me, you do not sell good companies because they are going through a rough patch.

I note that bloggers My Own Advisor and The Loonie Bin both have Sun Life stock.

Sun Life Financial is a leading international financial services organization providing a diverse range of protection and wealth accumulation products and services to individuals and corporate customers. Chartered in 1865, Sun Life Financial and its partners today have operations in key markets worldwide, including Canada, the United States, the United Kingdom, Ireland, Hong Kong, the Philippines, Japan, Indonesia, India, China and Bermuda. Its web site is here Sun Life. See my spreadsheet at slf.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. Hey Susan,

    Thanks for the reference.

    I'm a fan of SLF. I've got a bunch of shares in my TFSA, enough to DRIP synthetically.

    I personally think institutional investments (55%) are a great sign.

    Current P/E signals a buy; it is quite low and I personally think SLF should be trading much closer to $35 than $30. Time to scoop more up :) If folks aren't buying, this one is definitely a hold. If it keeps paying, why sell, if ever?