Price/Earnings Ratio is, basically, the stock price divided by the Earnings per Share (EPS). So, if you have $1.25 of EPS and a current price of $10.00, then you have a P/E of 8. (Price divided by P/E Ratio gives Earnings. For example $10.00 divided by 8 gives earnings of $1.25. EPS times P/E gives you the price.
For example, $1.25 EPS times 8 gives you $10.00.)
Usually when people talk about a Forward (or Leading) P/E Ratio, they are using the current stock price and EPS estimates for the current financial year. The Trailing P/E Ratio is using the current stock price and EPS for the last financial year. There are variations on this with Forward P/E Ratios using current stock price and next 12 months of EPS and Trailing P/E Ratios using current stock price and last 12 months of EPS.
On my spreadsheets, I calculate Price/Earnings Ratios for Closing, High, Low and Median stock price for each financial year. My median stock price is the median of the high and low stock prices for each financial year. When I give a current P/E Ratio, I am using current stock price and EPS estimates for the current financial year. When I give trailing P/E ratios, I am using the current stock price and EPS for the last financial year.
In order to see if the current P/E ratio is a reasonable one, I compare it to P/E ratios I calculated over the last 5 financial years. The stock price is probably reasonable if the current P/E ratio is around the median P/E ratio of the past 5 years. It is also valid to compare a company’s current P/E to current P/E ratios of similar companies.
I also like to compare the 5 year median Price/Earnings ratios for high and low stock prices to the current P/E ratio to get an idea if the current price is relatively high or relatively low. Realistically, while it is nice to pay a low price for a stock, getting one at a reasonable price is probably more attainable.
When comparing P/E ratios, you need to compare trailing P/E ratios to trailing P/E ratios, and current P/E ratios to current P/E ratios. Remember current is also called forward or leading P/E. In a rising (bull) market, the trailing P/E ratios tend to be higher than the current P/E ratios and the opposite in a falling (bear) market.
A financial year for a company is taken from the date of their annual financial statements. Most companies use the calendar year. That is a year beginning 1 January and ending 31 December. Some companies have non-calendar financial years. Our banks are examples of this. The TD Bank’s (TSX-TD) financial year begins 1 November and ends 31 October every year. Others, like Canadian Tire (TSX-CTC.A) have financial years ending on the closes Saturday to 31 December. For example, the financial year for 2010 started 3 January 2010 and ended 1 January 2011.
As I understand Price/Earnings Ratios, 10 and below is consider low, 15 – 20 is considered normal and 25 or 30 is considered high. This is just a rule of thumb. However, companies like utility companies tend to have low P/E Ratios and tech companies tend to have high ones. Also, mature companies tend to have lower P/E ratios than growth companies.
When companies change from a growth company to a mature company, their P/E ratios will tend to come down. Also, for some companies, investors are willing to pay a higher price (or a premium) for its stock. This will result in higher P/E Ratios that similar companies have. This can occur for various reasons.
There are, of course, problems with this ratio. The earnings part of the ratio is rather a fake number. This is because, for the P/E ratio to mean anything, all companies, across all industries have to calculate earnings in the same way. Earnings also seem to be a value that can be more easily manipulated that say cash flow. So, perhaps it is not a good idea to put too much weight on the earnings value.
I think that the Price/Earnings Ratio is one valuable tool for determining if a company’s stock price is reasonable or not. However, I do not think that it should be the only thing you should use.
Other possible ratios to use are Price/Sales Ratios and Price/Book Value. You can also use Graham Price, Dividend Yield and Return on Equity to determine if the stock price is reasonable or not. Under the new account rules for Canada (IFRS) it has been suggested we should also use Return on Comprehensive Income.
The site Investopedia has a tutorial on Price/Earning Ratio. The site Wikipedia has an informative article on the Price/Earnings Ratio.
Site such as Globe & Mail, in their stock summary used a P/E that is based on the last 12 months EPS. If you go to financials and add up EPS for last 4 financial periods, you will get the EPS used in their P/E Ratio. The Forward P/E ratio is supposed to be based on EPS estimates. However, I cannot match earnings used on this site (or others sites using same estimates) for the Forward P/E. Google Financial also gives P/E ratios for various stocks. See Google Finance.
Usually sites state what they are using as the EPS. Some use Diluted EPS and others Undiluted EPS. I use the Diluted EPS. Sites can also vary on the P/E Ratios depending on how up to date they are in what they use for EPS. You need to be aware of how a site gets their EPS. They usually always use the current stock price.
Also Yahoo gives current P/E ratios by industry. However, please be aware that this is geared towards the US market, not the Canadian market.
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.
Thursday, June 30, 2011
Wednesday, June 29, 2011
Rogers Sugar Inc 2
I do not own this stock (TSX-RSI). This stock was brought to my attention by Dividend Ninja. This company used to be a Unit Trust (TSX-RSI.UN) but it has recently converted to corporation. On change to a corporation, it lowered its dividend.
There is a minimal of insider selling and insider buying with net selling. This tells us nothing. There are 11 institutions that own almost 20% of this stock. There has been some buying and selling in the last 3 months, and these institutions have marginally increased their investment in this stock..
When I look at the 5 year median Price/Earnings Ratios, I get a low of 8.06 and a high of 10.40. The current one of 13.35 is higher than the median high. The 5 year median Trailing Price/Earnings Ratios are a low of 8.57 and a high of 11.09. The current trailing P/E at 11.13 is higher than the median high also, but just.
The 10 year median Price/Book Value Ratio is 1.35 and the current one at 1.64 is some 22% higher. However, a P/B Ratio of 1.64 is a pretty good one, on an absolute basis. I get a Graham Price of $5.41 and a current stock price of $5.34. The stock price is below the Graham Price. However, the median high difference between the Graham Price and the stock price is 15%. So, on a relatively basis, the stock price is high.
On a dividend yield basis, the stock price is high also. The current Dividend yield of 6.37% is lower than the 5 year average of 10.18%. However, do not forget that this company just lowered the dividends as it changed to a corporation.
When I look at analysts’ recommendations, I find only Hold and Underperform. The consensus would be a Hold as there are lots of Hold recommendations. For the second quarter of their 2011 reporting year, it seems that this company missed some earnings estimates. Hold recommendations come with a stock price at or just below the current stock price.
One good thing about this company is that the Payout Ratios are expected to be good by 2012 based on current estimates. This stock is probably suitable for investors who want income rather than growth. However, note that this is considered a medium risk, not a low risk. Also, do not forget that sugar is a commodity. So there will be volatility with this stock because of this.
I know that this company has a habit and adjusting the dividend as they see fit. This has meant that in the past they have lowered as well as raised their dividends. However, personally, I would rather a company lower a dividend because they cannot not keep up the current one without going into debt. I think it is a bad idea for a company to borrow money to pay dividends. On the other hand, you have to look at such situations on a case by case basis.
There is a Wikipedia entry for this company. Dividend Girl owns this stock and has recently commented on it at her blog. The Dividend Ninja wrote about this stock on his blog recently also.
Rogers Sugar Inc. was established to hold all of the common shares and notes of Lantic Inc. Lantic Inc. is a refiner, processor, distributor and marketer of sugar products in Canada. Its web site is here Rogers Sugar. See my spreadsheet at rsi.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.
There is a minimal of insider selling and insider buying with net selling. This tells us nothing. There are 11 institutions that own almost 20% of this stock. There has been some buying and selling in the last 3 months, and these institutions have marginally increased their investment in this stock..
When I look at the 5 year median Price/Earnings Ratios, I get a low of 8.06 and a high of 10.40. The current one of 13.35 is higher than the median high. The 5 year median Trailing Price/Earnings Ratios are a low of 8.57 and a high of 11.09. The current trailing P/E at 11.13 is higher than the median high also, but just.
The 10 year median Price/Book Value Ratio is 1.35 and the current one at 1.64 is some 22% higher. However, a P/B Ratio of 1.64 is a pretty good one, on an absolute basis. I get a Graham Price of $5.41 and a current stock price of $5.34. The stock price is below the Graham Price. However, the median high difference between the Graham Price and the stock price is 15%. So, on a relatively basis, the stock price is high.
On a dividend yield basis, the stock price is high also. The current Dividend yield of 6.37% is lower than the 5 year average of 10.18%. However, do not forget that this company just lowered the dividends as it changed to a corporation.
When I look at analysts’ recommendations, I find only Hold and Underperform. The consensus would be a Hold as there are lots of Hold recommendations. For the second quarter of their 2011 reporting year, it seems that this company missed some earnings estimates. Hold recommendations come with a stock price at or just below the current stock price.
One good thing about this company is that the Payout Ratios are expected to be good by 2012 based on current estimates. This stock is probably suitable for investors who want income rather than growth. However, note that this is considered a medium risk, not a low risk. Also, do not forget that sugar is a commodity. So there will be volatility with this stock because of this.
I know that this company has a habit and adjusting the dividend as they see fit. This has meant that in the past they have lowered as well as raised their dividends. However, personally, I would rather a company lower a dividend because they cannot not keep up the current one without going into debt. I think it is a bad idea for a company to borrow money to pay dividends. On the other hand, you have to look at such situations on a case by case basis.
There is a Wikipedia entry for this company. Dividend Girl owns this stock and has recently commented on it at her blog. The Dividend Ninja wrote about this stock on his blog recently also.
Rogers Sugar Inc. was established to hold all of the common shares and notes of Lantic Inc. Lantic Inc. is a refiner, processor, distributor and marketer of sugar products in Canada. Its web site is here Rogers Sugar. See my spreadsheet at rsi.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.
Tuesday, June 28, 2011
Rogers Sugar Inc
I do not own this stock (TSX-RSI). This stock was brought to my attention by Dividend Ninja. This company used to be a Unit Trust (TSX-RSI.UN) but it has recently converted to corporation. On change to a corporation, it lowered its dividend.
Lowering the dividend was the right thing to do as corporation cannot pay the same dividend rates as Unit Trusts. The dividend yield is still good on this stock at 6.93%, but not as good the 5 year median dividend yield of 10.18%. And, please note that a lot of people feel that, in the end, old unit trust stock will have dividend yields in the 4 to 5% range. They will get to this level because of a combination of decreasing dividends and stock price increase.
This stock has a habit of not only raising dividends, but lowering them. The company says their dividends will be subject to periodic review by the company’s board. This would imply that their past dividend policy has not changed. The other thing to note is that the company said the new distribution amount, taxed as dividend, would leave their shareholders with the same after tax amount. The old distribution was tax as interest.
The 5 year median Payout Ratio on earnings is 96% and the 5 year median Payout Ratio on Cash Flow is 58%. The expected Payout Ratio on earnings by the financial year September 2012 is expected to be a more reasonable value of 76%. The Payout Ratio on Cash Flow hasn’t been as bad as that for earnings. However, by the financial year September 2012, it is expected to be 52%. Please note that both these ratios had been overt 100% in the past.
Another feature of old income trust stock is that Book Value growth was lousy. This is because when you buy out higher distributions than earnings, a book value deficit is created. This stock is no different and 5 and 10 year book value growth is 2% and negative 8% per year, respectively. However, the Book Value grew at 4% between September 2010 financial year end and the end of the second quarter at April 2011.
The best growth for this stock has been in total return. The 5 and 10 year total return has been at 14% and 9.2% respectively. The portion of this total return coming from dividends has been 10% and 9%, respectively. Going forward the portion of the total return from dividends would probably be lower.
Other growth figures are not as good. The main problem with Revenues, Earnings and Cash Flow is that they tend to go up and down a lot. The 5 and 10 year revenue per share growth is 6.9% and 5% per year, respectively. The 5 and 10 year earnings growth is 2.7% and 5.9% per year, respectively. The 5 and 10 year growth in Cash Flow per share is 3.9% and 0% per year, respectively.
In looking at debt ratios, these also tend to fluctuate. The current Liquidity Ratio is 1.29, but the 10 year median ratio is just 1.08. This is just ok. The Asset/Liability Ratio is much better at 1.87 and a 10 year median of 1.92. Both the Leverage Ratio and Debt/Equity Ratio are fine with current ratios at 2.15 and 1.15, respectively.
The Return on Equity has been good for the last 5 years. This was not true prior to 5 years ago. The ROE for September 30, 2010 was 16.6%, with a 5 year median of 16.6%. Both these are very good. The ROE for the 12 months ending in April 2011 is even better at 23.5%.
You would characterize this stock as one to buy for income and modest capital gains. However, income might fluctuate. It would be of median risk.
Rogers Sugar Inc. was established to hold all of the common shares and notes of Lantic Inc. Lantic Inc. is a refiner, processor, distributor and marketer of sugar products in Canada. Its web site is here Rogers Sugar. See my spreadsheet at rsi.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.
Lowering the dividend was the right thing to do as corporation cannot pay the same dividend rates as Unit Trusts. The dividend yield is still good on this stock at 6.93%, but not as good the 5 year median dividend yield of 10.18%. And, please note that a lot of people feel that, in the end, old unit trust stock will have dividend yields in the 4 to 5% range. They will get to this level because of a combination of decreasing dividends and stock price increase.
This stock has a habit of not only raising dividends, but lowering them. The company says their dividends will be subject to periodic review by the company’s board. This would imply that their past dividend policy has not changed. The other thing to note is that the company said the new distribution amount, taxed as dividend, would leave their shareholders with the same after tax amount. The old distribution was tax as interest.
The 5 year median Payout Ratio on earnings is 96% and the 5 year median Payout Ratio on Cash Flow is 58%. The expected Payout Ratio on earnings by the financial year September 2012 is expected to be a more reasonable value of 76%. The Payout Ratio on Cash Flow hasn’t been as bad as that for earnings. However, by the financial year September 2012, it is expected to be 52%. Please note that both these ratios had been overt 100% in the past.
Another feature of old income trust stock is that Book Value growth was lousy. This is because when you buy out higher distributions than earnings, a book value deficit is created. This stock is no different and 5 and 10 year book value growth is 2% and negative 8% per year, respectively. However, the Book Value grew at 4% between September 2010 financial year end and the end of the second quarter at April 2011.
The best growth for this stock has been in total return. The 5 and 10 year total return has been at 14% and 9.2% respectively. The portion of this total return coming from dividends has been 10% and 9%, respectively. Going forward the portion of the total return from dividends would probably be lower.
Other growth figures are not as good. The main problem with Revenues, Earnings and Cash Flow is that they tend to go up and down a lot. The 5 and 10 year revenue per share growth is 6.9% and 5% per year, respectively. The 5 and 10 year earnings growth is 2.7% and 5.9% per year, respectively. The 5 and 10 year growth in Cash Flow per share is 3.9% and 0% per year, respectively.
In looking at debt ratios, these also tend to fluctuate. The current Liquidity Ratio is 1.29, but the 10 year median ratio is just 1.08. This is just ok. The Asset/Liability Ratio is much better at 1.87 and a 10 year median of 1.92. Both the Leverage Ratio and Debt/Equity Ratio are fine with current ratios at 2.15 and 1.15, respectively.
The Return on Equity has been good for the last 5 years. This was not true prior to 5 years ago. The ROE for September 30, 2010 was 16.6%, with a 5 year median of 16.6%. Both these are very good. The ROE for the 12 months ending in April 2011 is even better at 23.5%.
You would characterize this stock as one to buy for income and modest capital gains. However, income might fluctuate. It would be of median risk.
Rogers Sugar Inc. was established to hold all of the common shares and notes of Lantic Inc. Lantic Inc. is a refiner, processor, distributor and marketer of sugar products in Canada. Its web site is here Rogers Sugar. See my spreadsheet at rsi.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.
Monday, June 27, 2011
Computer Modelling Group Ltd 2
I own this stock (TSX-CMG, OTH-CMDXF-). I bought this stock in November 2008 and some more in June 2009. This is a small dividend paying technology company that does business internationally. I have made a total return of 48% per year on this stock. About 6% per year would be attributable to dividends. It was not a large investment.
When I look at insider trading I find some $11M of net insider selling. There is too small amount of insider buying to mention. Although insiders do own stock in this company in the millions of dollars, they do not own a substantial amount of outstanding shares. The CEO has sold off $2.3M in shares, but he still owns some $8M in shares. A number of officers have sold off shares to the tune of $7.3M, but it seems they are mostly selling off stock options. I consider all this action to be neutral.
It is a smart move for insiders of small fast growing companies to sell their shares in the company they work for and diversify their stock holdings. Also, except for the CFO, all other insiders generally have more shares than stock options. I glad to see a lot of insiders holding sizable amounts of this stock. This is positive. Also, the company has just raised the dividends by 5% and given a special dividend in June of this year. This is also positive. The recent stock split is also positive. You often get an uptick in the stock price with a split and this is what happened.
Just under 60% of the shares are held by 33 institutions. There has been some buying and selling over the past 3 months, but there is a net increase of 1.8M shares held by institutions over the past 3 months.
When I look at 5 year median Price/Earnings Ratios, I get a low of 11.56 and a high of 20.34. The current P/E of 24.63 is on the relatively high side. However, the P/E ratios have been increasing over the past 10 years and a P/E of 24.63 is not particularly high for a fast growing tech company.
I get a 10 year median Price/Book Value ratio of 4.85. The current one of 13.54 is a lot higher. This ratio has also been growing of late. However, on an absolute basis, a P/B Ratio of 13.54 is high. I get a Graham Price of $3.45 and a current stock price of $13.30. The current price is 285% higher than the Graham Price. However, the low and high difference between the Graham Price and Stock price last year ran from 156% to 305%. As you can see, the stock price has been moving up quite quickly on this stock.
I get a current dividend yield of 3.16% and a 5 year median dividend yield of 4.18%. By this this standard the current stock price is high also. There is not any good news on current stock price looking at the Price/Sales ratio also. The 5 year P/S Ratio is 4.58 and the current one is 8.79. On this ratio, lower is better.
There are few analysts following this stock, but the recommendations I see are Strong Buy, Buy, Hold and Underperform. The consensus would be a Buy. There is a big discrepancy in earnings estimates from $.54 to $.80 to $1.10. The P/E of each is 24.6, 16.6 to 12.09, respectively. The thing is that if you want to buy this stock, the price may never get any better as it seems to be a fast moving tech stock. But, it is a risky stock.
See a Can Tech Letter interview on this company. Also, there is another blog entry on this stock at All Time High Stocks.
I have done very well by this stock. But, as I said yesterday, I will hold on to what I have at the moment, but I will probably sell stock equal to my original purchase price at some point in the future.
Computer Modelling Group Ltd. is a computer software technology and consulting company serving the oil and gas industry. CMG is the leading supplier of advanced processes reservoir modelling software in the world with a blue chip client base of international oil companies and technology centers in approximately 50 countries. Its web site is here Computer Modelling. See my spreadsheet at cmg.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.
When I look at insider trading I find some $11M of net insider selling. There is too small amount of insider buying to mention. Although insiders do own stock in this company in the millions of dollars, they do not own a substantial amount of outstanding shares. The CEO has sold off $2.3M in shares, but he still owns some $8M in shares. A number of officers have sold off shares to the tune of $7.3M, but it seems they are mostly selling off stock options. I consider all this action to be neutral.
It is a smart move for insiders of small fast growing companies to sell their shares in the company they work for and diversify their stock holdings. Also, except for the CFO, all other insiders generally have more shares than stock options. I glad to see a lot of insiders holding sizable amounts of this stock. This is positive. Also, the company has just raised the dividends by 5% and given a special dividend in June of this year. This is also positive. The recent stock split is also positive. You often get an uptick in the stock price with a split and this is what happened.
Just under 60% of the shares are held by 33 institutions. There has been some buying and selling over the past 3 months, but there is a net increase of 1.8M shares held by institutions over the past 3 months.
When I look at 5 year median Price/Earnings Ratios, I get a low of 11.56 and a high of 20.34. The current P/E of 24.63 is on the relatively high side. However, the P/E ratios have been increasing over the past 10 years and a P/E of 24.63 is not particularly high for a fast growing tech company.
I get a 10 year median Price/Book Value ratio of 4.85. The current one of 13.54 is a lot higher. This ratio has also been growing of late. However, on an absolute basis, a P/B Ratio of 13.54 is high. I get a Graham Price of $3.45 and a current stock price of $13.30. The current price is 285% higher than the Graham Price. However, the low and high difference between the Graham Price and Stock price last year ran from 156% to 305%. As you can see, the stock price has been moving up quite quickly on this stock.
I get a current dividend yield of 3.16% and a 5 year median dividend yield of 4.18%. By this this standard the current stock price is high also. There is not any good news on current stock price looking at the Price/Sales ratio also. The 5 year P/S Ratio is 4.58 and the current one is 8.79. On this ratio, lower is better.
There are few analysts following this stock, but the recommendations I see are Strong Buy, Buy, Hold and Underperform. The consensus would be a Buy. There is a big discrepancy in earnings estimates from $.54 to $.80 to $1.10. The P/E of each is 24.6, 16.6 to 12.09, respectively. The thing is that if you want to buy this stock, the price may never get any better as it seems to be a fast moving tech stock. But, it is a risky stock.
See a Can Tech Letter interview on this company. Also, there is another blog entry on this stock at All Time High Stocks.
I have done very well by this stock. But, as I said yesterday, I will hold on to what I have at the moment, but I will probably sell stock equal to my original purchase price at some point in the future.
Computer Modelling Group Ltd. is a computer software technology and consulting company serving the oil and gas industry. CMG is the leading supplier of advanced processes reservoir modelling software in the world with a blue chip client base of international oil companies and technology centers in approximately 50 countries. Its web site is here Computer Modelling. See my spreadsheet at cmg.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.
Friday, June 24, 2011
Computer Modelling Group Ltd
I own this stock (TSX-CMG, OTH-CMDXF-). I bought this stock in November 2008 and some more in June 2009. This is a small dividend paying technology company. I have made a total return of 48% per year on this stock. About 6% per year would be attributable to dividends. It was not a large investment.
This is a high risk investment. They sell reservoir modelling software. Things can change rapidly in the software industry, so if you invest in this company, you need to keep an eye on it. I happen to like tech companies, but I also understand the risks. Also, just because past returns have been very high, does not mean that future ones will be also.
The growth rates for this company in Revenue, Earnings, Dividends, Total Return, Cash Flow and Book Value are very high. The lowest is in Book Value and the 5 and 10 year growth is 16% and 21% per year, respectively. Next in growth comes Revenue per share at 22% and 18% per year, respectively. Most of the rest is 30% or above growth per year.
This is a fast growing company. They are also paying out most of what they get in earnings and cash flow in dividends. The Payout Ratio re earnings has a 5 year median rate of 93% and the Payout re Cash Flow has a 5 year median of 79%. For the financial year ending in March 2011, the respectively Payout Ratios were 101% and 85.8%. The dividend growth rates over the past 5 and 6 years are 50% and 46% per year. They also often give out special dividends. The dividend yield is currently at 3.23%. The company has a 5 year median dividend yield of 4.18%.
The other thing of note is the Debt Ratios and they are very good. The Liquidity Ratio is 2.47 and the Asset/Liability Ratio is 2.56. The Leverage Ratio is 1.64 and the Debt/Equity Ratio is 0.64. They are debt free. The stock has recently split 2:1. This is the second stock split. The other stock split was in 2008.
I have done very well by this stock. I will hold on to what I have at the moment, but I will probably sell stock equal to my original purchase price at some point in the future.
Computer Modelling Group Ltd. is a computer software technology and consulting company serving the oil and gas industry. CMG is the leading supplier of advanced processes reservoir modelling software in the world with a blue chip client base of international oil companies and technology centers in approximately 50 countries. Its web site is here Computer Modelling. See my spreadsheet at cmg.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.
This is a high risk investment. They sell reservoir modelling software. Things can change rapidly in the software industry, so if you invest in this company, you need to keep an eye on it. I happen to like tech companies, but I also understand the risks. Also, just because past returns have been very high, does not mean that future ones will be also.
The growth rates for this company in Revenue, Earnings, Dividends, Total Return, Cash Flow and Book Value are very high. The lowest is in Book Value and the 5 and 10 year growth is 16% and 21% per year, respectively. Next in growth comes Revenue per share at 22% and 18% per year, respectively. Most of the rest is 30% or above growth per year.
This is a fast growing company. They are also paying out most of what they get in earnings and cash flow in dividends. The Payout Ratio re earnings has a 5 year median rate of 93% and the Payout re Cash Flow has a 5 year median of 79%. For the financial year ending in March 2011, the respectively Payout Ratios were 101% and 85.8%. The dividend growth rates over the past 5 and 6 years are 50% and 46% per year. They also often give out special dividends. The dividend yield is currently at 3.23%. The company has a 5 year median dividend yield of 4.18%.
The other thing of note is the Debt Ratios and they are very good. The Liquidity Ratio is 2.47 and the Asset/Liability Ratio is 2.56. The Leverage Ratio is 1.64 and the Debt/Equity Ratio is 0.64. They are debt free. The stock has recently split 2:1. This is the second stock split. The other stock split was in 2008.
I have done very well by this stock. I will hold on to what I have at the moment, but I will probably sell stock equal to my original purchase price at some point in the future.
Computer Modelling Group Ltd. is a computer software technology and consulting company serving the oil and gas industry. CMG is the leading supplier of advanced processes reservoir modelling software in the world with a blue chip client base of international oil companies and technology centers in approximately 50 countries. Its web site is here Computer Modelling. See my spreadsheet at cmg.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.
Thursday, June 23, 2011
Thomson Reuters Corp 2
I own this stock (TSX-TRI, NYSE-TRI). I held this stock in my RRSP account between 1998 and 2000. In this account, I made a total return of 14.3% per year on Thomson. For this period, my dividend portion of the total return was probably 2.2%. For my Trading account, I bought this stock in 1985 and I still have this stock in this account. To date, I have made total returns of 7.45% per year for this account on Thomson. For this stock, total return of both accounts is 8.3% per year.
When I look at insider trading, I find $4M net insider selling. There is $4.4M of insider selling and a minimal amount of insider buying. All the selling seems to be of options. None of this is significant. Of course one positive is that this company has raised their dividend by 6.9% in US$.
10 Institutions own about 35% of the shares of this company on the TSX. Over the past 3 months they have increased their investment in this company by 2.3%. No institution has sold any of their shares over the past 3 months. This is a positive. On the NYSE, 399 companies own 40% of the outstanding shares. They have increased their position only marginally over the past 3 months. There were no sales. So, this is also a positive.
When I look at the 5 year median Price/Earnings Ratio I get a low of 22.2 and a high of 30.7. The current P/E ratio based on earnings estimates is 17.8. This low P/E ratio points to a very good relative price. Also, on an absolute basis, a P/E of 17 is a reasonable one. (Note I am looking at CDN$ values, but they are not significantly different than US$ values, so switching currencies will not make any difference here.)
I get a 10 year Price/Book Value Ratio of 2.14 and a current one of 1.59. This current one is some 74% of the long term ratio. If the current ratio is 80% or lower compared to the 10 year ratio, it means that the current stock price is relatively good. The current dividend yield is 3.34% and the 5 year median is 3.18%. This also points to a good relative current stock price.
I get a Graham Price of $32.37. This is some 12% below the current stock price of $36.26. The median difference between the Graham Price and the low stock price over the past 10 years is the low stock price has been some 40.6% above the Graham Price. This difference points to a relatively good stock price. In fact, all my indicators point to a relatively good stock price. (See my site for information on calculating Graham Price.)
When I looked at analysts’ recommendations, I find lots of Strong Buy, lots of Hold, some Buy and at least one Sell. There are no others. The consensus would be a Buy. However, the consensus recommendation is quite close to a Hold. One Hold recommendation complained the long time it is taking for the integration of Thomson and Reuters. He feels that although cash flow should increase this year, there will still be a profit headwind. Hold recommendations come with a 12 month stock price of $40.
Some buy or strong buy recommendations come with a 12 month stock price of $45 to $50. A buy recommendation report says that Thomson Reuters have a well laid out plan to become more efficient. A Strong Buy recommendation said that it is a subscription based business with a high renewal rate of 86%.
Most negative comments talk about the stock moving sideways for some time now. Some do not see that this will change anytime soon. One feels that that it is not a good current buy as the stock price just moved below its 50 day and 200 day moving averages. Another thinks an investment in this company is dead money.
I hold this stock in my Trading Account. To sell a stock from my Trading Account, I look at the company’s long term viability. If it has long term viability, I will probably not sell. I also sell a stock if I like another stock better. However, to sell from my Trading account, I would have to believe that not only will I make a better return on the replacement stock, but also gain back the tax I have to pay to sell a stock.
For this stock, I certainly think it has long term viability. I think that on a long term basis still, it will produce a decent return for me. Therefore, I am not selling it. Although, I am not sure that I would buy this company today. It is not the same company that I bought in 1985. Although, I must admit that companies have to change over time to survive.
I have always been more careful in my investment in my Trading Account, generally looking for good long term stock. I do not sell from this account very easily either. The problem with a trading account is there are tax consequences. There is no such consequences for an RRSP account, so it is easier to make that sell transaction. It is also easier to make a buy transaction, because if you are wrong about a stock, you can sell with no tax consequences. It is easier to buy stocks for just capital gain for an RRSP account, because selling does not have tax consequences.
I have kept complete records in Quicken since 1 January 1994. According to Quicken, the total return on my trading account since then is 13.04% per year. The Total Return on my RRSP account since then is 9.87% per year. Another time period doesn’t help. If I do total return on my Trading Account to the end of 1999, my total return is 24.21% per year. For my RRSP account, it is 16.4% per year. So do I pick better stocks for my trading account? Or is it my reluctance to sell that makes a difference.
Thomson Reuters Corp is the leading source of intelligent information for businesses and professionals. They combine industry expertise with innovative technology to deliver critical information to leading decision-makers. Through more than 50,000 people in over 100 countries, they deliver this must-have insight to the financial, legal, tax and accounting, healthcare and science and media markets, powered by the world’s most trusted news organization. They derive the majority of our revenues from selling electronic content and services to professionals, primarily on a subscription basis. Its web site is here Thomson Reuters. See my spreadsheet at tri.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.
When I look at insider trading, I find $4M net insider selling. There is $4.4M of insider selling and a minimal amount of insider buying. All the selling seems to be of options. None of this is significant. Of course one positive is that this company has raised their dividend by 6.9% in US$.
10 Institutions own about 35% of the shares of this company on the TSX. Over the past 3 months they have increased their investment in this company by 2.3%. No institution has sold any of their shares over the past 3 months. This is a positive. On the NYSE, 399 companies own 40% of the outstanding shares. They have increased their position only marginally over the past 3 months. There were no sales. So, this is also a positive.
When I look at the 5 year median Price/Earnings Ratio I get a low of 22.2 and a high of 30.7. The current P/E ratio based on earnings estimates is 17.8. This low P/E ratio points to a very good relative price. Also, on an absolute basis, a P/E of 17 is a reasonable one. (Note I am looking at CDN$ values, but they are not significantly different than US$ values, so switching currencies will not make any difference here.)
I get a 10 year Price/Book Value Ratio of 2.14 and a current one of 1.59. This current one is some 74% of the long term ratio. If the current ratio is 80% or lower compared to the 10 year ratio, it means that the current stock price is relatively good. The current dividend yield is 3.34% and the 5 year median is 3.18%. This also points to a good relative current stock price.
I get a Graham Price of $32.37. This is some 12% below the current stock price of $36.26. The median difference between the Graham Price and the low stock price over the past 10 years is the low stock price has been some 40.6% above the Graham Price. This difference points to a relatively good stock price. In fact, all my indicators point to a relatively good stock price. (See my site for information on calculating Graham Price.)
When I looked at analysts’ recommendations, I find lots of Strong Buy, lots of Hold, some Buy and at least one Sell. There are no others. The consensus would be a Buy. However, the consensus recommendation is quite close to a Hold. One Hold recommendation complained the long time it is taking for the integration of Thomson and Reuters. He feels that although cash flow should increase this year, there will still be a profit headwind. Hold recommendations come with a 12 month stock price of $40.
Some buy or strong buy recommendations come with a 12 month stock price of $45 to $50. A buy recommendation report says that Thomson Reuters have a well laid out plan to become more efficient. A Strong Buy recommendation said that it is a subscription based business with a high renewal rate of 86%.
Most negative comments talk about the stock moving sideways for some time now. Some do not see that this will change anytime soon. One feels that that it is not a good current buy as the stock price just moved below its 50 day and 200 day moving averages. Another thinks an investment in this company is dead money.
I hold this stock in my Trading Account. To sell a stock from my Trading Account, I look at the company’s long term viability. If it has long term viability, I will probably not sell. I also sell a stock if I like another stock better. However, to sell from my Trading account, I would have to believe that not only will I make a better return on the replacement stock, but also gain back the tax I have to pay to sell a stock.
For this stock, I certainly think it has long term viability. I think that on a long term basis still, it will produce a decent return for me. Therefore, I am not selling it. Although, I am not sure that I would buy this company today. It is not the same company that I bought in 1985. Although, I must admit that companies have to change over time to survive.
I have always been more careful in my investment in my Trading Account, generally looking for good long term stock. I do not sell from this account very easily either. The problem with a trading account is there are tax consequences. There is no such consequences for an RRSP account, so it is easier to make that sell transaction. It is also easier to make a buy transaction, because if you are wrong about a stock, you can sell with no tax consequences. It is easier to buy stocks for just capital gain for an RRSP account, because selling does not have tax consequences.
I have kept complete records in Quicken since 1 January 1994. According to Quicken, the total return on my trading account since then is 13.04% per year. The Total Return on my RRSP account since then is 9.87% per year. Another time period doesn’t help. If I do total return on my Trading Account to the end of 1999, my total return is 24.21% per year. For my RRSP account, it is 16.4% per year. So do I pick better stocks for my trading account? Or is it my reluctance to sell that makes a difference.
Thomson Reuters Corp is the leading source of intelligent information for businesses and professionals. They combine industry expertise with innovative technology to deliver critical information to leading decision-makers. Through more than 50,000 people in over 100 countries, they deliver this must-have insight to the financial, legal, tax and accounting, healthcare and science and media markets, powered by the world’s most trusted news organization. They derive the majority of our revenues from selling electronic content and services to professionals, primarily on a subscription basis. Its web site is here Thomson Reuters. See my spreadsheet at tri.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.
Wednesday, June 22, 2011
Thomson Reuters Corp
I own this stock (TSX-TRI, NYSE-TRI). I held this stock in my RRSP account between 1998 and 2000. In this account, I made a total return of 14.3% per year. For this period, my dividend portion of the total return was probably 2.2%. For my Trading account, I bought this stock in 1985 and I still have this stock in this account. To date, I have made total returns of 7.45% per year. Approximately 3.5% of this total return is in dividends.
I have often held the same stock in the trading account and RRSP accounts. When I go looking for something to buy, I look at what I already have to see if any would be a suitable buy. If I want to sell a stock or some of my shares in a company, I would first sell off stock in my RRSP account before my trading account.
This stock reports in US$. Needless to say, the stock has done better in US$ than in CDN$, especially of late. In respect to dividends, it is no exception. Dividends have only gone up in US$, which is the currency dividends are proclaimed in. In CDN$ terms, dividends have not always gone up. Also, the 5 and 10 year growth in dividends are a lot less in CDN$ then in US$.
For example, between 2009 and 2010, dividends increased in US$ by 3.6% and decreased in CDN$ by 6.2%. My spreadsheet shows that actual dividends I received per shares. (This is different from most CDN$ values on my spreadsheet, where I have used the year end currency exchange rate.)
The growth in Dividends in CND$ over the past 5 and 10 years is 4.3% and 1.4% per year. The growth in Dividends in US$ over the past 5 and 10 years is 8% and 5.4% per year. However, this is quite common for Canadian stocks that reports in US$ over the past while because our Canadian currency has basically been increasing against the US currency since 2003. This company reports in US$; as they do most of their business in US$ currency.
As with most American stock, this stock got slammed with the last recession and then got slammed with the current one and has not really recovered. In US$ terms, over the past 5 and 10 years, this stock has had a total return of 4.4% and 2.9%. In CDN$, this stock has basically broken even. Well, it could be worse. A lot of stocks have declined in total returns over the past 5 and 10 years.
The Dividend Payout Ratio for earnings has been over 100% over the past two years. It is expected to be below 60% and therefore much more reasonable this year. The Dividend Payout Ratio for Cash Flow has remained below 40% and therefore not a concern.
There has been a bit of growth in Revenue in US$ terms over the past 5 and 10 years, but not in CDN$ terms. There has been a bit of growth also in Book Value over the past 5 and 10 years. There has basically been no growth in Earnings or Cash Flow over the past 5 and 10 years, no matter what currency you look at. On the other hand, Return on Equity has not been bad, especially of late. The 5 year median ROE is 10.7% and the ROE for the financial year ending December 31, 2011 was 19.3%. The last two year’s ROE was 7% and 4.5%, respectively.
The debt ratios are fine, except for the Liquidity Ratio. The Liquidity Ratio is currently at 0.78. This means that the current assets cannot cover the current liabilities. Adding in Cash Flow helps a bit. The other ratios are fine. The Asset/Liability Ratio is currently at 2.28 and this is very good. The Leverage Ratio and the Debt/Equity Ratio are both fine. They are currently at 1.81 and 0.79 respectively.
I expect that this stock will go back to a total return of 8% per year. For this type of company, this is what would be expected for the long term. Currently, I will be keeping my shares, but they are only just over 1% of my portfolio.
Thomson Reuters Corp is the leading source of intelligent information for businesses and professionals. They combine industry expertise with innovative technology to deliver critical information to leading decision-makers. Through more than 50,000 people in over 100 countries, they deliver this must-have insight to the financial, legal, tax and accounting, healthcare and science and media markets, powered by the world’s most trusted news organization. They derive the majority of our revenues from selling electronic content and services to professionals, primarily on a subscription basis. Its web site is here Thomson Reuters. See my spreadsheet at tri.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.
I have often held the same stock in the trading account and RRSP accounts. When I go looking for something to buy, I look at what I already have to see if any would be a suitable buy. If I want to sell a stock or some of my shares in a company, I would first sell off stock in my RRSP account before my trading account.
This stock reports in US$. Needless to say, the stock has done better in US$ than in CDN$, especially of late. In respect to dividends, it is no exception. Dividends have only gone up in US$, which is the currency dividends are proclaimed in. In CDN$ terms, dividends have not always gone up. Also, the 5 and 10 year growth in dividends are a lot less in CDN$ then in US$.
For example, between 2009 and 2010, dividends increased in US$ by 3.6% and decreased in CDN$ by 6.2%. My spreadsheet shows that actual dividends I received per shares. (This is different from most CDN$ values on my spreadsheet, where I have used the year end currency exchange rate.)
The growth in Dividends in CND$ over the past 5 and 10 years is 4.3% and 1.4% per year. The growth in Dividends in US$ over the past 5 and 10 years is 8% and 5.4% per year. However, this is quite common for Canadian stocks that reports in US$ over the past while because our Canadian currency has basically been increasing against the US currency since 2003. This company reports in US$; as they do most of their business in US$ currency.
As with most American stock, this stock got slammed with the last recession and then got slammed with the current one and has not really recovered. In US$ terms, over the past 5 and 10 years, this stock has had a total return of 4.4% and 2.9%. In CDN$, this stock has basically broken even. Well, it could be worse. A lot of stocks have declined in total returns over the past 5 and 10 years.
The Dividend Payout Ratio for earnings has been over 100% over the past two years. It is expected to be below 60% and therefore much more reasonable this year. The Dividend Payout Ratio for Cash Flow has remained below 40% and therefore not a concern.
There has been a bit of growth in Revenue in US$ terms over the past 5 and 10 years, but not in CDN$ terms. There has been a bit of growth also in Book Value over the past 5 and 10 years. There has basically been no growth in Earnings or Cash Flow over the past 5 and 10 years, no matter what currency you look at. On the other hand, Return on Equity has not been bad, especially of late. The 5 year median ROE is 10.7% and the ROE for the financial year ending December 31, 2011 was 19.3%. The last two year’s ROE was 7% and 4.5%, respectively.
The debt ratios are fine, except for the Liquidity Ratio. The Liquidity Ratio is currently at 0.78. This means that the current assets cannot cover the current liabilities. Adding in Cash Flow helps a bit. The other ratios are fine. The Asset/Liability Ratio is currently at 2.28 and this is very good. The Leverage Ratio and the Debt/Equity Ratio are both fine. They are currently at 1.81 and 0.79 respectively.
I expect that this stock will go back to a total return of 8% per year. For this type of company, this is what would be expected for the long term. Currently, I will be keeping my shares, but they are only just over 1% of my portfolio.
Thomson Reuters Corp is the leading source of intelligent information for businesses and professionals. They combine industry expertise with innovative technology to deliver critical information to leading decision-makers. Through more than 50,000 people in over 100 countries, they deliver this must-have insight to the financial, legal, tax and accounting, healthcare and science and media markets, powered by the world’s most trusted news organization. They derive the majority of our revenues from selling electronic content and services to professionals, primarily on a subscription basis. Its web site is here Thomson Reuters. See my spreadsheet at tri.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.
Tuesday, June 21, 2011
Bombardier Inc 2
I own this stock (TSX-BBD.B). I first bought this stock in November 1987 and then bought some more in April 1988. I have made a total return on this stock of 14.6% per year. About 3.6% per year of this total return would be dividends. We have been though a lot together, me and this stock. Bombardier had a massive run up and crashed in the last recession. I really cannot complain too much as my initial investment was small.
There is some insider selling, but this is minimal. There is no insider buying. However, the Bombardier family controls this company though multiple voting shares that it holds. It has 64% of the votes. A lot of stock options are outstanding on this company. Both the CEO and CFO have far more stock options than shares.
Only just over 5% of the company is owned by some 23 Institutions. This still can come to a lot invested as this company is worth some $12B. Institutions have increased their shares in this company by around 2.7M shares within the last 3 months.
The 5 year median Price/Earnings Ratio have a low of 10.3 and a high of 14.5. So the current one 14.3 is close to the high median value. I am not going to use the Price/Book Value as the Book Value has dropped significantly under the new IFRS accounting rules and the comparison of old and new P/B Ratios would not mean anything.
However, I can use the Price/Sales (or Revenue) Ratios. The 10 year P/S ratio is 0.63 and the current one is some 54% more at 0.67. This higher P/S ratio points to a rather high current stock price. However, a P/S Ratio under $1.00 is considered to be a good ratio.
The median yield over the past 3 years is 1.92% and the current one of 1.52% shows a rather high current stock price. However, the dividend has not been raised since it was reinstated in 2008. I would think that the aerospace part of the business would have to improve for this to happen. This comes through also with the Graham Price. I get a current Graham Price of $3.18. However, the one at the end of Financial Year January 2011 is higher at $4.85 and might be a better one to use.
The problem with the current one is the much lower book value figures. The current price of $6.59 is some 36% above the Graham Price of $4.85. The median difference over the past 10 years is 58%. So, by this measure, the current stock price is decent. The median high difference between the Graham Price and the stock price is 110%.
When I looked at analysts’ recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus would be Strong Buy. (See my site for information on analyst ratings.) Most of the recommendations are in the Strong Buy and Buy range. There are few Holds.
A number of analysts remarked that they think that the aerospace business is picking up. Bombardier’s transportation business is currently very strong. A lot of analysts seem quite bullish on this stock. Recently, when the market has been treading down, Bombardier has been flat or up.
I will continue to hold the shares I have. I think that the Bombardier/Beaudoin family has worked very hard to revive this company. It is one good think about a family owned company. I liked this company better when I first bought it when it had three divisions, not just the current two. The third division was recreational products (which included the snowmobile). The thing with the three divisions was that it seemed there was always one division, if not two, that were making money. I do not remember a time when at least one division was not making money.
However, if I currently had none of this stock, I would probably not be reviewing this company or buying its stock. I think I would instead go for a company like Toromont (TSX-TIH) or SNC-Lavalin (TSX-SNC). A large portion of the profitability of this company relies on the aerospace division. I would never buy an Airlines company (like Air Canada or Westjet). I do not think that they are the sort of stocks to hold for the long term. So, you can imagine, I would not be crazy about a company that makes airplanes. On the other hand, I have no plans to sell this company.
Bombardier is a world-leading manufacturer of innovative transportation solutions, from commercial aircraft and business jets to rail transportation equipment, systems and services. Headquartered in Montréal, Canada, Bombardier has a presence in more than 60 countries. The Bombardier family controls 64% of the voting rights under this stock. Its web site is here Bombardier. See my spreadsheet at bbd.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.
There is some insider selling, but this is minimal. There is no insider buying. However, the Bombardier family controls this company though multiple voting shares that it holds. It has 64% of the votes. A lot of stock options are outstanding on this company. Both the CEO and CFO have far more stock options than shares.
Only just over 5% of the company is owned by some 23 Institutions. This still can come to a lot invested as this company is worth some $12B. Institutions have increased their shares in this company by around 2.7M shares within the last 3 months.
The 5 year median Price/Earnings Ratio have a low of 10.3 and a high of 14.5. So the current one 14.3 is close to the high median value. I am not going to use the Price/Book Value as the Book Value has dropped significantly under the new IFRS accounting rules and the comparison of old and new P/B Ratios would not mean anything.
However, I can use the Price/Sales (or Revenue) Ratios. The 10 year P/S ratio is 0.63 and the current one is some 54% more at 0.67. This higher P/S ratio points to a rather high current stock price. However, a P/S Ratio under $1.00 is considered to be a good ratio.
The median yield over the past 3 years is 1.92% and the current one of 1.52% shows a rather high current stock price. However, the dividend has not been raised since it was reinstated in 2008. I would think that the aerospace part of the business would have to improve for this to happen. This comes through also with the Graham Price. I get a current Graham Price of $3.18. However, the one at the end of Financial Year January 2011 is higher at $4.85 and might be a better one to use.
The problem with the current one is the much lower book value figures. The current price of $6.59 is some 36% above the Graham Price of $4.85. The median difference over the past 10 years is 58%. So, by this measure, the current stock price is decent. The median high difference between the Graham Price and the stock price is 110%.
When I looked at analysts’ recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus would be Strong Buy. (See my site for information on analyst ratings.) Most of the recommendations are in the Strong Buy and Buy range. There are few Holds.
A number of analysts remarked that they think that the aerospace business is picking up. Bombardier’s transportation business is currently very strong. A lot of analysts seem quite bullish on this stock. Recently, when the market has been treading down, Bombardier has been flat or up.
I will continue to hold the shares I have. I think that the Bombardier/Beaudoin family has worked very hard to revive this company. It is one good think about a family owned company. I liked this company better when I first bought it when it had three divisions, not just the current two. The third division was recreational products (which included the snowmobile). The thing with the three divisions was that it seemed there was always one division, if not two, that were making money. I do not remember a time when at least one division was not making money.
However, if I currently had none of this stock, I would probably not be reviewing this company or buying its stock. I think I would instead go for a company like Toromont (TSX-TIH) or SNC-Lavalin (TSX-SNC). A large portion of the profitability of this company relies on the aerospace division. I would never buy an Airlines company (like Air Canada or Westjet). I do not think that they are the sort of stocks to hold for the long term. So, you can imagine, I would not be crazy about a company that makes airplanes. On the other hand, I have no plans to sell this company.
Bombardier is a world-leading manufacturer of innovative transportation solutions, from commercial aircraft and business jets to rail transportation equipment, systems and services. Headquartered in Montréal, Canada, Bombardier has a presence in more than 60 countries. The Bombardier family controls 64% of the voting rights under this stock. Its web site is here Bombardier. See my spreadsheet at bbd.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.
Monday, June 20, 2011
Bombardier Inc
I own this stock (TSX-BBD.B). I first bought this stock in November 1987 and then bought some more in April 1988. I have made a total return on this stock of 14.6% per year. About 3.6% per year of this total return would be dividends. We have been though a lot together, me and this stock. Bombardier had a massive run up and crashed in the last recession. This stock has not really recovered.
It seemed to hit bottom in 2004 and 2005 and was steadily recovering until it was hit by the recent recession. Dividends were cut in half in 2003 and then stopped completely in 2005. The company reinstated dividends in 2008. This company had in the past increased its dividends regularly at very good rates prior to 2003. They have yet to raise the dividend rates since they were reinstated in 2008. This is because earnings and cash flow have not recovered sufficiently.
Generally speaking, the growth rates on this stock have been better over the past 5 years than over the past 10 years. For example, the growth in earnings over the past 5 and 10 years, in US$, is 26% per year and 0% per year, respectively. In CDN$, the growth is 23% per year and negative 4.8% per year, respectively. For cash flow, the growth in CDN$ over the last 5 and 10 years is 10% per year and negative 8% per year, respectively.
Revenue growth is not great. In CDN$ it has gone nowhere over the past 5 and 10 years. It does not matter if you look at just Revenue or Revenue per share. In US$, the growth in Revenue per share over the past 5 and 10 years is 3.7% per year and 5% per year, respectively. The Revenue estimates show that revenue is not expected to increase again until the Financial Year ending in January 2013.
None of the debt ratios are particularly great. The current Liquidity Ratio is 1.12 with the 5 year median ratio being better at 1.33. The current Asset/Liability Ratio is 1.08 with the 5 year median ratio at 1.18. This company has changed over to the IFRS accounting rules for the first quarterly report of 2012 dated March 30, 2011. (The Financial year for this company ends at 31st of January of each year.)
The main problem with the change to IFRS is that book value on this stock has dropped some 60%. However, the net income hasn’t changed much. For the year ending in January 2011, the Return on Equity is 17.7% and this is quite good. However, with the lowing of the Book Value for April 2011and little change in the net income over the 12 months ending in April 2011, the ROE is now up 156% to 45%. There are often anomalies when accounting rules are changed. It is hard to know how this will play out.
The financial statements for April 2011 show what the Book Value would be if it had been based on IFRS over the past 3 years. In this case, the Book Value would have increased by 15% from January 2011 to April 2011. The other thing that has happened with the lowing of the Book Value is that the Leverage Ratio has gone from 5.38 to 14.33 and the Debt/Equity Ratio has gone from 4.38 to 14.33.
I will continue to hold my shares in Bombardier Inc. Because I bought this stock so long ago, my actual cost is just $.60 per share. My ACB is a bit higher at $2.47 because I claimed the Capital Gain in 1994.
Bombardier is a world-leading manufacturer of innovative transportation solutions, from commercial aircraft and business jets to rail transportation equipment, systems and services. Headquartered in Montréal, Canada, Bombardier has a presence in more than 60 countries. The Bombardier family controls 54% of the voting rights under this stock. Its web site is here Bombardier. See my spreadsheet at bbd.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
It seemed to hit bottom in 2004 and 2005 and was steadily recovering until it was hit by the recent recession. Dividends were cut in half in 2003 and then stopped completely in 2005. The company reinstated dividends in 2008. This company had in the past increased its dividends regularly at very good rates prior to 2003. They have yet to raise the dividend rates since they were reinstated in 2008. This is because earnings and cash flow have not recovered sufficiently.
Generally speaking, the growth rates on this stock have been better over the past 5 years than over the past 10 years. For example, the growth in earnings over the past 5 and 10 years, in US$, is 26% per year and 0% per year, respectively. In CDN$, the growth is 23% per year and negative 4.8% per year, respectively. For cash flow, the growth in CDN$ over the last 5 and 10 years is 10% per year and negative 8% per year, respectively.
Revenue growth is not great. In CDN$ it has gone nowhere over the past 5 and 10 years. It does not matter if you look at just Revenue or Revenue per share. In US$, the growth in Revenue per share over the past 5 and 10 years is 3.7% per year and 5% per year, respectively. The Revenue estimates show that revenue is not expected to increase again until the Financial Year ending in January 2013.
None of the debt ratios are particularly great. The current Liquidity Ratio is 1.12 with the 5 year median ratio being better at 1.33. The current Asset/Liability Ratio is 1.08 with the 5 year median ratio at 1.18. This company has changed over to the IFRS accounting rules for the first quarterly report of 2012 dated March 30, 2011. (The Financial year for this company ends at 31st of January of each year.)
The main problem with the change to IFRS is that book value on this stock has dropped some 60%. However, the net income hasn’t changed much. For the year ending in January 2011, the Return on Equity is 17.7% and this is quite good. However, with the lowing of the Book Value for April 2011and little change in the net income over the 12 months ending in April 2011, the ROE is now up 156% to 45%. There are often anomalies when accounting rules are changed. It is hard to know how this will play out.
The financial statements for April 2011 show what the Book Value would be if it had been based on IFRS over the past 3 years. In this case, the Book Value would have increased by 15% from January 2011 to April 2011. The other thing that has happened with the lowing of the Book Value is that the Leverage Ratio has gone from 5.38 to 14.33 and the Debt/Equity Ratio has gone from 4.38 to 14.33.
I will continue to hold my shares in Bombardier Inc. Because I bought this stock so long ago, my actual cost is just $.60 per share. My ACB is a bit higher at $2.47 because I claimed the Capital Gain in 1994.
Bombardier is a world-leading manufacturer of innovative transportation solutions, from commercial aircraft and business jets to rail transportation equipment, systems and services. Headquartered in Montréal, Canada, Bombardier has a presence in more than 60 countries. The Bombardier family controls 54% of the voting rights under this stock. Its web site is here Bombardier. See my spreadsheet at bbd.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.
Friday, June 17, 2011
Canadian Tire Corp 2
I own this stock (TSX-CTC.A). I first bought this stock in 2000. I bought more in 2009 and 2010. I have made a return of 11.2% per year on this stock. The dividend portion of this return would be around 1.5% per year. Realistic long term return on a retail stock is 8 to 9%, with dividends at 1 to 1.5%. Yields are never going to get very high on this stock. In the past, dividend yield on this stock has basically ranged from .85% to 2.50%. They have mostly been around 1% to 1.5%.
When I look at the insider trading report, I find that there is some $16.7M of insider selling and some $3.4M of insider buying. It all seems to be done by a couple of officers who own a substantial amount of Class A shares. This buying and selling represents a very small portion of what they hold (i.e. way under 1%). I do not know what to make of this, but it tells us nothing.
Both the CEO and CFO own more options that shares. This is also true of a lot, but not all, of the officers of this company. It is also a positive that the company has raised their dividend by 31%. Management obviously has faith in the future earnings of this company.
Almost 7% of the shares are owned by 8 institutions. There has been substantial amount of institutional buying of this stock over the last 3 months. They have increased their investment in this company by over 290% and a net of $11M. It is a positive that institutional investment in this stock has increased over the past 3 month. It is also a positive that the company has raised their dividend by 31%.
The 5 year median Price/Earnings Ratios have a low of 9.4 and 15.7. The current one of 11.64 is about average. I get a 10 year Price/Book Value Ratio of 1.35 and a current P/B Ratio 1.27. To show a great stock price, you would want the current ratio to be 80% of the long term ratio. However, the current ratio is lower and is some 93% of the long term ratio. This would show a reasonable current price.
I get a Graham Price of $77.02 and a current stock price of $62.39. The different is some 19%. Over the last 10 years the median difference between the Graham Price and the stock price has been 19%. So this also shows a current reasonable price.
The 5 year median dividend yield is 1.39% and the current dividend yield is 1.76%. This shows a very good current stock price.
When I look at analysts’ recommendations, I find Strong Buy, Buy, Hold and Underperform. The consensus recommendations would be Buy. However, I should point out that there are a lot of Hold recommendations. Basically, a number of analysts do not expect the stock price to grow much further within the next 12 months. Hold recommendations come with stock price of around $66.00. Some analysts with a hold felt that the current price is too high and a better purchase price would be high $50s.
A number of analysts mentioned the purchase of Forzani and feel this is good. This company is going into selling Major Appliances and there is some concern about this. Analyst also worry this might not work out because Major Appliance selling is a crowded market. Another thing is American stores like Target coming to Canadian. Another analyst mentioned that the stock has basically gone sideways since mid-2009.
This stock has recently been discussed in the Cdn Money Forum. There is a discussion on the company going into selling large appliances at Dominion Lending. There was an article on how the retail stock rose after Cdn Tire bought Forzani by the Executive Investment site.
There is talk that this company will have head winds going forward. Others feel that purchasing this stock is a way to participate in the economic recovery in retail. For me, I am pleased with the overall performance of this stock. The dividend yield is low, but the increases are decent, although they are erratic. The company will only increase dividends when they feel they can afford to.
Canadian Tire Corp engages in retail sales, financial services and petroleum sales. They own Canadian Tire Store, Gas Outlets, Parts Source Stores and Mark's Work Warehouse. The Canadian Tire stores offer a unique range of automotive, sports and leisure and home products. The company is controlled by the Billes family who own most of the voting shares. Its web site is here Canadian Tire. See my spreadsheet at ctc.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.
When I look at the insider trading report, I find that there is some $16.7M of insider selling and some $3.4M of insider buying. It all seems to be done by a couple of officers who own a substantial amount of Class A shares. This buying and selling represents a very small portion of what they hold (i.e. way under 1%). I do not know what to make of this, but it tells us nothing.
Both the CEO and CFO own more options that shares. This is also true of a lot, but not all, of the officers of this company. It is also a positive that the company has raised their dividend by 31%. Management obviously has faith in the future earnings of this company.
Almost 7% of the shares are owned by 8 institutions. There has been substantial amount of institutional buying of this stock over the last 3 months. They have increased their investment in this company by over 290% and a net of $11M. It is a positive that institutional investment in this stock has increased over the past 3 month. It is also a positive that the company has raised their dividend by 31%.
The 5 year median Price/Earnings Ratios have a low of 9.4 and 15.7. The current one of 11.64 is about average. I get a 10 year Price/Book Value Ratio of 1.35 and a current P/B Ratio 1.27. To show a great stock price, you would want the current ratio to be 80% of the long term ratio. However, the current ratio is lower and is some 93% of the long term ratio. This would show a reasonable current price.
I get a Graham Price of $77.02 and a current stock price of $62.39. The different is some 19%. Over the last 10 years the median difference between the Graham Price and the stock price has been 19%. So this also shows a current reasonable price.
The 5 year median dividend yield is 1.39% and the current dividend yield is 1.76%. This shows a very good current stock price.
When I look at analysts’ recommendations, I find Strong Buy, Buy, Hold and Underperform. The consensus recommendations would be Buy. However, I should point out that there are a lot of Hold recommendations. Basically, a number of analysts do not expect the stock price to grow much further within the next 12 months. Hold recommendations come with stock price of around $66.00. Some analysts with a hold felt that the current price is too high and a better purchase price would be high $50s.
A number of analysts mentioned the purchase of Forzani and feel this is good. This company is going into selling Major Appliances and there is some concern about this. Analyst also worry this might not work out because Major Appliance selling is a crowded market. Another thing is American stores like Target coming to Canadian. Another analyst mentioned that the stock has basically gone sideways since mid-2009.
This stock has recently been discussed in the Cdn Money Forum. There is a discussion on the company going into selling large appliances at Dominion Lending. There was an article on how the retail stock rose after Cdn Tire bought Forzani by the Executive Investment site.
There is talk that this company will have head winds going forward. Others feel that purchasing this stock is a way to participate in the economic recovery in retail. For me, I am pleased with the overall performance of this stock. The dividend yield is low, but the increases are decent, although they are erratic. The company will only increase dividends when they feel they can afford to.
Canadian Tire Corp engages in retail sales, financial services and petroleum sales. They own Canadian Tire Store, Gas Outlets, Parts Source Stores and Mark's Work Warehouse. The Canadian Tire stores offer a unique range of automotive, sports and leisure and home products. The company is controlled by the Billes family who own most of the voting shares. Its web site is here Canadian Tire. See my spreadsheet at ctc.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.
Thursday, June 16, 2011
Canadian Tire Corp
I own this stock (TSX-CTC.A). I first bought this stock in 2000. I bought more in 2009 and 2010. I have made a return of 11.2% per year on this stock. The dividend portion of this return would be around 1.5% per year.
This is a retail stock, as such the dividend is low and they only increase dividends as they can afford to. The 5 and 10 year growth in dividends is 7.7% per year. The dividends were level from 2008 to 2010 inclusive. For this year, they have raised the dividends 31%. The 5 year median dividend yield is just 1.4%. This is typical of a retail stock. For this stock I expect low dividends and a decent growth in dividends.
When looking at growth figures for this stock, generally, the 10 year figures are substantially better than the 5 year figures. This is not unexpected as we are coming out of a recession. People who bought this stock 5 years ago would have broken even. However, if you had bought this stock 10 years ago the total return would be around 10 to 11% per year. The dividend portion would be around 1.6 – 1.7%. I have made the return I did because I bought stock lower than the stock peak of 2005.
Probably the worse growth is in revenues, where the growth over the past 5 and 10 years was at 3% and 5% per year, respectively. Growth was better in earnings and book value. The 5 and 10 year growth in earnings was 7% and 11% per year, respectively. Book Value growth was 7.7% and 10% per year, respectively.
When looking at debt ratios, I find that the Liquidity Ratios and the Asset/Liability Ratios to be quite good. The current Liquidity Ratio is 1.94 and the Asset/Liability Ratio is 1.56. For this stock, these ratios are often better, but the current ones are just fine. What you want is these ratios to be 1.50 and above.
The Leverage and Debt/Equity Ratios are about average. The current Leverage Ratio is 2.78 and the current Debt/Equity Ratio is 1.78. Both these ratios are often lower, but the current ones are just fine.
The Return on Equity for 2010 was 11.2% as is the 5 year median ROE. The ROE for the 12 months ending in March 2011 is 11.5%. The 5 year median ROE ending in March 2011 is 11.2%.
I am pleased with my investment in this stock and I consider this stock a core holding.
Canadian Tire Corp engages in retail sales, financial services and petroleum sales. They own Canadian Tire Store, Gas Outlets, Parts Source Stores and Mark's Work Warehouse. The Canadian Tire stores offer a unique range of automotive, sports and leisure and home products. The company is controlled by the Billes family who own most of the voting shares. Its web site is here Canadian Tire. See my spreadsheet at ctc.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.
This is a retail stock, as such the dividend is low and they only increase dividends as they can afford to. The 5 and 10 year growth in dividends is 7.7% per year. The dividends were level from 2008 to 2010 inclusive. For this year, they have raised the dividends 31%. The 5 year median dividend yield is just 1.4%. This is typical of a retail stock. For this stock I expect low dividends and a decent growth in dividends.
When looking at growth figures for this stock, generally, the 10 year figures are substantially better than the 5 year figures. This is not unexpected as we are coming out of a recession. People who bought this stock 5 years ago would have broken even. However, if you had bought this stock 10 years ago the total return would be around 10 to 11% per year. The dividend portion would be around 1.6 – 1.7%. I have made the return I did because I bought stock lower than the stock peak of 2005.
Probably the worse growth is in revenues, where the growth over the past 5 and 10 years was at 3% and 5% per year, respectively. Growth was better in earnings and book value. The 5 and 10 year growth in earnings was 7% and 11% per year, respectively. Book Value growth was 7.7% and 10% per year, respectively.
When looking at debt ratios, I find that the Liquidity Ratios and the Asset/Liability Ratios to be quite good. The current Liquidity Ratio is 1.94 and the Asset/Liability Ratio is 1.56. For this stock, these ratios are often better, but the current ones are just fine. What you want is these ratios to be 1.50 and above.
The Leverage and Debt/Equity Ratios are about average. The current Leverage Ratio is 2.78 and the current Debt/Equity Ratio is 1.78. Both these ratios are often lower, but the current ones are just fine.
The Return on Equity for 2010 was 11.2% as is the 5 year median ROE. The ROE for the 12 months ending in March 2011 is 11.5%. The 5 year median ROE ending in March 2011 is 11.2%.
I am pleased with my investment in this stock and I consider this stock a core holding.
Canadian Tire Corp engages in retail sales, financial services and petroleum sales. They own Canadian Tire Store, Gas Outlets, Parts Source Stores and Mark's Work Warehouse. The Canadian Tire stores offer a unique range of automotive, sports and leisure and home products. The company is controlled by the Billes family who own most of the voting shares. Its web site is here Canadian Tire. See my spreadsheet at ctc.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.
Wednesday, June 15, 2011
K-Bro Linen Inc
When I reviewed this stock (TSX-KBL) in February 2011, the December 2010 annual statements had not yet been published. Also, I was asked to review this stock again. My February reviews are here and here.
The dividend yield in February was 5.5% and it is now lower at 5.3%, and stock price has gone up from $20.15 to $20.84. The Earnings Payout Ratio is still quite high at 96.5%. The Payout Ratio re cash flow is much better at 43%.
Earnings and cash flow growth are still quite good. Revenues per share and Distributable Cash growth are just ok. Book Value growth is still non-existent. The 1st quarterly EPS of $.22 did not cover the dividends paid of $.28 and so the Book Value went down. However, cash flow per share at $.57 does cover dividends, and this is probably more important. Debt ratios are still all very good and the ROE for the 12 months ending March 2011 is good at 12.7%.
When I look at insider trading, I find no insider buying and no insider selling. The CEO and one of the officers of this company each hold just over $1M of shares in the company. There are 8 institutions that own some 48% of this company. Over the past 3 months, institutions have sold some 8% of their shares. Two Institutions have sold all their shares. However, selling tells you little, because you do not know why they sold, we just know that they did.
When I look at analysts’ recommendations, I find a number of Hold recommendations and one Strong Buy. The consensus recommendation would be a Hold. (See my site for information on analyst ratings.) Although the stock price has not go up much and estimates for 2011 have been increased, analysts with Hold recommendations seem to feel stock price is too high. Hold recommendations come with a 12 month stock price of around $22.00.
In February, analysts did not seem worried about the stock price. Now analysts seem to think that the stock price is too high. I thought it was relatively too high in February and this has not changed. Although, I must admit that the reason the stock price seems relatively too high is because dividends have not been increasing and book value has been decreasing.
This company seemed to have missed the 4th quarter of 2010 earnings estimate, but hit the 1st quarterly earnings estimate right on. Analysts seemed to have changed their minds about this stock when the Annual report hit the news in Mid-March. We know that analysts get a bit twitchy when estimates are missed.
The other thing is that Unit Trust companies are expected to have dividend yields in the 4.5% to 5.5% range due to dividend decreases and or stock price increases. This could very well be the reason for the current stock price. Probably, it is only time that will tell us whether or not the current price is too high. Hind sight is everything.
K-Bro is the largest owner and operator of laundry and linen processing facilities in Canada. K-Bro provides a comprehensive range of general linen and operating room linen processing, management and distribution services to healthcare institutions, hotels and other commercial accounts. K-Bro currently has seven processing plants in six Canadian cities: Quebec City, Toronto, Edmonton, Calgary, Vancouver and Victoria. Its web site is here K-Bro. See my spreadsheet at kbl.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.
The dividend yield in February was 5.5% and it is now lower at 5.3%, and stock price has gone up from $20.15 to $20.84. The Earnings Payout Ratio is still quite high at 96.5%. The Payout Ratio re cash flow is much better at 43%.
Earnings and cash flow growth are still quite good. Revenues per share and Distributable Cash growth are just ok. Book Value growth is still non-existent. The 1st quarterly EPS of $.22 did not cover the dividends paid of $.28 and so the Book Value went down. However, cash flow per share at $.57 does cover dividends, and this is probably more important. Debt ratios are still all very good and the ROE for the 12 months ending March 2011 is good at 12.7%.
When I look at insider trading, I find no insider buying and no insider selling. The CEO and one of the officers of this company each hold just over $1M of shares in the company. There are 8 institutions that own some 48% of this company. Over the past 3 months, institutions have sold some 8% of their shares. Two Institutions have sold all their shares. However, selling tells you little, because you do not know why they sold, we just know that they did.
When I look at analysts’ recommendations, I find a number of Hold recommendations and one Strong Buy. The consensus recommendation would be a Hold. (See my site for information on analyst ratings.) Although the stock price has not go up much and estimates for 2011 have been increased, analysts with Hold recommendations seem to feel stock price is too high. Hold recommendations come with a 12 month stock price of around $22.00.
In February, analysts did not seem worried about the stock price. Now analysts seem to think that the stock price is too high. I thought it was relatively too high in February and this has not changed. Although, I must admit that the reason the stock price seems relatively too high is because dividends have not been increasing and book value has been decreasing.
This company seemed to have missed the 4th quarter of 2010 earnings estimate, but hit the 1st quarterly earnings estimate right on. Analysts seemed to have changed their minds about this stock when the Annual report hit the news in Mid-March. We know that analysts get a bit twitchy when estimates are missed.
The other thing is that Unit Trust companies are expected to have dividend yields in the 4.5% to 5.5% range due to dividend decreases and or stock price increases. This could very well be the reason for the current stock price. Probably, it is only time that will tell us whether or not the current price is too high. Hind sight is everything.
K-Bro is the largest owner and operator of laundry and linen processing facilities in Canada. K-Bro provides a comprehensive range of general linen and operating room linen processing, management and distribution services to healthcare institutions, hotels and other commercial accounts. K-Bro currently has seven processing plants in six Canadian cities: Quebec City, Toronto, Edmonton, Calgary, Vancouver and Victoria. Its web site is here K-Bro. See my spreadsheet at kbl.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.
Dividend Ninja Interview
I was interviewed by Dividend Ninja. Links are Part one and Part two.
I find his interviews an interesting idea for a blog. He also recently interviewed Derek Foster. Links are Part one and Part two.
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.
I find his interviews an interesting idea for a blog. He also recently interviewed Derek Foster. Links are Part one and Part two.
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.
Tuesday, June 14, 2011
Veresen Inc 2
I own this stock (TSX-VSN). This stock used to be called Fort Chicago (TSX-FCE.UN). It has come through the change to a corporation well. I first bought this stock in December 2008 and then bought some more in March 2009. I have made a return of 49.7% per year on this stock. Probably around 8% per year was in distributions. However, this is a pipeline utility company and what you would normally expect to earn is 8% per year, with 4% dividends. I bought this company low, so I did make good capital gains.
When I look at the insider trading report, I find that there was some $1.2M insider selling my two officers who had a lot of shares in this company. One sold about 34% of his shares and one sold 22% of his shares. The problem with insider selling, you do not know why, the officers might just have needed money. So, this basically tells us nothing.
What seems to be good is that seems to be little in the way of stock options granted to insider for this company. Another good item is that there has been some insider buying under a company’s plan. Also, some 30% of this company is owned by52 institutions. Over the past 3 months they have increased their exposure to this company by just over 8%. Please note that the above insider trading report just covers this company since January 2011, when the company converted to a corporation.
When I look at the 5 year median Price/Earnings Ratio, I find a low of 15.3 and a high of 19.9. However, the high and low P/E for 2010 ranged from 33.5 to 46.5. I find that the 10 year median P/E Ratios are only slightly higher than the 5 year median P/E Ratios. The current P/E ratio of 24.3 is at the high end of P/E ratios for this company.
I get a 10 year median Price/Book Value Ratio of 1.85. The current P/B Ratio is 2.62, which is some 41% higher than the 10 year median ratio. The thing is that the P/B Ratio has been steadily increasing because the book value has been going down.
I get a Graham Price of $8.08. The current stock price is $13.60, which is some 68% higher. The 10 year median high difference between the Graham Price and the stock price is 40%. So, by this measure, the stock price is high.
The current dividend yield is 7.35% and the 5 year median is 8.68%. This shows a relatively high stock price. The 10 year median low Dividend yield is 7.29%. This is a bit lower than the current one, but not by much.
For people that would still like to look at distributable cash, the 10 year median Price/Distributable Cash Ratio has a low of 8.90 and a high of 11.75. The current P/DC Ratio of 11.24 is towards the high end. The conclusion is, of course, that the current stock price is high by any measure I have.
When I look at analysts’ recommendations, I find Strong Buy, Hold and Sell. The consensus recommendation would be a Hold. (See my site for information on analyst ratings.) Most Hold recommendations come with a 12 months stock price slightly lower than the current stock price.
I note that a lot of analysts call this a stable stock. No one thinks that the dividend will be cut. Few think that the stock price will move up, because it is fully valued. One sell recommendation came with the fact that other pipeline companies were preferable at the present time. Better current buys mentioned were Enbridge (TSX-ENB) and TransCanada (TSX=TRP).
Currently I am holding on to the shares I have. However, I do not expect to earn much from this stock this year. I agree that it is probably fully valued. The stock market has a tendency to have shares that are over bought or oversold.
Veresen Inc. is a publicly traded dividend paying corporation based in Calgary, Alberta, that owns and operates energy infrastructure assets across North America. Veresen Inc. is engaged in three principal businesses: a pipeline transportation business comprised of interests in two pipeline systems, the Alliance Pipeline and the Alberta Ethane Gathering System; a midstream business which includes ownership interests in a world-class extraction facility near Chicago and other gas processing facilities energy infrastructure; and a power business with renewable and gas-fired facilities and development projects in Canada and the United States, and district energy systems in Ontario and Prince Edward Island. Its web site is here Veresen. See my spreadsheet at vsn.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.
When I look at the insider trading report, I find that there was some $1.2M insider selling my two officers who had a lot of shares in this company. One sold about 34% of his shares and one sold 22% of his shares. The problem with insider selling, you do not know why, the officers might just have needed money. So, this basically tells us nothing.
What seems to be good is that seems to be little in the way of stock options granted to insider for this company. Another good item is that there has been some insider buying under a company’s plan. Also, some 30% of this company is owned by52 institutions. Over the past 3 months they have increased their exposure to this company by just over 8%. Please note that the above insider trading report just covers this company since January 2011, when the company converted to a corporation.
When I look at the 5 year median Price/Earnings Ratio, I find a low of 15.3 and a high of 19.9. However, the high and low P/E for 2010 ranged from 33.5 to 46.5. I find that the 10 year median P/E Ratios are only slightly higher than the 5 year median P/E Ratios. The current P/E ratio of 24.3 is at the high end of P/E ratios for this company.
I get a 10 year median Price/Book Value Ratio of 1.85. The current P/B Ratio is 2.62, which is some 41% higher than the 10 year median ratio. The thing is that the P/B Ratio has been steadily increasing because the book value has been going down.
I get a Graham Price of $8.08. The current stock price is $13.60, which is some 68% higher. The 10 year median high difference between the Graham Price and the stock price is 40%. So, by this measure, the stock price is high.
The current dividend yield is 7.35% and the 5 year median is 8.68%. This shows a relatively high stock price. The 10 year median low Dividend yield is 7.29%. This is a bit lower than the current one, but not by much.
For people that would still like to look at distributable cash, the 10 year median Price/Distributable Cash Ratio has a low of 8.90 and a high of 11.75. The current P/DC Ratio of 11.24 is towards the high end. The conclusion is, of course, that the current stock price is high by any measure I have.
When I look at analysts’ recommendations, I find Strong Buy, Hold and Sell. The consensus recommendation would be a Hold. (See my site for information on analyst ratings.) Most Hold recommendations come with a 12 months stock price slightly lower than the current stock price.
I note that a lot of analysts call this a stable stock. No one thinks that the dividend will be cut. Few think that the stock price will move up, because it is fully valued. One sell recommendation came with the fact that other pipeline companies were preferable at the present time. Better current buys mentioned were Enbridge (TSX-ENB) and TransCanada (TSX=TRP).
Currently I am holding on to the shares I have. However, I do not expect to earn much from this stock this year. I agree that it is probably fully valued. The stock market has a tendency to have shares that are over bought or oversold.
Veresen Inc. is a publicly traded dividend paying corporation based in Calgary, Alberta, that owns and operates energy infrastructure assets across North America. Veresen Inc. is engaged in three principal businesses: a pipeline transportation business comprised of interests in two pipeline systems, the Alliance Pipeline and the Alberta Ethane Gathering System; a midstream business which includes ownership interests in a world-class extraction facility near Chicago and other gas processing facilities energy infrastructure; and a power business with renewable and gas-fired facilities and development projects in Canada and the United States, and district energy systems in Ontario and Prince Edward Island. Its web site is here Veresen. See my spreadsheet at vsn.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.
Monday, June 13, 2011
Veresen Inc
I own this stock (TSX-VSN). This stock used to be called Fort Chicago (TSX-FCE.UN). It has come through the change to a corporation well. I first bought this stock in December 2008 and then bought some more in March 2009. I have made a return of 49.7% per year on this stock. Probably around 8% per year was in distributions.
This company did not reduce their distributions or dividend payout on conversion to a corporation. Personally, I think that it would have been better if they had. The company does not seem to have any tax pool to pay taxes starting from January 2011. In fact, in the annual statement they say they will have to start to pay taxes from January 2011.
I notice that some analysts are still looking at Adjust Funds from Operations (AFFO) to judge whether dividends are affordable. However, this company is now a corporation and their payout ratios re earnings, expected to be 178% this year and re cash flow, expected to be 72% this year, are high. The payout ratio re earnings is especially high and it would appear no one expects it to be under 100% anytime soon.
This company had modestly increased the dividend payments in the past, but as the payout ratios are high, you cannot expected to have this distributions increased anytime soon. The dividend yield on this company is high at 7.35%. I know that I have made a wonderful return on this stock since I bought it, but this cannot be expected to happen in the near term. I would expect that going forward; capital gains will be modest to non-existent
The only good growth is in total return. Over the past 5 and 10 years, this has grown at the rate of 8% and 12% per year, respectively. The portion due to distributions has been at 8% and 8.5% per year, respectively. The growth in Revenue, Earnings, Distributable Cash and Book Value has not been great, especially over the past 5 years.
Revenue growth has been, over the past 5 and 10 years at the rate of negative 4.6% and 4%. Revenue per share growth has been, over the past 5 and 10 years at negative 8.4% and negative 2%. The thing is that the number of shares has been growing over the past 10 years at a median rate of 3% per year. However, there has been big recent growth, with growth in 2009 at 4% and 2010 at 14%.
Earnings have been growing over the past 5 and 10 years at the rate of negative 1.4% and 3.2% per year, respectively. Even Distributable Cash has not grown well, with growth over the past 5 and 10 years at 2.6% and 6.8%. The problem with distributable cash is that its calculation has changed over the years. Currently AFFO is being used, but this was not always the case.
The book value has not grown over the past 5 and 10 years. Instead, it has gone down by 3.7% and 2.7% per year, respectively, over the past 5 and 10 years. I should note that this is quite typical of unit trust companies. The Book Value did grow by 5.5% in 2010. Generally, corporations do grow book value, but for this company, they pay so much out in distributions, I wonder if the book value on this company will grow.
The last growth to talk about is Cash Flow. The growth over the past 5 years is not good as it 0. I have no growth figures for the last 10 years, because 10 years ago, this company did not have any cash flow that year. However, the 9 year Cash Flow growth is quite good at 12.5%.
Of the debt ratios, the worse is the Liquidity Ratio. This is the ratio for current assets and liabilities. The current ratio is 0.93. This means that the current assets cannot cover current liabilities. If you add in cash flow after dividends, the ratio is 1.17. However, if you add in Cash Flow after dividends and investment, the ratio is 0.73.
The Asset/Liability Ratio is ok. It is at 1.36. Assets can cover liabilities, but I would be happier if it was at 1.50. The Leverage Ratio and the Debt/Equity Ratio are fine at 3.88 and 2.86, respectively. These ratios are typical of a company with pipelines.
I am holding on to my shares at the present time. I will be keeping an eye on them. Tomorrow, I will look at what the analysts say about this stock and what my spreadsheet says about the current price.
Veresen Inc. is a publicly traded dividend paying corporation based in Calgary, Alberta, that owns and operates energy infrastructure assets across North America. Veresen Inc. is engaged in three principal businesses: a pipeline transportation business comprised of interests in two pipeline systems, the Alliance Pipeline and the Alberta Ethane Gathering System; a midstream business which includes ownership interests in a world-class extraction facility near Chicago and other gas processing facilities energy infrastructure; and a power business with renewable and gas-fired facilities and development projects in Canada and the United States, and district energy systems in Ontario and Prince Edward Island. Its web site is here Veresen. See my spreadsheet at vsn.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.
This company did not reduce their distributions or dividend payout on conversion to a corporation. Personally, I think that it would have been better if they had. The company does not seem to have any tax pool to pay taxes starting from January 2011. In fact, in the annual statement they say they will have to start to pay taxes from January 2011.
I notice that some analysts are still looking at Adjust Funds from Operations (AFFO) to judge whether dividends are affordable. However, this company is now a corporation and their payout ratios re earnings, expected to be 178% this year and re cash flow, expected to be 72% this year, are high. The payout ratio re earnings is especially high and it would appear no one expects it to be under 100% anytime soon.
This company had modestly increased the dividend payments in the past, but as the payout ratios are high, you cannot expected to have this distributions increased anytime soon. The dividend yield on this company is high at 7.35%. I know that I have made a wonderful return on this stock since I bought it, but this cannot be expected to happen in the near term. I would expect that going forward; capital gains will be modest to non-existent
The only good growth is in total return. Over the past 5 and 10 years, this has grown at the rate of 8% and 12% per year, respectively. The portion due to distributions has been at 8% and 8.5% per year, respectively. The growth in Revenue, Earnings, Distributable Cash and Book Value has not been great, especially over the past 5 years.
Revenue growth has been, over the past 5 and 10 years at the rate of negative 4.6% and 4%. Revenue per share growth has been, over the past 5 and 10 years at negative 8.4% and negative 2%. The thing is that the number of shares has been growing over the past 10 years at a median rate of 3% per year. However, there has been big recent growth, with growth in 2009 at 4% and 2010 at 14%.
Earnings have been growing over the past 5 and 10 years at the rate of negative 1.4% and 3.2% per year, respectively. Even Distributable Cash has not grown well, with growth over the past 5 and 10 years at 2.6% and 6.8%. The problem with distributable cash is that its calculation has changed over the years. Currently AFFO is being used, but this was not always the case.
The book value has not grown over the past 5 and 10 years. Instead, it has gone down by 3.7% and 2.7% per year, respectively, over the past 5 and 10 years. I should note that this is quite typical of unit trust companies. The Book Value did grow by 5.5% in 2010. Generally, corporations do grow book value, but for this company, they pay so much out in distributions, I wonder if the book value on this company will grow.
The last growth to talk about is Cash Flow. The growth over the past 5 years is not good as it 0. I have no growth figures for the last 10 years, because 10 years ago, this company did not have any cash flow that year. However, the 9 year Cash Flow growth is quite good at 12.5%.
Of the debt ratios, the worse is the Liquidity Ratio. This is the ratio for current assets and liabilities. The current ratio is 0.93. This means that the current assets cannot cover current liabilities. If you add in cash flow after dividends, the ratio is 1.17. However, if you add in Cash Flow after dividends and investment, the ratio is 0.73.
The Asset/Liability Ratio is ok. It is at 1.36. Assets can cover liabilities, but I would be happier if it was at 1.50. The Leverage Ratio and the Debt/Equity Ratio are fine at 3.88 and 2.86, respectively. These ratios are typical of a company with pipelines.
I am holding on to my shares at the present time. I will be keeping an eye on them. Tomorrow, I will look at what the analysts say about this stock and what my spreadsheet says about the current price.
Veresen Inc. is a publicly traded dividend paying corporation based in Calgary, Alberta, that owns and operates energy infrastructure assets across North America. Veresen Inc. is engaged in three principal businesses: a pipeline transportation business comprised of interests in two pipeline systems, the Alliance Pipeline and the Alberta Ethane Gathering System; a midstream business which includes ownership interests in a world-class extraction facility near Chicago and other gas processing facilities energy infrastructure; and a power business with renewable and gas-fired facilities and development projects in Canada and the United States, and district energy systems in Ontario and Prince Edward Island. Its web site is here Veresen. See my spreadsheet at vsn.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.
Friday, June 10, 2011
Manitoba Telecom Services Inc 2
I own this stock (TSX-MBT). I first bought this stock in 2006 after reading a report about it at TD’s Waterhouse. They gave it an action buy rating (basically their Strong Buy Rating). I bought it for my Trading Account, my Pension Account and my RRSP account. I have sold it from my Trading and Pension account in 2010. This stock has been a disappointment.
Insider Report says that there has been no insider buyer or insider selling during the past year. All insiders, including directors have more stock options than shares in this company. This company has 69 institutional owners who own some 32% of this company. Over the past 3 months there have been 2 net purchases of this stock amounting to some $25.8M.
When I look at 5 year median Price/Earnings Ratios, I get a low of 16.2 and a high of 19.5. The current P/E of 13.8 is below the low and shows a relatively good current stock price. The 5 year median Price/Book Value Ratio is 2.09 and the current P/B Ratio is 2.34. The current P/B Ratio is 12% higher than the 5 year median and therefore shows a relatively high price. The problem is that the Book Value has been decreasing over the past few years.
The current Graham Price is $27.94. This is 19.6% lower than the current stock price. The median difference is 15%, so this difference is slightly more than the median difference. The high difference is 33%, so the relative difference is currently better. Also, please note that the Graham Price has been declining. It is based on the earnings and book value and both these have been declining.
The current dividend yield is 5.1%. The 5 year median dividend yield is 6.9%. This lower current dividend yield points to a relatively high price. Please note that the dividends were recently cut. However, this is a dividend yield that this stock has not seen for some time. Even the 10 year median high is higher at 5.2%. It is only the dividend yield that shows a relatively high stock price, all other measures show mostly a reasonable stock price.
Analysts are all over the place on this stock. I find analysts’ recommendations of Strong Buy, Buy, Hold, Underperform and Sell. The consensus recommendation is a Hold. There seems to be about the same amount of Strong Buy recommendations as there are Sell recommendations. (See my site for information on analyst ratings.)
An analyst that thinks this stock is a sell feels that it is a laggard and you are better off with a stock like Bell than this one. A number of analysts with buy and hold recommendations mention the recent dividend cut and the fact that they feel this was the right move for the company. Others feel that this is quite a save stock and should be held on to.
I am not sure what I will do with my remaining stock. I will probably sell, because, if I do not have much of a stock and I am unwilling to buy more, I feel that I should sell and move on.
This company is a full-service communications company. It serves residential and business customers in Manitoba. Their Allstream division serves national business consumers. Its web site is here Manitoba Telecom. See my spreadsheet at mbt.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.
Insider Report says that there has been no insider buyer or insider selling during the past year. All insiders, including directors have more stock options than shares in this company. This company has 69 institutional owners who own some 32% of this company. Over the past 3 months there have been 2 net purchases of this stock amounting to some $25.8M.
When I look at 5 year median Price/Earnings Ratios, I get a low of 16.2 and a high of 19.5. The current P/E of 13.8 is below the low and shows a relatively good current stock price. The 5 year median Price/Book Value Ratio is 2.09 and the current P/B Ratio is 2.34. The current P/B Ratio is 12% higher than the 5 year median and therefore shows a relatively high price. The problem is that the Book Value has been decreasing over the past few years.
The current Graham Price is $27.94. This is 19.6% lower than the current stock price. The median difference is 15%, so this difference is slightly more than the median difference. The high difference is 33%, so the relative difference is currently better. Also, please note that the Graham Price has been declining. It is based on the earnings and book value and both these have been declining.
The current dividend yield is 5.1%. The 5 year median dividend yield is 6.9%. This lower current dividend yield points to a relatively high price. Please note that the dividends were recently cut. However, this is a dividend yield that this stock has not seen for some time. Even the 10 year median high is higher at 5.2%. It is only the dividend yield that shows a relatively high stock price, all other measures show mostly a reasonable stock price.
Analysts are all over the place on this stock. I find analysts’ recommendations of Strong Buy, Buy, Hold, Underperform and Sell. The consensus recommendation is a Hold. There seems to be about the same amount of Strong Buy recommendations as there are Sell recommendations. (See my site for information on analyst ratings.)
An analyst that thinks this stock is a sell feels that it is a laggard and you are better off with a stock like Bell than this one. A number of analysts with buy and hold recommendations mention the recent dividend cut and the fact that they feel this was the right move for the company. Others feel that this is quite a save stock and should be held on to.
I am not sure what I will do with my remaining stock. I will probably sell, because, if I do not have much of a stock and I am unwilling to buy more, I feel that I should sell and move on.
This company is a full-service communications company. It serves residential and business customers in Manitoba. Their Allstream division serves national business consumers. Its web site is here Manitoba Telecom. See my spreadsheet at mbt.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.
Thursday, June 9, 2011
Manitoba Telecom Services Inc
I own this stock (TSX-MBT). I first bought this stock in 2006 after reading a report about it at TD’s Waterhouse. They gave it an action buy rating (basically their Strong Buy Rating). I bought it for my Trading Account, my Pension Account and my RRSP account. I have sold it from my Trading and Pension account in 2010. This stock has been a disappointment.
For all accounts, I have made a return of 3.3% per year. I still have this stock in my RRSP account. Under this account, I have a total return of 4% per year. As far as I can see, the dividend portion of my total return is 7%. This means, I have lost capital, but have made some dividend money that covers my capital loss and then a bit more.
This company lowered their dividends by 35% this year (2011). Their payout ratio compared to cash flow has not been bad, with a 5 year median of 34%. However, the payout ratio compared to earnings has a 5 year median of 116%. This is not good. You would want a payout ratio re earnings not higher than 75%. Dividends are basically now where they were in 2004.
It is expected that earnings will be around $2.43 this year and with a dividend of $1.70, payout ratio compared to earnings is expected to be 70%. However, analysts were very wrong on where earnings would be for 2010. I had an estimate of $2.01 and they came in at $1.54. At the end of 2010, for the 4th quarter, there was a huge range given by analysts for the fourth quarter.
As I said above, this stock has been a disappointment. When looking at my spreadsheet, all growth figures are low or negative. For example, the 5 and 10 year earnings growth is negative 13% and 0% per year, respectively. Book Value growth for the last 5 and 10 years is negative 1% and 3.7%. Book Value has been decreasing for the last 4 years and for the 1st quarter of 2011, it decreased even further by a walloping 28%. This occurred when they changed their accounting rules to IFRS.
With a change in accounting rules, there are winners and losers. This company lost as far as book value is concerned. If I had used the book value under the IFRS rules for 2010, the growth in book value would be a negative 9.2% and a 0% per year over the past 5 and 10 years. Also, Book Value is going down, because the company seems to be losing money, not making any.
In order to make a profit, first you need revenue. For this stock revenue growth is not good. Revenue growth for the last 5 and 10 years is negative 3.3% and 7.6% per year, respectively. Revenue per share for the last 5 and 10 years is negative 2.5% and 6.2% per year, respectively.
With debt ratios, the really bad one is the Liquidity Ratio. Liquidity Ratio is using current assets and current liabilities. The Liquidity Ratio has seldom been good. For the end of 2010 it was 0.51. The current one is 0.36. When the ratio is below 1.00, it means that current assets cannot cover current liabilities. For this stock, as far as I can see, cash flow cannot make up the shortfall. The Asset/Liability Ratio is better, with 2010 ratio being at 1.81 and the current one being at 1.57. They are both above what you would like to see, which is a ratio at 1.50 or higher.
The other debt ratios are fine. The Leverage is currently at 2.76 and the Debt/Equity Ratio is at 1.76. With these ratios, you want to compare them with other companies in the same industry.
I haven’t year decided what to do with my remaining shares in this company. However, I do not consider this is a company I would want for the long term. Tomorrow, I will look at what the analyst currently are saying about this stock.
This company is a full-service communications company. It serves residential and business customers in Manitoba. Their Allstream division serves national business consumers. Its web site is here Manitoba Telecom. See my spreadsheet at mbt.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.
For all accounts, I have made a return of 3.3% per year. I still have this stock in my RRSP account. Under this account, I have a total return of 4% per year. As far as I can see, the dividend portion of my total return is 7%. This means, I have lost capital, but have made some dividend money that covers my capital loss and then a bit more.
This company lowered their dividends by 35% this year (2011). Their payout ratio compared to cash flow has not been bad, with a 5 year median of 34%. However, the payout ratio compared to earnings has a 5 year median of 116%. This is not good. You would want a payout ratio re earnings not higher than 75%. Dividends are basically now where they were in 2004.
It is expected that earnings will be around $2.43 this year and with a dividend of $1.70, payout ratio compared to earnings is expected to be 70%. However, analysts were very wrong on where earnings would be for 2010. I had an estimate of $2.01 and they came in at $1.54. At the end of 2010, for the 4th quarter, there was a huge range given by analysts for the fourth quarter.
As I said above, this stock has been a disappointment. When looking at my spreadsheet, all growth figures are low or negative. For example, the 5 and 10 year earnings growth is negative 13% and 0% per year, respectively. Book Value growth for the last 5 and 10 years is negative 1% and 3.7%. Book Value has been decreasing for the last 4 years and for the 1st quarter of 2011, it decreased even further by a walloping 28%. This occurred when they changed their accounting rules to IFRS.
With a change in accounting rules, there are winners and losers. This company lost as far as book value is concerned. If I had used the book value under the IFRS rules for 2010, the growth in book value would be a negative 9.2% and a 0% per year over the past 5 and 10 years. Also, Book Value is going down, because the company seems to be losing money, not making any.
In order to make a profit, first you need revenue. For this stock revenue growth is not good. Revenue growth for the last 5 and 10 years is negative 3.3% and 7.6% per year, respectively. Revenue per share for the last 5 and 10 years is negative 2.5% and 6.2% per year, respectively.
With debt ratios, the really bad one is the Liquidity Ratio. Liquidity Ratio is using current assets and current liabilities. The Liquidity Ratio has seldom been good. For the end of 2010 it was 0.51. The current one is 0.36. When the ratio is below 1.00, it means that current assets cannot cover current liabilities. For this stock, as far as I can see, cash flow cannot make up the shortfall. The Asset/Liability Ratio is better, with 2010 ratio being at 1.81 and the current one being at 1.57. They are both above what you would like to see, which is a ratio at 1.50 or higher.
The other debt ratios are fine. The Leverage is currently at 2.76 and the Debt/Equity Ratio is at 1.76. With these ratios, you want to compare them with other companies in the same industry.
I haven’t year decided what to do with my remaining shares in this company. However, I do not consider this is a company I would want for the long term. Tomorrow, I will look at what the analyst currently are saying about this stock.
This company is a full-service communications company. It serves residential and business customers in Manitoba. Their Allstream division serves national business consumers. Its web site is here Manitoba Telecom. See my spreadsheet at mbt.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.
Wednesday, June 8, 2011
Emera Inc 2
I own this stock (TSX-EMA). It is in my Locked-Pension Account. I bought this stock in July 2005 and I have made a return of 14.3% per year. The portion of this total return attributable to dividends would be around 4% per year.
When I look at Insider Trading, I find that the CEO has, in the past year, sold some $2.8 of shares. This looks like he sold his option compensation. There is in total some $3M in net insider selling because other officers have sold off options. There is a bit of insider buying by directors. It would appear that institutions own some 23% of this company. Within the last 3 months they have bought some 540K shares which would be valued at around $17M.
When I look at the 5 year median Price/Earnings Ratios, I get a low of 13.4 and a high of 18.7. The current one of 17.6 is just higher than the median one of 16.6. This would show a current reasonable price. I get a Graham Price of $24.60 and the current price of $31.56 is some 28% higher. Compared to last year’s difference, which ranged from 20% to 60% difference, it is not bad, but the 10 year median high difference is just 20%, so on this basis the current stock price is high.
I get a 10 year median Price/Book Value Ratio of 1.67 with a current P/B ratio of 2.10. The current one is some 25% higher than the 10 year median P/B Ratio. The problem with this ratio, as well as the Graham Price is that the book value has not grown much over the past 5 and 10 years.
The current dividend yield of 4.1% is not a bad yield, but the 5 year median dividend yield is higher at 4.4%. This would indicate a rather high current stock price. In fact, the only ratio that shows a decent current stock price is the P/E ratio.
When I look at analysts’ recommendations, I find Strong Buy, Buy and Hold. The consensus would probably be a Buy, but there are a lot of Hold recommendations. (See my site for information on analyst ratings.)
The analysts with the Hold recommendations do not see this stock increasing much within the next 12 months. They look at a stock price increase of around 2% plus 4% dividend for a total return around 6%. One with a strong buy says that this stock has its seasonal strength from the summer to November each year, so expects the stock price to shortly start to move higher. There is, of course, always a range of opinions on any stock.
I feel that this stock has been a good investment for me and I will continue to hold what shares I own. I also may, in the future buy more. The thing is that some stocks I have bought for my pension account, like Saputo (TSX-SAP) have grown a lot and are a bigger portion of my portfolio than I care to hold. At some point, I will sell some Saputo and buy something else with that money.
Emera Inc. is an energy and services company that has two wholly-owned regulated electric utility subsidiaries, of Nova Scotia Power Inc. and Bangor Hydro-Electric Company. Emera also owns 19% of St. Lucia Electricity Services Limited and 25% of Grand Bahamas Power Company that serves 19,000 customers on the Caribbean island of Grand Bahamas. Emera also owns the Brunswick Pipeline; Bayside Power, in Saint John, New Brunswick; Emera Energy Services; a joint venture interest in Bear Swamp northern Massachusetts; a 12.9% interest in the Maritimes & Northeast Pipeline; and an 8.2% interest in Open Hydro. Its web site is here Emera. See my spreadsheet at ema.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.
When I look at Insider Trading, I find that the CEO has, in the past year, sold some $2.8 of shares. This looks like he sold his option compensation. There is in total some $3M in net insider selling because other officers have sold off options. There is a bit of insider buying by directors. It would appear that institutions own some 23% of this company. Within the last 3 months they have bought some 540K shares which would be valued at around $17M.
When I look at the 5 year median Price/Earnings Ratios, I get a low of 13.4 and a high of 18.7. The current one of 17.6 is just higher than the median one of 16.6. This would show a current reasonable price. I get a Graham Price of $24.60 and the current price of $31.56 is some 28% higher. Compared to last year’s difference, which ranged from 20% to 60% difference, it is not bad, but the 10 year median high difference is just 20%, so on this basis the current stock price is high.
I get a 10 year median Price/Book Value Ratio of 1.67 with a current P/B ratio of 2.10. The current one is some 25% higher than the 10 year median P/B Ratio. The problem with this ratio, as well as the Graham Price is that the book value has not grown much over the past 5 and 10 years.
The current dividend yield of 4.1% is not a bad yield, but the 5 year median dividend yield is higher at 4.4%. This would indicate a rather high current stock price. In fact, the only ratio that shows a decent current stock price is the P/E ratio.
When I look at analysts’ recommendations, I find Strong Buy, Buy and Hold. The consensus would probably be a Buy, but there are a lot of Hold recommendations. (See my site for information on analyst ratings.)
The analysts with the Hold recommendations do not see this stock increasing much within the next 12 months. They look at a stock price increase of around 2% plus 4% dividend for a total return around 6%. One with a strong buy says that this stock has its seasonal strength from the summer to November each year, so expects the stock price to shortly start to move higher. There is, of course, always a range of opinions on any stock.
I feel that this stock has been a good investment for me and I will continue to hold what shares I own. I also may, in the future buy more. The thing is that some stocks I have bought for my pension account, like Saputo (TSX-SAP) have grown a lot and are a bigger portion of my portfolio than I care to hold. At some point, I will sell some Saputo and buy something else with that money.
Emera Inc. is an energy and services company that has two wholly-owned regulated electric utility subsidiaries, of Nova Scotia Power Inc. and Bangor Hydro-Electric Company. Emera also owns 19% of St. Lucia Electricity Services Limited and 25% of Grand Bahamas Power Company that serves 19,000 customers on the Caribbean island of Grand Bahamas. Emera also owns the Brunswick Pipeline; Bayside Power, in Saint John, New Brunswick; Emera Energy Services; a joint venture interest in Bear Swamp northern Massachusetts; a 12.9% interest in the Maritimes & Northeast Pipeline; and an 8.2% interest in Open Hydro. Its web site is here Emera. See my spreadsheet at ema.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.
Tuesday, June 7, 2011
Emera Inc
I own this stock (TSX-EMA). It is in my Locked-Pension Account. I bought this stock in July 2005 and I have made a return of 14.3% per year. The portion of this total return attributable to dividends would be around 4% per year.
The current dividend is good at 4%. The growths in dividends are not bad, especially over the past 5 years. Growth over the past 5 and 10 years in dividends is 5.2% and 2.5% per year, respectively. Total return has also been good on this stock over the past 5 and 10 years at 12% and 9%, per year, respectively. The portion of this total return that is attributable to dividends over both these time periods is around 4% per year.
However, revenue, earnings, cash flow and book value growth has not been that good lately, especially over the last 10 years. Unfortunately, revenue growth is not expected to be high for the next two years, with growth this year and next at 3% and 2%, respectively. For example, revenue per share growth has been, over the past 5 and 10 years, at 5% and 2.8% per year respectively.
Cash Flow growth has been worse over the past 5 and 10 years at 3% and 1% per year, respectively. Cash flow is expected to growth over this year and next at 6% and 8.7%. Book Value growth has been a bit better over the past 5 and 10 years, at 3% and 2.4% per year, respectively.
Earnings have been better with 5 and 10 year growth at 8.7% and 3% per year respectively. Also, earnings are expected to grow at the rate of 8.5% and 5% in 2011 and 2012. Please note that it is not wise to put too much faith in estimates, as they are probably wrong as often as they are right. However, estimates do give you guidelines as to why analysts give the recommendations on a stock that they do. It gives you an idea what is company is expected to do and it is better than having nothing.
The Return on Equity on this stock has often been good. The ROE for the end of 2010 is 11.1%. The 5 year median ROE to the end of 2010 is also 11.1%.
I guess the last thing to talk about is debt ratios. For this utility company, the Liquidity Ratio has often been quite low. However, it was better at the end of 2010 at 1.13. It is slightly lower for the 1st Quarter of 2011 at 1.06. The Asset/Liability Ratio is better, with an end of 2010 ratio at 1.39 and a current one of 1.40. When these ratios are under 1.00, it means that assets cannot cover liabilities. This sort of company often has a high debt. The Leverage Ratio currently at, 3.79 and the Debt/Equity Ratio currently at 2.70 are ok.
I have been pleased with my investment in Emera; and I think it has been a good investment for me. For such utility companies, what you expect in the long term is 4% dividends and 4% capital gain each year for the long term.
Emera Inc. is an energy and services company that has two wholly-owned regulated electric utility subsidiaries, of Nova Scotia Power Inc. and Bangor Hydro-Electric Company. Emera also owns 19% of St. Lucia Electricity Services Limited and 25% of Grand Bahamas Power Company that serves 19,000 customers on the Caribbean island of Grand Bahamas. Emera also owns the Brunswick Pipeline; Bayside Power, in Saint John, New Brunswick; Emera Energy Services; a joint venture interest in Bear Swamp northern Massachusetts; a 12.9% interest in the Maritimes & Northeast Pipeline; and an 8.2% interest in Open Hydro. Its web site is here Emera. See my spreadsheet at ema.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.
The current dividend is good at 4%. The growths in dividends are not bad, especially over the past 5 years. Growth over the past 5 and 10 years in dividends is 5.2% and 2.5% per year, respectively. Total return has also been good on this stock over the past 5 and 10 years at 12% and 9%, per year, respectively. The portion of this total return that is attributable to dividends over both these time periods is around 4% per year.
However, revenue, earnings, cash flow and book value growth has not been that good lately, especially over the last 10 years. Unfortunately, revenue growth is not expected to be high for the next two years, with growth this year and next at 3% and 2%, respectively. For example, revenue per share growth has been, over the past 5 and 10 years, at 5% and 2.8% per year respectively.
Cash Flow growth has been worse over the past 5 and 10 years at 3% and 1% per year, respectively. Cash flow is expected to growth over this year and next at 6% and 8.7%. Book Value growth has been a bit better over the past 5 and 10 years, at 3% and 2.4% per year, respectively.
Earnings have been better with 5 and 10 year growth at 8.7% and 3% per year respectively. Also, earnings are expected to grow at the rate of 8.5% and 5% in 2011 and 2012. Please note that it is not wise to put too much faith in estimates, as they are probably wrong as often as they are right. However, estimates do give you guidelines as to why analysts give the recommendations on a stock that they do. It gives you an idea what is company is expected to do and it is better than having nothing.
The Return on Equity on this stock has often been good. The ROE for the end of 2010 is 11.1%. The 5 year median ROE to the end of 2010 is also 11.1%.
I guess the last thing to talk about is debt ratios. For this utility company, the Liquidity Ratio has often been quite low. However, it was better at the end of 2010 at 1.13. It is slightly lower for the 1st Quarter of 2011 at 1.06. The Asset/Liability Ratio is better, with an end of 2010 ratio at 1.39 and a current one of 1.40. When these ratios are under 1.00, it means that assets cannot cover liabilities. This sort of company often has a high debt. The Leverage Ratio currently at, 3.79 and the Debt/Equity Ratio currently at 2.70 are ok.
I have been pleased with my investment in Emera; and I think it has been a good investment for me. For such utility companies, what you expect in the long term is 4% dividends and 4% capital gain each year for the long term.
Emera Inc. is an energy and services company that has two wholly-owned regulated electric utility subsidiaries, of Nova Scotia Power Inc. and Bangor Hydro-Electric Company. Emera also owns 19% of St. Lucia Electricity Services Limited and 25% of Grand Bahamas Power Company that serves 19,000 customers on the Caribbean island of Grand Bahamas. Emera also owns the Brunswick Pipeline; Bayside Power, in Saint John, New Brunswick; Emera Energy Services; a joint venture interest in Bear Swamp northern Massachusetts; a 12.9% interest in the Maritimes & Northeast Pipeline; and an 8.2% interest in Open Hydro. Its web site is here Emera. See my spreadsheet at ema.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.
Monday, June 6, 2011
IBI Group Inc 2
I have had this stock (TSX-IBG) on my list to investigate for sometime. What finally prompted me set up a spreadsheet on this stock was an investment report I read in March. I know it does take me a while sometimes to get to things.
When I looked at the Insider Trading Report, I find that there has been some minor buying by some directors since the beginning of the year. The report only covers this year as this stock has converted from an Partnership arrangement (TSX-IBG.UN) to a corporation (TSX-IBG). It would appear that in the last 2 months institutional holders, who currently hold some 20% of the share of this company, sold almost 5% of the shares of this company over the last 3 months.
The problem I have with figuring out this company is that between the insiders’ holdings and institutional holders, there is far more than 100% of the shares accounted for. This means that I do not understand how this company is set. However, I do have the correct number of shares showing in my spreadsheet. There appears to be, since the beginning of the year, anywhere between 111K and 8K shares being trading on a daily basis. So, there is no trouble in trading volumes for people who want to buy or sell this stock.
When I look at the 5 year median Price/Earnings Ratios, I get a low P/E of 7 and a high P/E of 14, with a median P/E of 10. So the current P/E of 12.6 is a bit towards the high side. I get a 10 year median Price/Book Value Ratio of 1.32 and a current P/B Ratio of 1.34. This would also put the current stock price towards the high side.
I get a Graham Price of $16.61. This Graham Price is some 13% above the current stock price. The Median difference between the Graham Price and stock price is a negative 15%. The median high difference between the Graham Price and the stock Price is 9.5%. This puts the current stock price above the median price, but below the median high price.
The last thing to look at is the dividend yield. The current yield is 7.7% and the 5 year median yield is 10.3%. This shows a high current stock price. However, they did reduce the dividends by 30% in 2011. The Payout Ratio for earnings is expected to be around 97% this year and around 75% for next year. The Payout Ratio for cash flow, if they earn the same as last year, would be around 50% this year. So, Payout ratios are getting better.
When I look for analysts recommendations, I find Strong Buy, Buy and Hold. The consensus would be a Hold as there are a lot of them. (See my site for information on analyst ratings.) A number of analysts said this was an infrastructure play. One said he preferred Aecon Group (TSX-ARE) and SNC Lavalin (TSX-SNC) to this company. Some analysts remarked that the first quarter was a bit disappointing, but they feel that the company will do well in the long term.
This looks like an interesting company. I will continue to track it. The stock’s earnings for the 1st quarter were lower than expected. (Full financial statements are not yet available.) However, even analysts giving a hold recommendation on this stock give the 12 month stock price in the $15 to $16.50 price range, which would be a good return for this stock from the current price.
The Company through IBI Group provides professional services, including planning, design, implementation, analysis of operations and other consulting services in relation to four main areas of development, being urban land, building facilities, transportation networks and systems technology. Its web site is here IBI Group. See my spreadsheet at ibg.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.
When I looked at the Insider Trading Report, I find that there has been some minor buying by some directors since the beginning of the year. The report only covers this year as this stock has converted from an Partnership arrangement (TSX-IBG.UN) to a corporation (TSX-IBG). It would appear that in the last 2 months institutional holders, who currently hold some 20% of the share of this company, sold almost 5% of the shares of this company over the last 3 months.
The problem I have with figuring out this company is that between the insiders’ holdings and institutional holders, there is far more than 100% of the shares accounted for. This means that I do not understand how this company is set. However, I do have the correct number of shares showing in my spreadsheet. There appears to be, since the beginning of the year, anywhere between 111K and 8K shares being trading on a daily basis. So, there is no trouble in trading volumes for people who want to buy or sell this stock.
When I look at the 5 year median Price/Earnings Ratios, I get a low P/E of 7 and a high P/E of 14, with a median P/E of 10. So the current P/E of 12.6 is a bit towards the high side. I get a 10 year median Price/Book Value Ratio of 1.32 and a current P/B Ratio of 1.34. This would also put the current stock price towards the high side.
I get a Graham Price of $16.61. This Graham Price is some 13% above the current stock price. The Median difference between the Graham Price and stock price is a negative 15%. The median high difference between the Graham Price and the stock Price is 9.5%. This puts the current stock price above the median price, but below the median high price.
The last thing to look at is the dividend yield. The current yield is 7.7% and the 5 year median yield is 10.3%. This shows a high current stock price. However, they did reduce the dividends by 30% in 2011. The Payout Ratio for earnings is expected to be around 97% this year and around 75% for next year. The Payout Ratio for cash flow, if they earn the same as last year, would be around 50% this year. So, Payout ratios are getting better.
When I look for analysts recommendations, I find Strong Buy, Buy and Hold. The consensus would be a Hold as there are a lot of them. (See my site for information on analyst ratings.) A number of analysts said this was an infrastructure play. One said he preferred Aecon Group (TSX-ARE) and SNC Lavalin (TSX-SNC) to this company. Some analysts remarked that the first quarter was a bit disappointing, but they feel that the company will do well in the long term.
This looks like an interesting company. I will continue to track it. The stock’s earnings for the 1st quarter were lower than expected. (Full financial statements are not yet available.) However, even analysts giving a hold recommendation on this stock give the 12 month stock price in the $15 to $16.50 price range, which would be a good return for this stock from the current price.
The Company through IBI Group provides professional services, including planning, design, implementation, analysis of operations and other consulting services in relation to four main areas of development, being urban land, building facilities, transportation networks and systems technology. Its web site is here IBI Group. See my spreadsheet at ibg.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.
Friday, June 3, 2011
IBI Group Inc
I have had this stock (TSX-IBG) on my list to investigate for sometime. What finally prompted me set up a spreadsheet on this stock was an investment report I read in March. I know, it does take me a while sometimes to get to things, but also when I did a spreadsheet on this stock, I thought it best to wait until after the 1st Quarterly report for 2011 because I was unclear about its current partnership arrangements and I thought it might be clearer after this first quarterly report.
They finally reported on June 1st, but it was not full financial statements. They have reported revenues up 14.2%, but distributable cash down 8.7%. The payout ratio for distributable cash was 85.4%. When they produce the 1st quarterly statements, they will also be reporting using the new accounting rules of IFRS. Also, this company only went public in August 2004, so I really only have 5 years of data to report on.
First, let us deal with revenue. Although revenue over the past 5 years is up some 24% per year, but revenue per shares is only up 2.8% per year. Problem is, of course, this company has been increasing shares at the rate of 9.4% per year. I was also wondering if there was going to be another increase this year, but market cap on a number of sites has not changed, so maybe not.
Next, is cash flow, and this has increase nicely, but not the cash flow per share. It is the cash flow per share that counts and it is down about 4.2% per year. However, there are better statistics. Earnings per share (EPS) are up 8% per year. Dividends to the end of 2010 are up 7% per year. However, dividends were cut 30% in 2011 and are down slightly from initial dividends that started in 2004.
Dividends were $1.13 per share in 2004 and are now at $1.10 per share. The good thing about current dividends is that the dividend yield is 7.7%. The company had to cut dividends when they changed from a partnership (TSX-IBG.UN) to a corporation (TSX-IBG). A lot of companies that converted to corporation had to cut dividends. Once these companies convert to corporation, payout ratios for earnings and cash flow become important, not payout ratio for distributable income.
The total return on this stock has been great over the past 5 years. The total return would be around 19.2% per year, with almost 13% of this return in dividends. Of course, dividend yield has come down from the 5 year median yield of 10% to a current dividend yield of 7.7%.
The other good thing about this stock is the debt ratios. The Liquidity Ratio and the Asset/Liability Ratios are great at 1.65 and 1.69 respectively. For these ratios, anything over 1.50 is very good. The other debt ratios are fine, but not great with the Leverage Ratio at 3.20 and the Debt/Equity Ratio at 1.90.
The Return on Equity has had some ups and downs, but it has mostly been fine. The ROE for 2010 is good at 10.3%. The 5 year median ROE is also good at 12.4%.
The Company through IBI Group provides professional services, including planning, design, implementation, analysis of operations and other consulting services in relation to four main areas of development, being urban land, building facilities, transportation networks and systems technology. Its web site is here IBI Group. See my spreadsheet at ibg.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.
They finally reported on June 1st, but it was not full financial statements. They have reported revenues up 14.2%, but distributable cash down 8.7%. The payout ratio for distributable cash was 85.4%. When they produce the 1st quarterly statements, they will also be reporting using the new accounting rules of IFRS. Also, this company only went public in August 2004, so I really only have 5 years of data to report on.
First, let us deal with revenue. Although revenue over the past 5 years is up some 24% per year, but revenue per shares is only up 2.8% per year. Problem is, of course, this company has been increasing shares at the rate of 9.4% per year. I was also wondering if there was going to be another increase this year, but market cap on a number of sites has not changed, so maybe not.
Next, is cash flow, and this has increase nicely, but not the cash flow per share. It is the cash flow per share that counts and it is down about 4.2% per year. However, there are better statistics. Earnings per share (EPS) are up 8% per year. Dividends to the end of 2010 are up 7% per year. However, dividends were cut 30% in 2011 and are down slightly from initial dividends that started in 2004.
Dividends were $1.13 per share in 2004 and are now at $1.10 per share. The good thing about current dividends is that the dividend yield is 7.7%. The company had to cut dividends when they changed from a partnership (TSX-IBG.UN) to a corporation (TSX-IBG). A lot of companies that converted to corporation had to cut dividends. Once these companies convert to corporation, payout ratios for earnings and cash flow become important, not payout ratio for distributable income.
The total return on this stock has been great over the past 5 years. The total return would be around 19.2% per year, with almost 13% of this return in dividends. Of course, dividend yield has come down from the 5 year median yield of 10% to a current dividend yield of 7.7%.
The other good thing about this stock is the debt ratios. The Liquidity Ratio and the Asset/Liability Ratios are great at 1.65 and 1.69 respectively. For these ratios, anything over 1.50 is very good. The other debt ratios are fine, but not great with the Leverage Ratio at 3.20 and the Debt/Equity Ratio at 1.90.
The Return on Equity has had some ups and downs, but it has mostly been fine. The ROE for 2010 is good at 10.3%. The 5 year median ROE is also good at 12.4%.
The Company through IBI Group provides professional services, including planning, design, implementation, analysis of operations and other consulting services in relation to four main areas of development, being urban land, building facilities, transportation networks and systems technology. Its web site is here IBI Group. See my spreadsheet at ibg.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.
Thursday, June 2, 2011
Russel Metals Inc 2
I own this stock (TSX-RUS). I have been tracking this stock for a number of years, but I did not buy this stock until 2007 and then I bought it again in 2009. I have earned only 3.2% per year on this stock. Dividend portion of this total return was probably around 6.5%. This stock is categorized as an industrial stock. It is also considered a growth company. You should not be investing in it if you cannot afford the risk that comes with an industrial growth stock.
When I look at insider trading, I find that there is both insider buying (at $1.2M) and insider selling (at $1.8M). The net insider selling is therefore at $.6M. The buying and the selling seem to be by the same people (CEO and officers). What seems to be happening is that insiders are selling off stock options. As with a lot of Canadian corporations, all the insiders, but the directors, have lots more stock options than shares. For example, the CEO has almost 5 times the number of stock options compared to shares he owns.
Management has shown confidence in the future with the recent 10% increase in dividends. However, dividends at $1.10 a share are lower than the $1.85 of 2008, which occurred before the recent crisis. Dividends had been lowered in 2009 to $1.00 a share and stayed at $1.00 in 2010.
When I look at the 5 year median Price/Earnings Ratios, I get a low of 9.5 and a high of 14, when I get rid of the negative P/E Ratios for 2009. However, this masked a great deal of volatility in the P/E Ratios. Either high P/E ratios have been around 20 or around 8 in the last 5 years, (there seems to be no middle ground here). The current P/E 12.7 on a share price of $24.22 is somewhat between the highs and the lows, but a bit closer to the highs.
For Price/Book Ratio, I get a 10 year median value of 1.51. The current P/B Ratio of 1.92 is some 27% higher. This ratio points to a rather current high stock price. The current Dividend yield of 4.5% is good, but the 5 year median dividend yield is 6.3%. Of course, in 2009, they lowered the dividend by 45% and this would have an effect on the current dividend yield.
I get a Graham Price of $23.30. The current stock price at $24.22 is some 4% higher than the Graham price. However, the 10 year median difference between the Graham Price and Stock price is the stock price being some 25% below the Graham Price. Even the 10 year median high difference is a negative 10%. It would seem that each year there was a point where the Stock price was lower than the Graham price. However, the difference between the stock price and Graham price has bounced around a lot.
On an absolute basis the stock price does not look high, but on a relatively basis it does. A P/E Ratio of 12 is not particular high, but rather average. The current stock price is back to where it was in 2005 and 2006. There are a number of analysts that follow this stock and the analyst recommendations are Strong Buy, Buy, Hold and Underperform. The Consensus recommendation would be a Hold. There are a lot of Hold recommendations. (See my site for information on analyst ratings.)
With a Hold recommendation, comes a 12 month stock price of $26 to $27. Some analysts think that the stock might go lower before it goes any higher and therefore there might be some good buying opportunities over the next 12 months for this stock. Analysts talk about this stock being cyclical with a strong balance sheet. Many think it is well run.
This company does metal distribution and processing North America. It operates in three segments of metals service centers, energy tubular products and steel distributors under various names including Russel Metals, A. J. Forsyth, Acier Leroux, Acier Loubier, Acier Richler, Arrow Steel Processors, B&T Steel, Baldwin International, Comco Pipe and Supply, Fedmet Tubulars, JMS Russel Metals, Leroux Steel, McCabe Steel, Mégantic Métal, Métaux Russel, Métaux Russel Produits Spécialisés, Milspec, Norton Metals, Pioneer Pipe, Russel Metals Specialty Products, Russel Metals Williams Bahcall, Spartan Steel Products, Sunbelt Group, Triumph Tubular & Supply, Wirth Steel and York-Ennis. Its web site is here Russel Metals. See my spreadsheet at rus.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.
When I look at insider trading, I find that there is both insider buying (at $1.2M) and insider selling (at $1.8M). The net insider selling is therefore at $.6M. The buying and the selling seem to be by the same people (CEO and officers). What seems to be happening is that insiders are selling off stock options. As with a lot of Canadian corporations, all the insiders, but the directors, have lots more stock options than shares. For example, the CEO has almost 5 times the number of stock options compared to shares he owns.
Management has shown confidence in the future with the recent 10% increase in dividends. However, dividends at $1.10 a share are lower than the $1.85 of 2008, which occurred before the recent crisis. Dividends had been lowered in 2009 to $1.00 a share and stayed at $1.00 in 2010.
When I look at the 5 year median Price/Earnings Ratios, I get a low of 9.5 and a high of 14, when I get rid of the negative P/E Ratios for 2009. However, this masked a great deal of volatility in the P/E Ratios. Either high P/E ratios have been around 20 or around 8 in the last 5 years, (there seems to be no middle ground here). The current P/E 12.7 on a share price of $24.22 is somewhat between the highs and the lows, but a bit closer to the highs.
For Price/Book Ratio, I get a 10 year median value of 1.51. The current P/B Ratio of 1.92 is some 27% higher. This ratio points to a rather current high stock price. The current Dividend yield of 4.5% is good, but the 5 year median dividend yield is 6.3%. Of course, in 2009, they lowered the dividend by 45% and this would have an effect on the current dividend yield.
I get a Graham Price of $23.30. The current stock price at $24.22 is some 4% higher than the Graham price. However, the 10 year median difference between the Graham Price and Stock price is the stock price being some 25% below the Graham Price. Even the 10 year median high difference is a negative 10%. It would seem that each year there was a point where the Stock price was lower than the Graham price. However, the difference between the stock price and Graham price has bounced around a lot.
On an absolute basis the stock price does not look high, but on a relatively basis it does. A P/E Ratio of 12 is not particular high, but rather average. The current stock price is back to where it was in 2005 and 2006. There are a number of analysts that follow this stock and the analyst recommendations are Strong Buy, Buy, Hold and Underperform. The Consensus recommendation would be a Hold. There are a lot of Hold recommendations. (See my site for information on analyst ratings.)
With a Hold recommendation, comes a 12 month stock price of $26 to $27. Some analysts think that the stock might go lower before it goes any higher and therefore there might be some good buying opportunities over the next 12 months for this stock. Analysts talk about this stock being cyclical with a strong balance sheet. Many think it is well run.
This company does metal distribution and processing North America. It operates in three segments of metals service centers, energy tubular products and steel distributors under various names including Russel Metals, A. J. Forsyth, Acier Leroux, Acier Loubier, Acier Richler, Arrow Steel Processors, B&T Steel, Baldwin International, Comco Pipe and Supply, Fedmet Tubulars, JMS Russel Metals, Leroux Steel, McCabe Steel, Mégantic Métal, Métaux Russel, Métaux Russel Produits Spécialisés, Milspec, Norton Metals, Pioneer Pipe, Russel Metals Specialty Products, Russel Metals Williams Bahcall, Spartan Steel Products, Sunbelt Group, Triumph Tubular & Supply, Wirth Steel and York-Ennis. Its web site is here Russel Metals. See my spreadsheet at rus.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.
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