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.

1 comment:

  1. This looks interesting, I have been thinking about buying some BDT but I may just buy this instead. Are you also going to do a part 2?

    I checked Reuters and they list the payout as 200%, Stockhouse has it at 162% and I'm curious as to what you come up with.