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.

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