Gluskin Sheff + Associates Inc

I do not own this stock (TSX-GS). I started to review some of the stock recommended by Jennifer Dowty from a column she wrote and I reviewed in February 2010. See Dividends and Special Dividends.

I sort of gave up after reviewing the first stock she talked about which was this stock. I decided to again review this stock to see if I thought better of it. In giving up after just reviewing one stock, I did miss a good one that I later found and bought. That was Computer Modelling Group (TSX-CMG). I haven’t yet reviewed all the stocks she talked about.

What I did not like about this stock last year is the same I do not like about it this year. It seemed to hit a peak in 2006 and then go downhill. This includes Revenues, Earnings and Book Value. The Stock Price and Cash Flow peaked in 2007. In the most recent annual report, dated June 2009 they were recovering and analysts do expect that recovery to continue in 2011.

Because this stock only went public in 2006, I have limited data on how well it has done and only data going back 4 years. For anyone that invested in this company in 2006, they would not have made any money. There are also two levels of shares, but it is only the subordinate shares that are sold on the stock market.

In regards to dividends, they have been very good. The stock has a 5 year median yield of 2.2% on basic dividends. However, if you include the special dividends, the 5 year median yield is 4%. The increases in the regular dividend have also been very good at 17% per year. (Dividends have only been paid since 2006.)

As far as Dividend Payout Ratios goes, they look fine if you look at the 4 year median rates, which are 75% for earnings and 51% for cash flow. However, in both 2007 and 2008, the company paid out in regular and special dividends more than 100% of their earnings and I do not care for this.

One good thing about this stock is the debt ratios. The current Liquidity Ratio is 5.38 and the current Asset/Liability Ratio is 4.08. These are both quite high. The current leverage Ratio and Debt Equity Ratios are also very good and are currently at 1.32 and 0.32. This company basically has no debt.

On Monday, I will look to see what analysts are saying about this stock and what my spreadsheet says about the current stock price.

Gluskin Sheff is an independent investment firm that manages portfolios for high net-worth individuals and institutional clients. Its web site is here Gluskin& Sheff. See my spreadsheet at gs.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.