I started to look at this stock (TSX-GNV) for possible purchase after reading an Globe and Mail article Build your own pension with top dividend stocks.
One of the problems about this stock is lack of long term data. It was initially started as an Income Trust in 2006, so I really only have 4 years of data to review and then two years of analysts’ estimates. However, since analysts’ estimates have often been wrong, you cannot put too much faith in them.
The company has kept the dividend at the same level when it changed to a corporation effective January 2011. The four year increase in dividends is 30% per year; however, the increases came in the first few years. The dividends have been at $1.50 since 2009, although they paid special dividends in 2009 and 2011.
The 5 year median Dividend Payout Ratios at 75% for earning and 44% for cash flow are fine. The DPRs is expected to be a bit higher for 2011 and 2012, but still fine. The current dividend yield is good at 6.1%.
This company has ranked up good growth in all measurements I follow since share where issued in 2006. Revenue per share has grown by 34% per year. Analysts do not expect much growth in revenues this year, but we still have not come out of a recession or we have had slow growth since 2008, so this is not unexpected.
Earnings growth has also been in the 30% range per year over the past 4 year. Again, analysts do not expect any growth in earnings for 2011, but feel that 2012 will be a better year for this company. People who have held this stock since 2006 have done well with a 33% growth per year. The dividend portion of this total return was around 8% per year.
Growth in Cash Flow has also been around 30% per year with this year not expected to see any growth, but growth again next year. The book value growth has been 10.7% per year over the past 4 years and this is also good. However Book Value has declined since the end of 2010 by 12%.
There has been two changed, one is the issuance of more share in connection with the change in the company from an Income Trust to a Corporation and accounting rule changes from Canadian GAAP to IFRS. The number of shares went up by 43%. Genivar Income Trust unit holders got shares in the new company as well as shareholders of the old Genivar company who held an interest in the Income Trust company
The debt ratios are very good for this company. The current Liquidity Ratio is 2.16 and this ratio has a 5 year median value of 1.80. The Asset/Liability Ratio is 2.31 and this ratio has a 5 year median value of 4.14. The Leverage Ratio is currently at 1.76 and this ratio has a 5 year median value of 2.26. The Debt/Equity Ratio is currently at 0.76 and this ratio has a 5 year median value of 0.55. As you can see these are all great values.
The Return on Equity has a 5 year median value of 11.4%. The ROE covering the 12 months to the 2nd quarter of 2011 is lower and is a bit low at 7.8%.
I think that this stock shows promise. I have today sold my Stantec stock to buy this stock. Stantec was always going to be sold at some point as it has no dividends. This stock is in the same industry as Stantec and has dividends.
Genivar Inc. is an engineering services firm providing private and public-sector clients with a complete range of professional consulting services throughout all project phases, including planning, design, construction and maintenance. Its web site is here Genivar. See my spreadsheet at gnv.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 also read the same article and mentioned Genivar in my recent post about farmland.
As usual, you do such a superb job dissecting all the pertinent details about stocks. You provide an exceptional resource for readers.
Congrats on your position! It's nice to see a fellow shareholder :)