Friday, November 4, 2011

Astral Media Inc 2

First, in regards to insurance companies, especially Sun Life (TSX-SLF) and Manulife (TSX-MFC) mentioned yesterday, Globe and Mail today talks about Canadian Insurance companies being penalized by Canada’s tougher rules. See G&M.

There are pro and cons to this. Our banks had tougher rules going into the last recession and fared better than US banks. I am still holding on to my insurance stock as I believe that companies are basically solid. I think that I have done well on my core stocks over the long term because I have held on to them. I see no fundamental reason to sell these stocks.

Now, on to Astral Media (TSX-ACM.S), a stock I want to talk some more about today, especially on the current stock price. I do not own this stock. The dividend on this stock is rather low, but growth in dividends is very good. You would buy this for both increasing dividends and capital gain.

When I look at insider trading, I find some $4.3M of insider selling and a minimal amount insider buying. The insider selling seems to be of options, mostly by the CEO, but by some officers also. Both the CEO and CFO have more options than shares. Some 62 Institutions own some 45% of outstanding shares and they have marginally increased their shares by around 7% over the past 3 months.

I get a 5 year median low Price/Earnings Ratios of 9.34 and a 5 year median high P/E Ratio of 13.14. The 10 year median low and high P/E ratios are higher. The current Price/Earnings Ratio of 9.77 is at the low end. It shows a good current relative stock price at $34.49. If the stock price changes, you can get a current P/E Ratio from the G&M site. For comparison, use the forward P/E ratio.

I get a Graham price of $45.32. The current stock price of $34.49 is some 24% lower and therefore shows a good stock price. The 10 year median difference between the Graham Price and the stock price is the stock price at 15% lower. So this test also shows a relatively good current stock price.

I get a 10 year median Price/Book Value Ratio of 1.72. The current ratio of 1.33 is some 77% lower. This shows a very good current stock price. Whenever the current difference is 80% or less of the 10 year median, you have a good relative stock price.

The last test is the dividend yield. The current one of 2.17% is above 5 year median of 1.49%. The current one is also above the 5 year median high yield of 1.86%. This test also shows a very good current stock price. You can also get current dividend yield from G&M.

When I look at analysts’ recommendations, I find Strong Buy, Buy and Hold. There are lots more Buys than Holds, and the consensus recommendation is a Buy. One Buy recommendation comes with 12 month stock price of $42, which is some 22% higher than the current price. No one knows what the future holds, but the revenues and earnings seem to be increasing.

One analyst said he does not understand why this company is trading at stock price at 2008 level when they are growing their earnings. Some are worried about competition from Netflix, and streaming video, but feel the company is up to taking on this sort of competition.

The globe and mail has a write up on this stock dated October 25, 2011.

I will continue to track this stock. I track what I think are good stocks, so if I want to buy something, I already have data on a number of good stocks.

Astral Media is a leading Canadian media company. It operates several of the country's most popular pay and specialty television, radio, out-of-home advertising and digital media properties interactive media. This company is 63% owned by Greenberg family. Its web site is here Astral. See my spreadsheet at acm.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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