Genivar Inc. 2

I have updated my investment comments site at blog3.

I own this stock (TSX-GNV). I made two purchases at the end of 2011 and according to Quicken I have made per year return of 33%, but Quicken rather distorts such things when the period is less than one year. My stock is up is only up 12.5%. Some 8.3% of my return is from dividends.

When I look at insider trading, I find a minimum of insider buying and no insider selling. There are a few insiders with several million dollars of shares of this company, ranging from $6M to $20M. (It is the CEO with $20M in this company.) There are no stock options. This is positive.

There are 37 institutions that won some 30% of this company. They have bought and sold stocks over the past 3 months and now hold some 5.3% more shares. There are also 10 more buyers than sellers. I think that this shows positive support for this company.

I get 5 year median low and high Price/Earnings Ratios of 10.04 and 17.90. The current P/E Ratio of 14.87 is just above the median P/E of 14.35 and would suggest that the current stock price of $24.24 is reasonable.

I get a Graham price of $23.81 and the current stock price of $24.24 is 1.8% higher. The 10 year median low difference between the Graham Price and the stock price is the stock price being 22% lower. The 10 year median and median high difference between the Graham price and the stock price is the stock price being 4% and 25% higher than the Graham price. The current difference between the Graham Price and stock price suggests a reasonable stock price.

The 10 year median Price/Book Value Ratio is 1.87. The current P/B Ratio is 1.57 and this is 83% of the 10 year median and suggests a reasonable to low current stock price. The current dividend yield is 6.2% and the 5 year median dividend yield is 5.4% which is some 7.2% lower and suggests a reasonable stock price.

When I look at analysts’ recommendations I find Strong Buy, Buy and Hold recommendations. However, there is only one Strong Buy and many Hold recommendations. The consensus recommendation would be a Hold.

Earnings growth looks at good with a growth rate of 9.7% per year. However, earnings in 2011 included a one-time deferred income tax recovery resulting from a change in legal structure. Without it earnings would have been $1.63 and growth would just be 5.2%. Earnings of $1.63 is also what is expected in 2012. It is lower than both for 2009 and 2010. However, earnings are expected to rise some 15% in 2013.

A lot of analysts expect the company to have lower revenue in 2012 than in 2011. They also expect a rise in revenues in 2013. Revenues increased in the first quarter, but not as much as analysts had expected. One analysts with a Hold recommendation said that they liked the company’s long term outlook; they felt that the stock was fairly price currently. That means that they do not expect much short term growth in the stock price.

One analyst with a Hold recommendation called 2011 results uninspiring. After the Q1 results were made public a number of analysts cut their 12 month stock price. The analysts that did not put a Hold recommendation on this previously lower their recommendations from Buy to Hold. Analysts do not expect a special dividend this year, nor do they expect dividends to increase in 2012.

The 12 month consensus stock target is $28.50 and this implies a 24% total return for 2012.

A good write up on this stock is at Canadian Dividend Stock site.

See 1st quarter’s results in G&M article. They did miss analysts’ estimates. See Financial Post. In this story, unlike yesterday’s, AltaCorp Capital’s analysts downgraded this stock from Buy to Hold.

As I said yesterday, I am holding on to the shares I have, but will keep an eye on what they do with dividends over the next couple of years. The company is involved in the construction industry and this part of the economy has yet to recover from the recent recession. I still think that my purchase of this stock in 2011 was a good move.

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. Mainly in Ontario and Quebec, but has some international exposure. 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.