Manitoba Telecom Services Inc 2

I own this stock (TSX-MBT). I bought some of this stock for all three of my accounts of Trading, RRSP and Pension Locked-in in 2006. I was looking for a save dividend payer and TD Waterhouse was recommending it. In 2010, I was giving hope of earnings much from this stock and sold all from my Trading and Pension Accounts and some from my RRSP. I still have some in my RRSP account.

When I look at insider trading I find very, very little of insider buying and no insider selling. The insider’s not only have options, but option-like things like Rights Performance Share Units and Rights Restricted Share Units. Directors also have Rights Director Compensation Units. These new options-like vehicles seem to be replacing old options in some cases. Everyone has more options or options-like vehicles than shares. The CEO does own shares worth just under $3.4M at today’s prices. Otherwise there is not much share ownership by insiders, but there is a bit.

Some 68 companies own almost 24% of the shares in this company. Over the past 3 months they have bought and sold shares. Their ownership in shares is down by just over 9%. There were the same number of buyers and sellers. This is a bit of a negative.

I get 5 year median low and high Price/Earnings Ratios of 16.19 and 19.48. (The corresponding 10 year median values are 13.26 and 17.50). In any case, the current P/E Ratio of 13.40 on a price of $34.03 would suggest that the stock price is relatively low.

I get a Graham price of $26.16. The 10 year median low, median and high difference between the Graham price and the stock price is the stock price being 0%, 15% and 32% above the Graham Price. With the current stock price being 30% above the Graham price it would seem that the stock price is relatively high.

The 10 year median Price/Book Value Ratio is 2.05 and the current P/B Ratio is 2.84. The current ratio at 2.84 i8s some 36% higher than the 10 year median ratio and would suggest a relatively high stock price. The main reason for the relatively high stock price showing in the last two tests is because the book value has been tracking down over the past while. It has been tracking down because the company has paid out too high a portion of their earnings in dividends.

The current dividend yield is 5% and the 5 year median dividend yield is some 38% higher at 6.9%. This would also suggest a relatively high current stock price. The tests I use show mixed results, but mostly show that the stock price may be relatively high currently.

The analysts’ recommendations are all over the place, with Strong Buy, Buy, Hold, Underperform and Sell. However, the most recommendations are in the Hold category and the consensus recommendation would be a Hold. The Hold recommendations either like other Telecom stocks better, or feel that you cannot expect much beyond dividends on this stock. Only a capital gain is visualized if new telecom legislation allows in foreign companies and then it or Allstream might be sold at a profit.

One analyst has a 12 month stock price of $40 as they expect that the Allstream division will be sold after the Federal budget of June changes the rules about foreign telecom ownership. They give this stock a Strong Buy. (The loosening of the telecom market was announced on May 14th, 2012. The Federal government scrapped foreign ownership rules on carries with less than 10% of the market.)

One site gives the consensus 12 month stock price of $33.90 and another as $35.00. The first one is lower than what the price is today. Everyone expects the dividend to be safe. No one expects any dividend increases in 2012 or 2013.

Some analysts a worried that their pension plans insolvency will again become a problem in 2013. Last week a couple of analysts downgraded this stock from Buys to Holds after the company posted positive results for the first quarter and stock rose some 3%. See article in the G&M.

I think I will still look for an exit point and try to decide what I should replace this with. Maybe I should buy Ag Growth International (TSX-AFN).

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.