Progressive Waste Solutions Ltd 2

I own this stock (TSX-BIN, NYSE-BIN). I first bought this company as BFI Canada Income Fund (TSX-BFC.UN) in 2007. I bought some more after the stock price went down in 2010. I have lost some 2.2% per year on this stock. Or, the stock price is down some 14%. It is because of dividends of approximately 3% per year that I have not lost more.

When I look at insider trading, I find $12.3M of insider selling and $2.2M of insider buying. About $11.1M of insider selling was by directors in August of 2011. This selling would seem to be by or mostly by Keith Carrigan, who is currently a director but was the CEO and founder of this company. The CEO, CFO and directors all have more options than shares. However, the reason that the directors have more options than shares is because of the number held by Carrigan who used to be the CEO.

Half the current insider buying is by directors and the rest by CEO, CFO and an officer of the company. The current buying is a good sign. Also, this company is buying back shares on the open market for cancellation. There were big increases in shares in 2009 and 2010. Money was used to pay down debt and to buy assets.

There are 162 institutions that hold 76% of the shares of this company. They have bought and sold shares over the past three months with 3 net buyers and an increase in their shares held. However, the increase in shares is less than 1% and so does not tell us much. But it does show that these institutions are not negative about this company.

I get 5 year median low and high Price/Earnings Ratios of 12.26 and 33.09. This is a broad range and the 5 year median high is rather high. The current 18.08 on a stock price of 20.31 is lower than the 5 year median of 21.35. It is on the high side, but not that high. By this measure the price is reasonable.

I get a Graham Price of $16.82. The low and high difference between the Graham price and the stock price is the stock price being 23.7% and 79% higher than the Graham Price. The current stock price of $20.31 is some 21% above the Graham Price. This shows a relatively good stock price.

I get a 10 year Price/Book Value Ratio 1.79 and a current one of 2.18, which is only some 1% higher. This is not much of a difference. Part of the reason for this is the earnings loss for 2011. This would point to a reasonable stock price.

The last test is the dividend yield, and this company has a 5 year median dividend yield of 6.33%. The current dividend yield is 2.76, which is some 57% lower. Normally, this would show a high relative stock price. However, when this company changed from an Income Trust to a Corporation, the management decided they wanted a growth company and therefore lowered the dividend by 72.5% to go for a dividend yield of around 2% to 3%.

This is a dividend paying company and the stock prices on dividend paying companies tend to increase about as much as the dividends are increased. Last year the dividends were increased by 12%.

When I look at analysts’ recommendations, I find Strong Buy, Buy and Hold. A number of analysts have downgraded this stock recently because of the missed 1st quarterly earnings estimates, with downgrades from Strong Buy to Buy and from Buy to Hold.

The 12 months stock price target is $24.30. This implies as 22.4% total return from current stock price of $20.31. A Buy analysts gave a 12 months stock price of $26 $US. Analysts think that the company is well-run, but also complain about the problems they seem to be having in the US Northeast division. (It is a company they purchased in the US Northeast for which they had to write down their good-will value and therefore got an earnings loss last year.)

Analyst had thought that this company would be fairly non-cyclical because it was into garbage, but it has not turned out that way. I had pointed out this problem with a link to an article by David Berman yesterday. (See David Berman points out in a G&M Article how recessions are bad for garbage companies.) There is also a fairly recent article on the site 24/7 Wall Street about Garbage and Waste Management companies having a current hard time. See article.

The blogger My Own Adviser talked about buying this stock in December 2011. The site Benzinga talks about BMO’s recent downgrade of this stock. See Benzinga.

I am going to hold on to my shares as I think the problems will clear up when the economy does. The problem is no one knows when this will occur. However, it is May and people are worried about Greece.

They are a full-service waste management company providing non-hazardous solid waste collection and landfill disposal services for municipal, commercial, industrial and residential customers in five provinces and ten US states. Two-thirds of their business is in US. The fund operates through its subsidiaries. Five companies control almost 53% of this company. There are also 11M special shares outstanding. Its web site is here Progressive Waste . See my spreadsheet at bin.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.