I do not own this stock of Linamar Corporation (TSX-LNR). It is not a stock I would want to buy and hold. However, you need to track a number of different stocks with different characteristics in order to find stocks that you do like. The real problem with this stock is that it is the Auto business.
When I look at insider trading, I find $1.1M insider buying, with most buying by CFO and officers of the company. There is no insider selling. There are outstanding options and most insiders have more options than shares. However, there are several insiders which own millions of dollars in shares. Large insider ownership is by CFO and officers and range from $3.4M to $355M in shares.
There are some 47 institutions that own 20% of the shares of this company. Over the past 3 months they have sold just over 3% of their shares.
The 5 year low, median and high Price/Earnings Ratios are 8.26, 11.52 and 16.38. The current P/E Ratio of 8.68 on a stock price of $20.23 shows that the stock price is on the low side.
I get a current Graham price of $27.96. The 10 year low, median and high Price/Graham Price Ratios are 0.60, 0.78 and 1.00. The current P/GP Ratio of 0.72 shows a relatively low stock price.
I get a 10 year Price/Book Value Ratio of 1.20. The current P/B Ratio of 1.36 is some 13% higher. This shows a stock price a little on the high side.
I get a 5 year median dividend yield of 1.59% and the current yield is around the same value at 1.58%. This shows a reasonable stock price.
The results of my stock price tests are a little mixed, but overall the stock price seems reasonable.
When I look at analysts' recommendations, I find only Strong Buy and Buy recommendations. The majority of the recommendations are Buys and the consensus recommendation would be a Buy. Consensus 12 months stock price is $26.30. This consensus stock price implies a Total return of 31.6%, with 30% from capital gain and 1.6% from dividends. Dividends income would represent some 5% of the total return.
Canaccord Genuity Corp is one analyst to give this stock a Buy recommendation. See to see why. The analyst David Tyerman feels the buy recommendation reflects Linamar's stronger growth potential. There is a G&M article called Recovery picks up for auto parts suppliers on theirsite.
Obviously some analysts feel that this is going to grow over the next while. However, to me this company is still in the Auto business and there is a worldwide glut of cars. The world might be heading into another worldwide recession. For me, this would be a risky investment with not much hope of it doing well in dividends for me. Insiders seem optimistic, though.
Linamar Corporation is a diversified global manufacturing company of highly engineered products. It is a world-class designer and diversified manufacturer of precision metallic components and systems for the automotive industry, and mobile industrial markets. Its web site is here Linamar. See my spreadsheet at lnr.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.
Tuesday, July 31, 2012
Monday, July 30, 2012
Linamar Corporation
On my other blog is some comment on "Dividend and Interest Return". See comments blog.
I do not own this stock of Linamar Corporation (TSX-LNR). I am been tracking this company for some time. It is a stock that I notice has been recommended as good value and a dividend payer. When I initially looked at this stock back in 2000 I did not think it was a stock that fit my investment philosophy. It is not a stock I would want to buy and hold.
This stock reached a peak in 1998 as far as stock price goes, because the P/E went way up. The P/E Ratio probably had a peak around 30. The P/E has since been lower and the 10 year median high P/E is just 15.58. It is an auto parts supplier and this has been a tough business to be in over the past while.
It is a dividend paying company and dividends have increased over time. However, increases are inconsistent. The company tends to have the same dividend for a while and then goes to a big increase. The last increase was in 2011 and it was for 33%. The 5 and 10 year growth dividends are 5.9% and 7.2% per year, respectively.
Note that they temporarily reduced dividends by 50% in 2009 a year they had an earnings loss. It was probably prudent, but hard is a shareholder depends on dividends.
Dividend yields are low, with a 5 year median yield of just 1.59%. The Dividend Payout Ratios are also quite low with the 5 year median DPRs being 11.95% for earnings and 6.68% for cash flow. You would not buy this stock for their dividends. When I buy stocks with low dividend yields I like them to have very good dividend growth. This company has rather low dividend yields and rather moderate dividend growth. However, it is good to look at all sorts of companies. This is the way you find ones that you like.
Total return on this company has not been very good over the past 5 and 10 years. Total return was 1.80% and 2.90% per year over these periods. The Dividend portion of this return was 1.66% and 1.61% per year. That makes the dividends 92% and 55% of the total returns during these periods. Capital gain was just 0.14% and 1.29% per year during these periods.
Best growth for this company was in Revenue per share at 6.43% and 9.75% per year over the past 5 and 10 years. The number of shares outstanding has been going down marginally, so Revenue growth is not quite as good with the 5 and 10 year growth at 4.8% and 9% per year.
There is not much growth in earnings, but 10 year growth is better than 5 year growth. The 5 and 10 year growth in EPS is 2.3% and 7% per year, respectively. Growth in cash flow is better with growth in CFPS for the last 5 and 10 years at 4.8% and 8.2% per year, respectively. Growth in Book Value is also low with BVPS growing over the past 5 and 10 years at 3.2% and 5.7% per year, respectively.
The Return on Equity for the financial year of 2011 was 11.1%. Both this and the 5 year median ROE at 10.3% are good. However, the ROE using comprehensive income is lower at 8.1% for 2011 and it has a 5 year median of 7.9%. This would tend to question whether the quality of the earnings for this company is quite as good as it first appears.
The current Liquidity Ratio is very good at 1.75. However this ratio has bounced around a bit, and has a 5 and 10 year median ratios of 1.52 and 1.37. However, cash flow is good for this company. The current Debt Ratio is 1.68 and this one has often been quite strong and the company has 5 and 10 year median ratios of 1.90 and 1.99. The current Leverage Debt/Equity Ratios are fine at 2.47 and 1.47, respectively.
The problem I see with this stock and why I would not currently invest in it is that it is not a good dividend paying stock. For me, if a stock has a low dividend yield, I would like it to have very good dividend growth. The higher the yield on a stock, the lower the growth I will accept. This stock has low dividend yield and only a moderate growth in dividends.
The dividend yield potential on your original purchase price after 10 and 15 years of owning this stock with dividend increases based on the 5 year median growth rate would only be about 2.6% and 3.5%.
I track a number of stocks, even ones I would not buy if for no other purpose than for comparison.
Linamar Corporation is a diversified global manufacturing company of highly engineered products. It is a world-class designer and diversified manufacturer of precision metallic components and systems for the automotive industry, and mobile industrial markets. Its web site is here Linamar. See my spreadsheet at lnr.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 do not own this stock of Linamar Corporation (TSX-LNR). I am been tracking this company for some time. It is a stock that I notice has been recommended as good value and a dividend payer. When I initially looked at this stock back in 2000 I did not think it was a stock that fit my investment philosophy. It is not a stock I would want to buy and hold.
This stock reached a peak in 1998 as far as stock price goes, because the P/E went way up. The P/E Ratio probably had a peak around 30. The P/E has since been lower and the 10 year median high P/E is just 15.58. It is an auto parts supplier and this has been a tough business to be in over the past while.
It is a dividend paying company and dividends have increased over time. However, increases are inconsistent. The company tends to have the same dividend for a while and then goes to a big increase. The last increase was in 2011 and it was for 33%. The 5 and 10 year growth dividends are 5.9% and 7.2% per year, respectively.
Note that they temporarily reduced dividends by 50% in 2009 a year they had an earnings loss. It was probably prudent, but hard is a shareholder depends on dividends.
Dividend yields are low, with a 5 year median yield of just 1.59%. The Dividend Payout Ratios are also quite low with the 5 year median DPRs being 11.95% for earnings and 6.68% for cash flow. You would not buy this stock for their dividends. When I buy stocks with low dividend yields I like them to have very good dividend growth. This company has rather low dividend yields and rather moderate dividend growth. However, it is good to look at all sorts of companies. This is the way you find ones that you like.
Total return on this company has not been very good over the past 5 and 10 years. Total return was 1.80% and 2.90% per year over these periods. The Dividend portion of this return was 1.66% and 1.61% per year. That makes the dividends 92% and 55% of the total returns during these periods. Capital gain was just 0.14% and 1.29% per year during these periods.
Best growth for this company was in Revenue per share at 6.43% and 9.75% per year over the past 5 and 10 years. The number of shares outstanding has been going down marginally, so Revenue growth is not quite as good with the 5 and 10 year growth at 4.8% and 9% per year.
There is not much growth in earnings, but 10 year growth is better than 5 year growth. The 5 and 10 year growth in EPS is 2.3% and 7% per year, respectively. Growth in cash flow is better with growth in CFPS for the last 5 and 10 years at 4.8% and 8.2% per year, respectively. Growth in Book Value is also low with BVPS growing over the past 5 and 10 years at 3.2% and 5.7% per year, respectively.
The Return on Equity for the financial year of 2011 was 11.1%. Both this and the 5 year median ROE at 10.3% are good. However, the ROE using comprehensive income is lower at 8.1% for 2011 and it has a 5 year median of 7.9%. This would tend to question whether the quality of the earnings for this company is quite as good as it first appears.
The current Liquidity Ratio is very good at 1.75. However this ratio has bounced around a bit, and has a 5 and 10 year median ratios of 1.52 and 1.37. However, cash flow is good for this company. The current Debt Ratio is 1.68 and this one has often been quite strong and the company has 5 and 10 year median ratios of 1.90 and 1.99. The current Leverage Debt/Equity Ratios are fine at 2.47 and 1.47, respectively.
The problem I see with this stock and why I would not currently invest in it is that it is not a good dividend paying stock. For me, if a stock has a low dividend yield, I would like it to have very good dividend growth. The higher the yield on a stock, the lower the growth I will accept. This stock has low dividend yield and only a moderate growth in dividends.
The dividend yield potential on your original purchase price after 10 and 15 years of owning this stock with dividend increases based on the 5 year median growth rate would only be about 2.6% and 3.5%.
I track a number of stocks, even ones I would not buy if for no other purpose than for comparison.
Linamar Corporation is a diversified global manufacturing company of highly engineered products. It is a world-class designer and diversified manufacturer of precision metallic components and systems for the automotive industry, and mobile industrial markets. Its web site is here Linamar. See my spreadsheet at lnr.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.
Friday, July 27, 2012
Granite Real Estate 2
I so not own this stock (TSX-GRT, NYSE-GRP), but I used to. I owned it as MI Developments (TSX-MIM.A). I bought this stock in 2003 and some more in 2006. The stock started going down in 2008 and was quite low in 2009. When it recovered a bit, I sold.
The insider trading report shows no insider buying or insider selling over the past year. The report also shows that Granite has been buying back stock for cancellation over the past year. Insiders do not have much in the way of options, but they have substitutes for options called Deferred Share Units and Restricted Share Units. Insiders have a lot more options or options substitutes than they do shares. In fact very few insiders have shares.
There are some 119 institutions that hold 78.5% of the outstanding shares on July 27, 2012. Over the past 3 months institutions have reduced their holdings by 3.9%. This is certainly a negative.
I can get no fix on historical median Price/Earnings Ratios as there have been a number of years with negative earnings and earnings have also bounced around a lot. The current P/E Ratio is 17 on a stock price of $35.19. This is a reasonable P/E Ratio.
I get 10 year low, median and high Price/Graham Price Ratios of 1.04, 123 and 1.41. The current P/GP Ratio of 1.16 on a stock price of $35.19 is a reasonable ratio and shows a reasonable stock price.
I get a 10 year Price/Book Value Ratio of 0.73. The current one of 1.63 is 125% higher. However, a P/B Ratio of 0.73 is a very low P/B Ratio and 1.63 is a reasonable one. On a relative basis, the P/B Ratio is high, but not on an absolute basis.
The 5 year median dividend yield is 2.8%. The current dividend yield is a lot higher, in fact 103% higher at 5.68%. This shows that the current stock price is quite low. However, the company has just increased the dividend by a lot.
When I look for analysts' recommendations, I find only one and it is a Buy. This stock is also listed on the NYSE and The Street has just upgraded NYSE-GRP from a Hold to a Buy. See their site. Seeking Alpha did a screening for high profit, high yield stock with Analysts confidence and this is one of three companies they came up with. See their site.
It has a very good yield and a reasonable stock price. Others may like this company, but it would not be my first choice for a real estate stock at the moment.
Granite is a global real estate operating company engaged principally in the acquisition, development, construction, leasing, management and ownership of a predominantly industrial rental portfolio of properties in North America and Europe leased primarily to Magna and its automotive operating units. Members of the Magna International Inc. group of companies are our primary tenants. Its web site is here Granite Real Estate. See my spreadsheet at grt.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.
The insider trading report shows no insider buying or insider selling over the past year. The report also shows that Granite has been buying back stock for cancellation over the past year. Insiders do not have much in the way of options, but they have substitutes for options called Deferred Share Units and Restricted Share Units. Insiders have a lot more options or options substitutes than they do shares. In fact very few insiders have shares.
There are some 119 institutions that hold 78.5% of the outstanding shares on July 27, 2012. Over the past 3 months institutions have reduced their holdings by 3.9%. This is certainly a negative.
I can get no fix on historical median Price/Earnings Ratios as there have been a number of years with negative earnings and earnings have also bounced around a lot. The current P/E Ratio is 17 on a stock price of $35.19. This is a reasonable P/E Ratio.
I get 10 year low, median and high Price/Graham Price Ratios of 1.04, 123 and 1.41. The current P/GP Ratio of 1.16 on a stock price of $35.19 is a reasonable ratio and shows a reasonable stock price.
I get a 10 year Price/Book Value Ratio of 0.73. The current one of 1.63 is 125% higher. However, a P/B Ratio of 0.73 is a very low P/B Ratio and 1.63 is a reasonable one. On a relative basis, the P/B Ratio is high, but not on an absolute basis.
The 5 year median dividend yield is 2.8%. The current dividend yield is a lot higher, in fact 103% higher at 5.68%. This shows that the current stock price is quite low. However, the company has just increased the dividend by a lot.
When I look for analysts' recommendations, I find only one and it is a Buy. This stock is also listed on the NYSE and The Street has just upgraded NYSE-GRP from a Hold to a Buy. See their site. Seeking Alpha did a screening for high profit, high yield stock with Analysts confidence and this is one of three companies they came up with. See their site.
It has a very good yield and a reasonable stock price. Others may like this company, but it would not be my first choice for a real estate stock at the moment.
Granite is a global real estate operating company engaged principally in the acquisition, development, construction, leasing, management and ownership of a predominantly industrial rental portfolio of properties in North America and Europe leased primarily to Magna and its automotive operating units. Members of the Magna International Inc. group of companies are our primary tenants. Its web site is here Granite Real Estate. See my spreadsheet at grt.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.
Thursday, July 26, 2012
Granite Real Estate
I so not own this stock (TSX-GRT, NYSE-GRP), but I used to. I owned it as MI Developments (TSX-MIM.A). I bought this stock in 2003 and some more in 2006. The stock started going down in 2008 and was quite low in 2009. When it recovered a bit, I sold.
I lost about 67% of my money. I should probably have waited a bit as the stock price has recovered. I earned dividends too, so my loss is something like 59%. I had lost hope in this stock and felt that it was time to sell and move on. This was a company that Frank Stronach has multiple voting shares in and therefore he controlled the company.
Dividends have fluctuated on this stock. The dividends were initially moved down a bit in 2010, but in 2011 they were moved back up again and then there was a big increase in 2012. The current dividends are over 200% higher than what they were in 2009. The other change they have recently made in dividends is to change the dividends from US$ to CDN$ (as of the May 2012 dividend).
I do not think that past Revenue will inform us much on future growth. There was a huge drop in revenue in 2011 as the Company's Racing & Gaming Business was given to Frank Stronach to buy his multiple voting shares.
As far as earnings go, from 2008 to 2010 inclusive was years of losses. However, earnings were positive in 2011 and analysts are expecting a very nice increase in earnings for 2012. The company's recent increase in dividends would also suggest that the company is expecting a nice increase in earnings for 2012. In the first quarter of 2012, earnings were $.63 compared to consensus expected earnings of $.60.
As far as total returns over the past 5 and 10 years, this company has not done well. Over the past 5 year period, the total returns are a loss of 3.07% per year with capital loss of 4.81% per year and dividends at 1.74% per year. The 10 year period was not great with total returns of 4.27% per year with capital gains of 2.2% per year and dividends of 2.07% per year. Dividends were almost 49% of the total returns over this period.
Cash flow was better with the 5 and 10 year growth rates of 16.5% per year and 4.4% per year, respectively. There was no growth in book value and it was down substantially over the past 5 and 10 years.
However, considering the recent big change in management, what this stock has done or not done in the past may have no value now in determining how the future may go. The other recent big change is that the past financial reports were using US currency, but the most recent quarterly report was in CDN currency. This quarterly report was still using US GAAP rules.
For Return on Equity calculation, I am using the earnings on continuing operations as most analysts' are. That gives an ROE of just 6.62%. The 5 year median ROE is below 0%, as there have been a number of years of losses.
The current Liquidity Ratio is 1.48 and this is a fine ratio. The 5 year median ratio is 1.33, which is a bit low. The liquidity ratio has often moved around a lot over the years. The Debt Ratio is very good at 3.50. The Debt Ratio has a very good 5 year median ratio 3.70.
Current Leverage and Debt/Equity Ratios are also good at 1.40 and 0.40 respectively. Their 5 year median ratios are also good at 1.60 and 0.60.
It is hard to say how well this stock is going to do. I have read reports year after year of how great a company this was as an investment, but none of this has come true. Maybe this stock will now live up to the potential some analysts have felt it had over the past few years. Management is certainly optimistic amount the company's future with their recent dividend increase.
Granite is a global real estate operating company engaged principally in the acquisition, development, construction, leasing, management and ownership of a predominantly industrial rental portfolio of properties in North America and Europe leased primarily to Magna and its automotive operating units. Members of the Magna International Inc. group of companies are our primary tenants. Its web site is here Granite Real Estate. See my spreadsheet at grt.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 lost about 67% of my money. I should probably have waited a bit as the stock price has recovered. I earned dividends too, so my loss is something like 59%. I had lost hope in this stock and felt that it was time to sell and move on. This was a company that Frank Stronach has multiple voting shares in and therefore he controlled the company.
Dividends have fluctuated on this stock. The dividends were initially moved down a bit in 2010, but in 2011 they were moved back up again and then there was a big increase in 2012. The current dividends are over 200% higher than what they were in 2009. The other change they have recently made in dividends is to change the dividends from US$ to CDN$ (as of the May 2012 dividend).
I do not think that past Revenue will inform us much on future growth. There was a huge drop in revenue in 2011 as the Company's Racing & Gaming Business was given to Frank Stronach to buy his multiple voting shares.
As far as earnings go, from 2008 to 2010 inclusive was years of losses. However, earnings were positive in 2011 and analysts are expecting a very nice increase in earnings for 2012. The company's recent increase in dividends would also suggest that the company is expecting a nice increase in earnings for 2012. In the first quarter of 2012, earnings were $.63 compared to consensus expected earnings of $.60.
As far as total returns over the past 5 and 10 years, this company has not done well. Over the past 5 year period, the total returns are a loss of 3.07% per year with capital loss of 4.81% per year and dividends at 1.74% per year. The 10 year period was not great with total returns of 4.27% per year with capital gains of 2.2% per year and dividends of 2.07% per year. Dividends were almost 49% of the total returns over this period.
Cash flow was better with the 5 and 10 year growth rates of 16.5% per year and 4.4% per year, respectively. There was no growth in book value and it was down substantially over the past 5 and 10 years.
However, considering the recent big change in management, what this stock has done or not done in the past may have no value now in determining how the future may go. The other recent big change is that the past financial reports were using US currency, but the most recent quarterly report was in CDN currency. This quarterly report was still using US GAAP rules.
For Return on Equity calculation, I am using the earnings on continuing operations as most analysts' are. That gives an ROE of just 6.62%. The 5 year median ROE is below 0%, as there have been a number of years of losses.
The current Liquidity Ratio is 1.48 and this is a fine ratio. The 5 year median ratio is 1.33, which is a bit low. The liquidity ratio has often moved around a lot over the years. The Debt Ratio is very good at 3.50. The Debt Ratio has a very good 5 year median ratio 3.70.
Current Leverage and Debt/Equity Ratios are also good at 1.40 and 0.40 respectively. Their 5 year median ratios are also good at 1.60 and 0.60.
It is hard to say how well this stock is going to do. I have read reports year after year of how great a company this was as an investment, but none of this has come true. Maybe this stock will now live up to the potential some analysts have felt it had over the past few years. Management is certainly optimistic amount the company's future with their recent dividend increase.
Granite is a global real estate operating company engaged principally in the acquisition, development, construction, leasing, management and ownership of a predominantly industrial rental portfolio of properties in North America and Europe leased primarily to Magna and its automotive operating units. Members of the Magna International Inc. group of companies are our primary tenants. Its web site is here Granite Real Estate. See my spreadsheet at grt.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.
Wednesday, July 25, 2012
Waterfurnace Renewable Energy Inc 2
On my other blog is some comment on "Price/Earnings Ratios". See comments blog.
I do not own this stock of Waterfurnace Renewable Energy (TSX-WFI). I started reviewing this stock in February 2009 because I saw it being reviewed in the Investment Reporter. See their site here. At that time they thought that it was a risky investment, but it is a buy for capital gains and dividend income.
When I look at the insider trading report for the past year, there is both insider buying and insider selling, but both of very minimal amounts. This tells us nothing. There are some options outstanding but of a very minimal amount. Insiders own some shares, and looking only at the ones with the largest number of shares, I get insider with 12% plus in company shares. There are a number of insiders who own a few million dollars in shares.
There are 19 institutions that own about 34% of the outstanding shares. Over the past 3 months they have increased their shares by 1.5%.
I get 5 year low, median and high Price/Earnings Ratios of 16.74, 19.13 and 23.39. The current P/E ratio of 13.27 on a stock price of $16.06 is relatively low. This low P/E shows a relatively very good stock price. However, a P/E Ratio of 13.27 is, in absolute terms, a reasonable ratios rather than a low one.
I get a current Graham price of $9.53. The 10 year low, median and high P/GP Ratios are 1.92, 2.53 and 3.06. The current P/GP Ratio of 1.69 shows a relatively low current stock price. However, in absolute terms, for a stock is to be considered low, it would have to be at or lower than the Graham Price.
The 10 year Price/Book Value Ratio is 7.95. The current one of 3.33 is only 60% of the 10 year ratio. However, a P/B Ratio of 7.95 is quite high. 3.33 is a more reasonable ratio.
On a relative basis the current stock price is low; however, on an absolute basis it is closer to reasonable.
There only appears to be only a couple of analysts following this stock. One gives a Strong Buy recommendation and one gives a Hold recommendation. This would give a consensus of a Buy recommendation.
Consensus 12 month Stock price is $22.86, with one of $21.96 and one of 23.87. The 12 months price of $21.96 would give a total return of 42.7%, with 36.7 from capital gain and 6% from dividends. They both assume a good price recover in the next 12 months.
There is a good article on this stock at Canadian Financial DIY. This article states that there could be increased pressure from Natural Gas. Article also questions big recent salary increases and Warranty provisions. See also an article on Heat Pumps at Renewable Energy network.
From my analysis, the stock price seems reasonable and relatively low. Dividend yield is currently very good at 6%. I see no reason why dividend might be cut as DPRs are fine and this stock's debt levels are quite low. However, stock is still rather risky. Insiders own shares and managements have expressed its faith in this company with the 9.1% dividend increase in 2011.
Waterfurnace Renewable Energy Inc. is a manufacturer and distributor of residential and commercial geothermal and other water source heating and cooling systems. This is an international company with 80% of its revenue from the US. It has revenue from Canada of just over 16% and the rest of the world under 3%. Its web site is here Waterfurnace. See my spreadsheet at wfi.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 do not own this stock of Waterfurnace Renewable Energy (TSX-WFI). I started reviewing this stock in February 2009 because I saw it being reviewed in the Investment Reporter. See their site here. At that time they thought that it was a risky investment, but it is a buy for capital gains and dividend income.
When I look at the insider trading report for the past year, there is both insider buying and insider selling, but both of very minimal amounts. This tells us nothing. There are some options outstanding but of a very minimal amount. Insiders own some shares, and looking only at the ones with the largest number of shares, I get insider with 12% plus in company shares. There are a number of insiders who own a few million dollars in shares.
There are 19 institutions that own about 34% of the outstanding shares. Over the past 3 months they have increased their shares by 1.5%.
I get 5 year low, median and high Price/Earnings Ratios of 16.74, 19.13 and 23.39. The current P/E ratio of 13.27 on a stock price of $16.06 is relatively low. This low P/E shows a relatively very good stock price. However, a P/E Ratio of 13.27 is, in absolute terms, a reasonable ratios rather than a low one.
I get a current Graham price of $9.53. The 10 year low, median and high P/GP Ratios are 1.92, 2.53 and 3.06. The current P/GP Ratio of 1.69 shows a relatively low current stock price. However, in absolute terms, for a stock is to be considered low, it would have to be at or lower than the Graham Price.
The 10 year Price/Book Value Ratio is 7.95. The current one of 3.33 is only 60% of the 10 year ratio. However, a P/B Ratio of 7.95 is quite high. 3.33 is a more reasonable ratio.
On a relative basis the current stock price is low; however, on an absolute basis it is closer to reasonable.
There only appears to be only a couple of analysts following this stock. One gives a Strong Buy recommendation and one gives a Hold recommendation. This would give a consensus of a Buy recommendation.
Consensus 12 month Stock price is $22.86, with one of $21.96 and one of 23.87. The 12 months price of $21.96 would give a total return of 42.7%, with 36.7 from capital gain and 6% from dividends. They both assume a good price recover in the next 12 months.
There is a good article on this stock at Canadian Financial DIY. This article states that there could be increased pressure from Natural Gas. Article also questions big recent salary increases and Warranty provisions. See also an article on Heat Pumps at Renewable Energy network.
From my analysis, the stock price seems reasonable and relatively low. Dividend yield is currently very good at 6%. I see no reason why dividend might be cut as DPRs are fine and this stock's debt levels are quite low. However, stock is still rather risky. Insiders own shares and managements have expressed its faith in this company with the 9.1% dividend increase in 2011.
Waterfurnace Renewable Energy Inc. is a manufacturer and distributor of residential and commercial geothermal and other water source heating and cooling systems. This is an international company with 80% of its revenue from the US. It has revenue from Canada of just over 16% and the rest of the world under 3%. Its web site is here Waterfurnace. See my spreadsheet at wfi.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
Tuesday, July 24, 2012
Waterfurnace Renewable Energy Inc
I do not own this stock (TSX-WFI). I started reviewing this stock in February 2009 because I saw it being reviewed in the Investment Reporter. See their site here. At that time they thought that it was a risky investment, but it is a buy for capital gains and dividend income.
The one main problem Canadians may have with this stock is that it gets most of its money from the US and therefore it pays dividends in US$ and reports in US$. This could also, of course, be a plus as it gives Canadian investors exposure to the US market. All my values are based on the Canadian currency, because in the final analysis, what is important to a Canadian investor is how well an investment is doing in the Canadian currency.
Because they got so much of their money from the US, this company pays dividends in US$. This will naturally add volatility to dividend payments. At best, every dividend payment will differ slightly. At worse, because changes in our currency against the US currency you may not see the benefit of dividend increases or they may be magnified.
Growth in dividends has certainly been better in US$ terms with the 5 and 10 year growth at 12.5% and 17.4% per year respectively. Growth in CDN$ terms over the past 5 and 10 years is at 5.6% and 14% per year, respectively. Of course, the future is not necessarily like the past when it comes to exchange rates.
As far as total returns go, this is negative for the past 5 years, with total returns down 5.89%. Dividend returns were 3.87%. Capital losses were at 9.76%. The thing with dividend paying stock is that you earn income while you wait for better times.
However, the 10 year total returns on this stock were great with total returns at 25.54% per year. The dividend portion of this return was 7.85% per year at 30% of the total return. Capital gain was 17.70% per year.
The 5 year median Dividend Payout Ratios for earnings is at 74% and for cash flow is at 64%. The DPRs for 2011 were at 79% for earnings and 64% for cash flow. The DPR for this year for earnings is expected at 81%. (The 10 year median DPR for earnings is higher than the 5 year one and it is at 78%.) (See my site for information on Dividend Payout Ratios).
There is not much difference between revenue and revenue per share growth as the number of shares over the past 5 and 10 years has changed only marginally. The revenue per share growth is the lowest growth for this company with 5 and 10 year growth at 5.6% and 6.2% per year, respectively.
The company has obviously become more efficient, because it has better growth in earnings and cash flow than in revenue. However, this can only go so far. Eventually, it will need better growth in revenue to push better growth in earnings and cash flow.
Growth in Earnings per share is good, with the 5 and 10 year growth in EPS at 7.7% and 9.3% per year, respectively. Growth in cash flow per share is also good, with the 5 and 10 year growth at 10.2% and 8.6% per year, respectively.
Growth in book value is better over the past 5 years than over the past 10 years with 5 year growth quite good at 14% per year and 10 year growth lower at 6.7% per year.
The return on equity for this stock has always been very good, with the ROE for 2011 at 33.4% and the 5 year median ROE at 47.3%. The ROE for comprehensive income is the same as the ROE on net income as there is no difference between comprehensive income and net income.
The last thing to look at is debt ratios. The debt ratios on this stock are very good as the company has little debt. The current Liquidity Ratio at 5.15 is very high as it the lower but still high 5 year median Liquidity Ratio at 4.14. The current Debt Ratio is also very good at 2.45. The 5 year median ratio is 2.47.
The current Leverage and Debt/Equity Ratio are also very good. Here lower is better and these ratios are currently at 1.69 and 0.69. The 10 year median ratios are also very good at 1.66 and 0.66.
This is a rather small company so it is riskier than a lot of dividend paying stock. The company has not financially recovered from 2008, but it is making headway. Since its head office is in Fort Wayne, Indiana, USA, it is essentially an American company listed on the TSX. It has the potential to produce for dividends and capital gains for its shareholders.
WaterFurnace International, Inc. is a leading manufacturer of residential, commercial, industrial and institutional geothermal and water source heat pumps. Products from WaterFurnace include energy-efficient and environmentally friendly geothermal comfort systems, indoor air quality products and pool heaters. Its web site is here Waterfurnace. See my spreadsheet at wfi.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.
The one main problem Canadians may have with this stock is that it gets most of its money from the US and therefore it pays dividends in US$ and reports in US$. This could also, of course, be a plus as it gives Canadian investors exposure to the US market. All my values are based on the Canadian currency, because in the final analysis, what is important to a Canadian investor is how well an investment is doing in the Canadian currency.
Because they got so much of their money from the US, this company pays dividends in US$. This will naturally add volatility to dividend payments. At best, every dividend payment will differ slightly. At worse, because changes in our currency against the US currency you may not see the benefit of dividend increases or they may be magnified.
Growth in dividends has certainly been better in US$ terms with the 5 and 10 year growth at 12.5% and 17.4% per year respectively. Growth in CDN$ terms over the past 5 and 10 years is at 5.6% and 14% per year, respectively. Of course, the future is not necessarily like the past when it comes to exchange rates.
As far as total returns go, this is negative for the past 5 years, with total returns down 5.89%. Dividend returns were 3.87%. Capital losses were at 9.76%. The thing with dividend paying stock is that you earn income while you wait for better times.
However, the 10 year total returns on this stock were great with total returns at 25.54% per year. The dividend portion of this return was 7.85% per year at 30% of the total return. Capital gain was 17.70% per year.
The 5 year median Dividend Payout Ratios for earnings is at 74% and for cash flow is at 64%. The DPRs for 2011 were at 79% for earnings and 64% for cash flow. The DPR for this year for earnings is expected at 81%. (The 10 year median DPR for earnings is higher than the 5 year one and it is at 78%.) (See my site for information on Dividend Payout Ratios).
There is not much difference between revenue and revenue per share growth as the number of shares over the past 5 and 10 years has changed only marginally. The revenue per share growth is the lowest growth for this company with 5 and 10 year growth at 5.6% and 6.2% per year, respectively.
The company has obviously become more efficient, because it has better growth in earnings and cash flow than in revenue. However, this can only go so far. Eventually, it will need better growth in revenue to push better growth in earnings and cash flow.
Growth in Earnings per share is good, with the 5 and 10 year growth in EPS at 7.7% and 9.3% per year, respectively. Growth in cash flow per share is also good, with the 5 and 10 year growth at 10.2% and 8.6% per year, respectively.
Growth in book value is better over the past 5 years than over the past 10 years with 5 year growth quite good at 14% per year and 10 year growth lower at 6.7% per year.
The return on equity for this stock has always been very good, with the ROE for 2011 at 33.4% and the 5 year median ROE at 47.3%. The ROE for comprehensive income is the same as the ROE on net income as there is no difference between comprehensive income and net income.
The last thing to look at is debt ratios. The debt ratios on this stock are very good as the company has little debt. The current Liquidity Ratio at 5.15 is very high as it the lower but still high 5 year median Liquidity Ratio at 4.14. The current Debt Ratio is also very good at 2.45. The 5 year median ratio is 2.47.
The current Leverage and Debt/Equity Ratio are also very good. Here lower is better and these ratios are currently at 1.69 and 0.69. The 10 year median ratios are also very good at 1.66 and 0.66.
This is a rather small company so it is riskier than a lot of dividend paying stock. The company has not financially recovered from 2008, but it is making headway. Since its head office is in Fort Wayne, Indiana, USA, it is essentially an American company listed on the TSX. It has the potential to produce for dividends and capital gains for its shareholders.
WaterFurnace International, Inc. is a leading manufacturer of residential, commercial, industrial and institutional geothermal and water source heat pumps. Products from WaterFurnace include energy-efficient and environmentally friendly geothermal comfort systems, indoor air quality products and pool heaters. Its web site is here Waterfurnace. See my spreadsheet at wfi.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.
Monday, July 23, 2012
Teck Resources Ltd 2
On my other blog is some comment on "Cash Flow Importance". See comments blog.
I do not own this stock of Teck Resources Ltd. (TSX-TCK.B). I follow a few resource stocks, but generally do not own much. TSX is heavy with resource stocks, so I just like to know what is going on with them.
When I look at insider trading, I find $1.3M of insider selling. As there is also insider buying, the net insider selling is just below $0.4M. There are lots of outstanding options and option like things. Insiders not only have Options, but Deferred Share Units and Restricted Share Units. Everyone, with the exception of a few directors, have lots more options and option like things than shares.
Insider and some companies own the Class A shares, which has 100 votes per share compared to the 1 vote per share of Class B shares. Caisse de dépôt et placement du Québec has almost 17% of Class A shares. Sumitomo Metal Mining Co. Ltd. has about 16% of Class A shares and Temagami Mining Company has about 46% of Class A shares.
There are some 463 institutions that hold 37% of the outstanding shares and they have marginally increased their shares over the past 3 months (0.1%). Basically there is no change in what they are holding.
I have 5 year low, median and high Price/Earnings Ratios of 6.38, 11.72 and 14.28. The 10 year median Price/Earnings Ratios are not far off this. The current P/E Ratio 8.92 on a stock price of $30.28 shows a rather reasonable stock price.
I get a Graham Price of $49.01. The 10 year low, median and high Price/Graham Price Ratios 0.68, 0.97 and 1.26. The current P/GP is 0.63. This shows that the current stock price of $30.28 is very good.
The 10 year median Price/Book Value Ratio is 1.85. The current P/B Ratio is 0.99. Not only is the current price below the Book Value, the P/B Ratio it is only 46% of the 10 year median.
For the dividend yield I am comparing the current one to the 10 year median dividend yield. This is because we had one recent year of no dividends. The 10 year median dividend yield is 1.44%. The current yield is some 80% lower than then the 10 year median. It is also lower than the 10 year high dividend yield of 2.03%. This shows a very good current relative price.
All the test show that the stock price is relatively very good. However, this is not a dividend growth stock and dividends can fluctuate. Over the past 10 years, dividends only made up about 3% per year of the total return per year or 14% of the total return. I think you would buy this stock to get capital gains, not dividends.
When I look at analysts' recommendations I find Strong Buy, Buy, Hold and Underperform. However, the overwhelming recommendation is Strong Buy and this is the consensus recommendations. One Strong Buy analyst said that this company should be a core investment in the Canadian base metals sector.
Consensus 12 month Stock price is $49.30. This implies a total return of 34% with only 2.6% from dividends. So what this really is a capital gains play. We are in a long term secular bear market, so if you make a capital gains play, it is should be a short term investment.
Teck is a diversified resource company involved in mining and mineral development with major business units focused on copper, metallurgical coal, zinc, gold and energy. This company has interests in several oil sands developments. The company explores for resources in the Americas, the Asia Pacific Region, Europe and Africa. Its web site is here Teck. See my spreadsheet at tck.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 do not own this stock of Teck Resources Ltd. (TSX-TCK.B). I follow a few resource stocks, but generally do not own much. TSX is heavy with resource stocks, so I just like to know what is going on with them.
When I look at insider trading, I find $1.3M of insider selling. As there is also insider buying, the net insider selling is just below $0.4M. There are lots of outstanding options and option like things. Insiders not only have Options, but Deferred Share Units and Restricted Share Units. Everyone, with the exception of a few directors, have lots more options and option like things than shares.
Insider and some companies own the Class A shares, which has 100 votes per share compared to the 1 vote per share of Class B shares. Caisse de dépôt et placement du Québec has almost 17% of Class A shares. Sumitomo Metal Mining Co. Ltd. has about 16% of Class A shares and Temagami Mining Company has about 46% of Class A shares.
There are some 463 institutions that hold 37% of the outstanding shares and they have marginally increased their shares over the past 3 months (0.1%). Basically there is no change in what they are holding.
I have 5 year low, median and high Price/Earnings Ratios of 6.38, 11.72 and 14.28. The 10 year median Price/Earnings Ratios are not far off this. The current P/E Ratio 8.92 on a stock price of $30.28 shows a rather reasonable stock price.
I get a Graham Price of $49.01. The 10 year low, median and high Price/Graham Price Ratios 0.68, 0.97 and 1.26. The current P/GP is 0.63. This shows that the current stock price of $30.28 is very good.
The 10 year median Price/Book Value Ratio is 1.85. The current P/B Ratio is 0.99. Not only is the current price below the Book Value, the P/B Ratio it is only 46% of the 10 year median.
For the dividend yield I am comparing the current one to the 10 year median dividend yield. This is because we had one recent year of no dividends. The 10 year median dividend yield is 1.44%. The current yield is some 80% lower than then the 10 year median. It is also lower than the 10 year high dividend yield of 2.03%. This shows a very good current relative price.
All the test show that the stock price is relatively very good. However, this is not a dividend growth stock and dividends can fluctuate. Over the past 10 years, dividends only made up about 3% per year of the total return per year or 14% of the total return. I think you would buy this stock to get capital gains, not dividends.
When I look at analysts' recommendations I find Strong Buy, Buy, Hold and Underperform. However, the overwhelming recommendation is Strong Buy and this is the consensus recommendations. One Strong Buy analyst said that this company should be a core investment in the Canadian base metals sector.
Consensus 12 month Stock price is $49.30. This implies a total return of 34% with only 2.6% from dividends. So what this really is a capital gains play. We are in a long term secular bear market, so if you make a capital gains play, it is should be a short term investment.
Teck is a diversified resource company involved in mining and mineral development with major business units focused on copper, metallurgical coal, zinc, gold and energy. This company has interests in several oil sands developments. The company explores for resources in the Americas, the Asia Pacific Region, Europe and Africa. Its web site is here Teck. See my spreadsheet at tck.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.
Friday, July 20, 2012
Teck Resources Ltd
I do not own this stock (TSX-TCK.B). I follow a few resource stocks, but generally do not own much. TSX is heavy with resource stocks, so I just like to know what is going on with them. When I reviewed this stock in November 2008, I realized that it was grossly oversold so I bought 100 shares. By May the following year I have made some $1500 so I sold. I guess that I should have held on until it more fully recovered, but I had made some money and I moved on.
In 2008 they had just bought Fording Canadian Coal Trust when the recession hit and had some cash flow problems. They shares got slammed. I thought they would overcome their problems and that is why I bought some shares. Their purchase of Fording just came at the wrong time.
In 2009 they cut their dividends, but in 2010 they reinstated the dividends but the dividends were a lot less. There has been dividend increases, the latest being for 2012 of 33.3%. However, dividends are still some 20% lower than in 2008. Over the past 5 years, dividends are down 9.7% per year. Over the past 10 years, dividends are up 19.6% per year. That said there were many past years when dividends were level. They only started to really go up in 2004.
Dividends have generally been quite low on this stock, which has a 10 year median dividend yield of just 1.44%. The Dividend Payout Ratios have also been quite low, with 10 year median DPR for earnings at 15% and for cash flow at 10.5%. However, these rates hide a lot of volatility that has occurred in DPRs. (I am using 10 year figures rather than 5 year figures because there were no dividends for one and one half years.)
Total return over the past 5 years is negative at 2.38% per year. Dividends came in at 1.37% and capital gain at a negative 3.75%. There is happier news for total return over the past 10 years, with total return at 21.93%. Dividend portion of this is 3.1% and capital gain is 18.82%. Dividends made up some 14% of the total return over the past 10 years.
Outstanding shares have grown, with growth over the past 5 and 10 years at 6.3% and 5% per year. Because of this, things like revenue have grown faster than revenue per share. Revenues over the past 5 and 10 years have grown at the rate of 12% and 17% per year. Revenue per share has grown over the past 5 and 10 years at the rate of 5.3% and 11.6% per year.
Earnings per Share has declined over the past 5 by 4.3% per year. EPS has grown over the past 11 years by 25.5%. (I am using an 11 year figure as 10 years ago, the company lost money and so had a negative EPS figure.)
Cash Flow per shares over the past 5 and 10 years has grown at the rate of 5.5% per year and 24.2% per year, respectively. Book Value per share is up nicely over the past 5 and 10 years with growth at 15% and 16% per year, respectively.
Return on Equity for the financial year ending 2011 was quite good at 15.26%. The 5 year median ROE is good at 12.6%. The ROE on comprehensive income is also quite good at 14.7% with a 5 year median of 13.5%. This ROE confirms the good ROE on net income or earnings.
The Liquidity ratio has varied quite a bit, but it is generally quite good. The current one is rather high 4.15. The 5 year median Liquidity Ratio is lower at 1.90. The Debt Ratio is much less volatile, but still quite good at 2.18, with a 5 year median value of 2.10. (With these ratios, higher is better and you want them at or better than 1.50.)
The Leverage and Debt/Equity Ratios have generally been good and the current ratios are 1.87 and 0.86. The 10 year median values for these ratios are 1.95 and 0.74, respectively. (Here the lower the ratio, the better the ratio.)
I am partial to dividend growth stocks, and I do not consider this to be one of these. If you look what shareholders are getting on their original purchase price after 10, 15 or 10 years, you are lucky to get more than 10% dividend yield. Dividend yield might have grown a lot over the past 10 years, but they grew hardly at all before that.
I will continue to follow this stock as it is a good resource stock to follow, but I would not buy it as a long term investment. Dividends are currently good at 2.6%, but I just do not see shareholders making a good income from this stock.
Teck is a diversified resource company involved in mining and mineral development with major business units focused on copper, metallurgical coal, zinc, gold and energy. This company has interests in several oil sands developments. The company explores for resources in the Americas, the Asia Pacific Region, Europe and Africa. Its web site is here Teck. See my spreadsheet at tck.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.
In 2008 they had just bought Fording Canadian Coal Trust when the recession hit and had some cash flow problems. They shares got slammed. I thought they would overcome their problems and that is why I bought some shares. Their purchase of Fording just came at the wrong time.
In 2009 they cut their dividends, but in 2010 they reinstated the dividends but the dividends were a lot less. There has been dividend increases, the latest being for 2012 of 33.3%. However, dividends are still some 20% lower than in 2008. Over the past 5 years, dividends are down 9.7% per year. Over the past 10 years, dividends are up 19.6% per year. That said there were many past years when dividends were level. They only started to really go up in 2004.
Dividends have generally been quite low on this stock, which has a 10 year median dividend yield of just 1.44%. The Dividend Payout Ratios have also been quite low, with 10 year median DPR for earnings at 15% and for cash flow at 10.5%. However, these rates hide a lot of volatility that has occurred in DPRs. (I am using 10 year figures rather than 5 year figures because there were no dividends for one and one half years.)
Total return over the past 5 years is negative at 2.38% per year. Dividends came in at 1.37% and capital gain at a negative 3.75%. There is happier news for total return over the past 10 years, with total return at 21.93%. Dividend portion of this is 3.1% and capital gain is 18.82%. Dividends made up some 14% of the total return over the past 10 years.
Outstanding shares have grown, with growth over the past 5 and 10 years at 6.3% and 5% per year. Because of this, things like revenue have grown faster than revenue per share. Revenues over the past 5 and 10 years have grown at the rate of 12% and 17% per year. Revenue per share has grown over the past 5 and 10 years at the rate of 5.3% and 11.6% per year.
Earnings per Share has declined over the past 5 by 4.3% per year. EPS has grown over the past 11 years by 25.5%. (I am using an 11 year figure as 10 years ago, the company lost money and so had a negative EPS figure.)
Cash Flow per shares over the past 5 and 10 years has grown at the rate of 5.5% per year and 24.2% per year, respectively. Book Value per share is up nicely over the past 5 and 10 years with growth at 15% and 16% per year, respectively.
Return on Equity for the financial year ending 2011 was quite good at 15.26%. The 5 year median ROE is good at 12.6%. The ROE on comprehensive income is also quite good at 14.7% with a 5 year median of 13.5%. This ROE confirms the good ROE on net income or earnings.
The Liquidity ratio has varied quite a bit, but it is generally quite good. The current one is rather high 4.15. The 5 year median Liquidity Ratio is lower at 1.90. The Debt Ratio is much less volatile, but still quite good at 2.18, with a 5 year median value of 2.10. (With these ratios, higher is better and you want them at or better than 1.50.)
The Leverage and Debt/Equity Ratios have generally been good and the current ratios are 1.87 and 0.86. The 10 year median values for these ratios are 1.95 and 0.74, respectively. (Here the lower the ratio, the better the ratio.)
I am partial to dividend growth stocks, and I do not consider this to be one of these. If you look what shareholders are getting on their original purchase price after 10, 15 or 10 years, you are lucky to get more than 10% dividend yield. Dividend yield might have grown a lot over the past 10 years, but they grew hardly at all before that.
I will continue to follow this stock as it is a good resource stock to follow, but I would not buy it as a long term investment. Dividends are currently good at 2.6%, but I just do not see shareholders making a good income from this stock.
Teck is a diversified resource company involved in mining and mineral development with major business units focused on copper, metallurgical coal, zinc, gold and energy. This company has interests in several oil sands developments. The company explores for resources in the Americas, the Asia Pacific Region, Europe and Africa. Its web site is here Teck. See my spreadsheet at tck.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.
Thursday, July 19, 2012
Pulse Seismic Inc 2
I up dated my July 7th entry on Dividend Growth Index as the Dividend Growth Investor has just posted updates on the stocks he was covering. See my Dividend Growth Index post and Dividend Growth Investor's post.
I do not own this stock of Pulse Seismic Inc. (TSX-PSD). This company did not do well from 2006 to 2010 when the EPS was negative. They prudently cancelled dividends for 2009 and 2010. They restated the dividend payments in the later part of 2011. They increased the dividend after the 1st quarter of 2012 by 60%. However, the dividends are still considerably smaller than those paid in 2008.
The insider trading report says that insider buying was $4.8M and net insider buying was at $4.7M. There is a bit of insider selling. There seems to be a lot of options issued. Plus there are also option like things called Rights LTIP, Rights Performance Share Unit and Rights Restricted Share Unit
The CEO, CFO and officers all have more options than shares. However, the Directors tend to have more shares than options (or option like things). There is one director with an 8% stake in this company. Both the CEO and CFO have stock worth in the $100,000's.
There are 12 institutions that own 17% of the outstanding shares. Over the past 3 months they have increased their shares by 2.2%. This is a positive.
It not possible to come up with past Price/Earnings Ratios as there was a number of years when this company has not earnings. However, the current P/E Ratio of 10.18 is a good ratio.
I can come up with a Graham Price. The 10 year low, median and high Price/Graham Price Ratios are 1.27, 1.54 and 1.80. The current P/GP Ratio is just 0.85 on a Graham Price of $2.64. This suggests a very good current price of $2.24.
However, the Graham Price increased substantially this year because expected earnings are quite high compared with the past. If we use last year's Graham Price of $1.50, I get a P/GP Ratio of 1.49. This suggests a reasonable stock price of $2.24.
I get a 10 year Price/Book Value Ratio of 1.29. The current P/B Ratio is 1.59. This is some 24% higher and would suggest a high relative stock price. Book value was going down because the company was not earning any profits. It is not surprising that the P/B Ratio is higher than the 10 year median ratio.
The current dividend yield is 3.57%. I will use the 10 year median dividend yield rather than the 5 year one as we are missing 3 years of dividends. This 10 year median dividend yield is 3.42% and our current dividend yield is 4.4% higher. This would suggest a good current price.
I do not often talk about the accrual ratio. This is really only important if it is above 5% or below -5%. When it is below -5% it is saying that the stock price is very low. The Accrual Ratio on this stock is -9.2%. Richard Sloan did a paper on this subject some years back. I cannot find my original document, but this one says essentially the same thing. See Smart Money.
When I look for analysts' recommendations, I find Strong Buy, Buy and Underperform recommendations. The consensus would be a Buy. Consensus 12 months stock price is $2.47. This implies a total return 13.8% with 10.3% from capital gain and 3.5% from dividends.
Although the financial are not yet out, Pulse Seismic has put out a news release for 2nd quarter ending in June 2012. It says it has record sales and strong growth in cash flow.
There is an interesting discussion on this stock at Financial Web Ring. Seeking Alpha also has an interesting article on this stock.
It would seem that this company is currently doing well. The stock price seems at a reasonable level, so I can see were the Buy and Strong Buy recommendations are coming from. However, this is a small risky stock and probably is not for the faint of heart to buy. Dividend will probably continue to fluctuate in the future.
Pulse Data Inc. is a provider of 2D and 3D seismic library data and is based in Calgary, Alberta. Pulse owns the second-largest licensable seismic data library in western Canada. Pulse's 2D and 3D seismic data library extends over the Western Canada Sedimentary Basin, plus selected areas of the U.S. Rocky Mountains region and northern Canada, with a particular focus on active exploration areas. Its web site is here Pulse Seismic. See my spreadsheet at psd.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 do not own this stock of Pulse Seismic Inc. (TSX-PSD). This company did not do well from 2006 to 2010 when the EPS was negative. They prudently cancelled dividends for 2009 and 2010. They restated the dividend payments in the later part of 2011. They increased the dividend after the 1st quarter of 2012 by 60%. However, the dividends are still considerably smaller than those paid in 2008.
The insider trading report says that insider buying was $4.8M and net insider buying was at $4.7M. There is a bit of insider selling. There seems to be a lot of options issued. Plus there are also option like things called Rights LTIP, Rights Performance Share Unit and Rights Restricted Share Unit
The CEO, CFO and officers all have more options than shares. However, the Directors tend to have more shares than options (or option like things). There is one director with an 8% stake in this company. Both the CEO and CFO have stock worth in the $100,000's.
There are 12 institutions that own 17% of the outstanding shares. Over the past 3 months they have increased their shares by 2.2%. This is a positive.
It not possible to come up with past Price/Earnings Ratios as there was a number of years when this company has not earnings. However, the current P/E Ratio of 10.18 is a good ratio.
I can come up with a Graham Price. The 10 year low, median and high Price/Graham Price Ratios are 1.27, 1.54 and 1.80. The current P/GP Ratio is just 0.85 on a Graham Price of $2.64. This suggests a very good current price of $2.24.
However, the Graham Price increased substantially this year because expected earnings are quite high compared with the past. If we use last year's Graham Price of $1.50, I get a P/GP Ratio of 1.49. This suggests a reasonable stock price of $2.24.
I get a 10 year Price/Book Value Ratio of 1.29. The current P/B Ratio is 1.59. This is some 24% higher and would suggest a high relative stock price. Book value was going down because the company was not earning any profits. It is not surprising that the P/B Ratio is higher than the 10 year median ratio.
The current dividend yield is 3.57%. I will use the 10 year median dividend yield rather than the 5 year one as we are missing 3 years of dividends. This 10 year median dividend yield is 3.42% and our current dividend yield is 4.4% higher. This would suggest a good current price.
I do not often talk about the accrual ratio. This is really only important if it is above 5% or below -5%. When it is below -5% it is saying that the stock price is very low. The Accrual Ratio on this stock is -9.2%. Richard Sloan did a paper on this subject some years back. I cannot find my original document, but this one says essentially the same thing. See Smart Money.
When I look for analysts' recommendations, I find Strong Buy, Buy and Underperform recommendations. The consensus would be a Buy. Consensus 12 months stock price is $2.47. This implies a total return 13.8% with 10.3% from capital gain and 3.5% from dividends.
Although the financial are not yet out, Pulse Seismic has put out a news release for 2nd quarter ending in June 2012. It says it has record sales and strong growth in cash flow.
There is an interesting discussion on this stock at Financial Web Ring. Seeking Alpha also has an interesting article on this stock.
It would seem that this company is currently doing well. The stock price seems at a reasonable level, so I can see were the Buy and Strong Buy recommendations are coming from. However, this is a small risky stock and probably is not for the faint of heart to buy. Dividend will probably continue to fluctuate in the future.
Pulse Data Inc. is a provider of 2D and 3D seismic library data and is based in Calgary, Alberta. Pulse owns the second-largest licensable seismic data library in western Canada. Pulse's 2D and 3D seismic data library extends over the Western Canada Sedimentary Basin, plus selected areas of the U.S. Rocky Mountains region and northern Canada, with a particular focus on active exploration areas. Its web site is here Pulse Seismic. See my spreadsheet at psd.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.
Wednesday, July 18, 2012
Pulse Seismic Inc
On my other blog is some comment on "Tax Hikes Perversities". See comments blog.
I do not own this stock of Pulse Seismic Inc. (TSX-PSD). This company did not do well from 2006 to 2010 when the EPS was negative. They prudently cancelled dividends for 2009 and 2010. They restated the dividend payments in the later part of 2011. They increased the dividend after the 1st quarter of 2012 by 60%. However, the dividends are still considerably smaller than those paid in 2008.
Total returns over the past 5 were a negative 2.2%. There was a capital loss of 5.8% and dividends were 3.6%. Total returns over the past 10 years were better. The total return was 8.5% per year. There was a capital gain of 3.6% per year and dividends income was 4.9% per year of this total return. Dividends were almost 60% of the total return over the past 10 years.
The years of EPS losses, started when revenue declined sharply. After another sharp decline in 2009, revenues started growing again. There is a difference in revenue and revenue per share has shares have increased in the past due to business acquisitions. Shares are up some 6.6% per year over the past 5 years and 14% per year over the past 10 years.
Revenue only grew at 3% per year over the past 5 years. The past 10 years was better with revenue growth at 7.7%. However, revenue per share has not grown. The Revenue per Share has declined by 3.5% per year over the past 5 years and by 5.9% over the past 10 years.
Cash Flow per shares is better over the past 5 years with a 3.5% per year growth. However, Cash Flow per share has declined by 6.4% per year over the past 10 years. Cash Flow increased quite nicely in 2011 after a couple of years of decline.
The book value per share has declined by 4.4% per year over the past 5 years. There was no increase in book value per share over the past 10 years. You tend to get book value declining when dividends are paid but there are no earnings.
Generally speaking, the Liquidity Ratio is fine for this stock. The current Liquidity Ratio is 1.99. The Liquidity Ratio for the end of 2011 was a bit low at 1.17. Generally speaking they do have a good steady cash flow.
The Debt Ratio has always been extremely good with the current one at 2.38. The current Leverage and Debt/Equity Ratios are also very good, with current ones at 1.72 and 0.72.
The Return on Equity has never been great, but there was no return (that is not earnings) for a few years until we hit 2011. The ROE for 2011 is just 6.3%. There is no difference between comprehensive income and net income on this stock and this is good.
The management certainly feels good about the future since they restarted the dividends in 2011 and did a good increase in 2012. However, analyst feel that they will do well is earnings this year, but that earnings will decline sharply in 2013. They sell seismic data to oil and gas companies in Western Canada. Their future likely depends on the gas industry and gas prices are probably at historical lows.
Pulse Data Inc. is a provider of 2D and 3D seismic library data and is based in Calgary, Alberta. Pulse owns the second-largest licensable seismic data library in western Canada. Pulse"s 2D and 3D seismic data library extends over the Western Canada Sedimentary Basin, plus selected areas of the U.S. Rocky Mountains region and northern Canada, with a particular focus on active exploration areas. Its web site is here Pulse Seismic. See my spreadsheet at psd.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 do not own this stock of Pulse Seismic Inc. (TSX-PSD). This company did not do well from 2006 to 2010 when the EPS was negative. They prudently cancelled dividends for 2009 and 2010. They restated the dividend payments in the later part of 2011. They increased the dividend after the 1st quarter of 2012 by 60%. However, the dividends are still considerably smaller than those paid in 2008.
Total returns over the past 5 were a negative 2.2%. There was a capital loss of 5.8% and dividends were 3.6%. Total returns over the past 10 years were better. The total return was 8.5% per year. There was a capital gain of 3.6% per year and dividends income was 4.9% per year of this total return. Dividends were almost 60% of the total return over the past 10 years.
The years of EPS losses, started when revenue declined sharply. After another sharp decline in 2009, revenues started growing again. There is a difference in revenue and revenue per share has shares have increased in the past due to business acquisitions. Shares are up some 6.6% per year over the past 5 years and 14% per year over the past 10 years.
Revenue only grew at 3% per year over the past 5 years. The past 10 years was better with revenue growth at 7.7%. However, revenue per share has not grown. The Revenue per Share has declined by 3.5% per year over the past 5 years and by 5.9% over the past 10 years.
Cash Flow per shares is better over the past 5 years with a 3.5% per year growth. However, Cash Flow per share has declined by 6.4% per year over the past 10 years. Cash Flow increased quite nicely in 2011 after a couple of years of decline.
The book value per share has declined by 4.4% per year over the past 5 years. There was no increase in book value per share over the past 10 years. You tend to get book value declining when dividends are paid but there are no earnings.
Generally speaking, the Liquidity Ratio is fine for this stock. The current Liquidity Ratio is 1.99. The Liquidity Ratio for the end of 2011 was a bit low at 1.17. Generally speaking they do have a good steady cash flow.
The Debt Ratio has always been extremely good with the current one at 2.38. The current Leverage and Debt/Equity Ratios are also very good, with current ones at 1.72 and 0.72.
The Return on Equity has never been great, but there was no return (that is not earnings) for a few years until we hit 2011. The ROE for 2011 is just 6.3%. There is no difference between comprehensive income and net income on this stock and this is good.
The management certainly feels good about the future since they restarted the dividends in 2011 and did a good increase in 2012. However, analyst feel that they will do well is earnings this year, but that earnings will decline sharply in 2013. They sell seismic data to oil and gas companies in Western Canada. Their future likely depends on the gas industry and gas prices are probably at historical lows.
Pulse Data Inc. is a provider of 2D and 3D seismic library data and is based in Calgary, Alberta. Pulse owns the second-largest licensable seismic data library in western Canada. Pulse"s 2D and 3D seismic data library extends over the Western Canada Sedimentary Basin, plus selected areas of the U.S. Rocky Mountains region and northern Canada, with a particular focus on active exploration areas. Its web site is here Pulse Seismic. See my spreadsheet at psd.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.
Tuesday, July 17, 2012
K-Bro Linen Inc 2
I do not own this stock (TSX-KBL). I have found this stock interesting ever since I have first heard about it at the 2009 Toronto Money Show. A lot of speakers were talking about the great yields that could still be gotten from Unit Trust companies. This company was a Unit Trust at that time.
When I look at insider trading report, I find a minor amount of insider selling and a minor amount of insider buying, with a net of insider selling. All the insider selling was by one officer and done recently. The buying is by officers and directors and most of the buying was under the company plan. No one has stock options.
Lots of insiders have shares. They do not seem to add up to a big percentage of outstanding shares, but do show that individuals have considerable amounts invested in the company. For example, the CEO has shares worth just over $3M. A director has shares worth $2.1M. This is a positive.
There are 6 institutions have own shares comprising of 27% of the outstanding shares. Over the past 3 months they have increased their shares by 1.7%. This is a positive.
I get 5 year low, median and high Price/Earnings Ratios of 12.12, 15.67 and 18.80. The current P/E Ratio of 18.57 shows a stock price is rather high.
I get a Graham price of $16.69. The 10 year low, median and high Price/Graham price Ratios 0.90, 1.03 and 1.16. The current P/GP Ratio is at 1.51. This current high ratio shows a high stock price.
I get a 10 year Price/Book Value Ratio of 1.50. The current P/B Ratio 2.78. You would expect a higher current P/B Ratio because book value has not risen with the stock price. However, the current one is 85% than the 10 year P/B Ratio and this also suggests a high stock price.
When I look at the dividend yield I find that the 5 year median dividend yield is 8.04% and the current yield of 4.55% is some 43% lower. Because of the change from a unit trust to a corporation, you would expect that the dividend yield would go to a 4% to 5% range. However, the adjustment of the dividend yield is solely due to stock price increase.
You do not get any definite feel from the dividend yield test. Certainly, the stock price has been rising faster than the earnings.
When I look for analysts" recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus would be a Buy. In May of this year a number of analysts upgraded their recommendations or the expected 12 month stock price. Consensus 12 month stock price is $25.40. This is very close to the current stock price.
The implication is that the total return will consist only of dividends and be around 4.6%. The stock has had a good run up since it hit a low in October 2011. This stock is up some 45% since October, however year over year the stock is up about 20%.
One Hold recommendation thought that there would be a better entry point in buying this stock in the future that there is now. They are basically saying that the stock is overpriced. A number of analysts like the company and feel that it is well managed. They mention the low debt.
The one problem I see is when companies have a strong rise in stock price, it tends to go on. A bull market in a stock can go on much longer than you ever think it will. It is a stock that blogger Rise of a Millionaire holds. He talks about it in an March 2012 blog and in another blog dated May 2012.
I think the stock is overpriced, but not grossly so. I have waited to buy a stock because of high relative price only to pay it at a higher price later that was relative good. You do seem to earn more buying stocks at relatively good prices.
K-Bro is the largest owner and operator of laundry and linen processing facilities in Canada. K-Bro provides a comprehensive range of general linen and operating room linen processing, management and distribution services to healthcare institutions, hotels and other commercial accounts. K-Bro currently has seven processing plants in six Canadian cities: Quebec City, Toronto, Edmonton, Calgary, Vancouver and Victoria. Its web site is here K-Bro. See my spreadsheet at kbl.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.
When I look at insider trading report, I find a minor amount of insider selling and a minor amount of insider buying, with a net of insider selling. All the insider selling was by one officer and done recently. The buying is by officers and directors and most of the buying was under the company plan. No one has stock options.
Lots of insiders have shares. They do not seem to add up to a big percentage of outstanding shares, but do show that individuals have considerable amounts invested in the company. For example, the CEO has shares worth just over $3M. A director has shares worth $2.1M. This is a positive.
There are 6 institutions have own shares comprising of 27% of the outstanding shares. Over the past 3 months they have increased their shares by 1.7%. This is a positive.
I get 5 year low, median and high Price/Earnings Ratios of 12.12, 15.67 and 18.80. The current P/E Ratio of 18.57 shows a stock price is rather high.
I get a Graham price of $16.69. The 10 year low, median and high Price/Graham price Ratios 0.90, 1.03 and 1.16. The current P/GP Ratio is at 1.51. This current high ratio shows a high stock price.
I get a 10 year Price/Book Value Ratio of 1.50. The current P/B Ratio 2.78. You would expect a higher current P/B Ratio because book value has not risen with the stock price. However, the current one is 85% than the 10 year P/B Ratio and this also suggests a high stock price.
When I look at the dividend yield I find that the 5 year median dividend yield is 8.04% and the current yield of 4.55% is some 43% lower. Because of the change from a unit trust to a corporation, you would expect that the dividend yield would go to a 4% to 5% range. However, the adjustment of the dividend yield is solely due to stock price increase.
You do not get any definite feel from the dividend yield test. Certainly, the stock price has been rising faster than the earnings.
When I look for analysts" recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus would be a Buy. In May of this year a number of analysts upgraded their recommendations or the expected 12 month stock price. Consensus 12 month stock price is $25.40. This is very close to the current stock price.
The implication is that the total return will consist only of dividends and be around 4.6%. The stock has had a good run up since it hit a low in October 2011. This stock is up some 45% since October, however year over year the stock is up about 20%.
One Hold recommendation thought that there would be a better entry point in buying this stock in the future that there is now. They are basically saying that the stock is overpriced. A number of analysts like the company and feel that it is well managed. They mention the low debt.
The one problem I see is when companies have a strong rise in stock price, it tends to go on. A bull market in a stock can go on much longer than you ever think it will. It is a stock that blogger Rise of a Millionaire holds. He talks about it in an March 2012 blog and in another blog dated May 2012.
I think the stock is overpriced, but not grossly so. I have waited to buy a stock because of high relative price only to pay it at a higher price later that was relative good. You do seem to earn more buying stocks at relatively good prices.
K-Bro is the largest owner and operator of laundry and linen processing facilities in Canada. K-Bro provides a comprehensive range of general linen and operating room linen processing, management and distribution services to healthcare institutions, hotels and other commercial accounts. K-Bro currently has seven processing plants in six Canadian cities: Quebec City, Toronto, Edmonton, Calgary, Vancouver and Victoria. Its web site is here K-Bro. See my spreadsheet at kbl.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.
Monday, July 16, 2012
K-Bro Linen Inc
On my other blog is some comment on "Solidarity Against Austerity". See comments blog.
I do not own this stock of K-Bro Linen Inc. (TSX-KBL). I have found this stock interesting ever since I have first heard about it at the 2009 Toronto Money Show. A lot of speakers were talking about the great yields that could still be gotten from Unit Trust companies. This company was a Unit Trust at that time.
This company stopped dividend increases in 2006 when the tax laws for income trusts were changed. Since that time dividend yield has been travelling south, but so have the Dividend Payout Ratios. In 2006 the median yield was 7.55% and DPRs for earnings and cash flow were 141% and 132%. In 2011, median yield was 5.56% and DPRs for earnings and cash flow were 99% and 42%, respectively.
In 2011 was the first year they raised the dividends and this was a 4.5% increase. DPR for earnings is expected to be 85% for 2012. Current dividend yield is down to 4.55%.
The total return over the past 5 and 7 years is at 23.1% and 16.7% per year. The portion of this return from dividends is 7.9% and 7.1% per year. The portion of this return from capital gain is 15.2% and 9.6% per year. Dividend income makes up 34% and 44% of the total return.
There are a couple of reasons that future growth may not be the same. The first reason is dividend yield has come down. The median dividend yield over the past 5 years is 8%. The current dividend yield is 4.55%. It was expected that a combination of dividend decreases and/or stock price increases would lower dividend yield on old income trust stock to the 4% to 5% range. It has been stock increases that have been going on for this stock to lower the dividend yield.
I am not saying that you will get a decent return going forward; I am just saying that that you should not expect it to be as good as in the past. Dividend growth companies tend to have capital gains in line with dividend increases on a long term basis. If you go by what is currently happening, the future total return would be in the range of around 9%, with 4.5% from dividends and 4.5% from capital gains.
They have twice issued more stock, in 2006 and 2008. They used the money for equipment and business acquisitions. So, the 5 and 6 year increase in shares is at 5% and 8% per year. This affects the "per share" values and you can see that such things as earnings and revenues have grown much quicker than earnings per share (EPS) and revenue per shares. As a stock investor, you are, of course, interested in both, but mostly in the "per share" values.
Because this company only went public as an income trust on February 3, 2005, I generally have only 6 and 7 years maximum of financial information available. The original company was started in the early 1950"s in Edmonton.
Too see differences because of the issuance of new stock, I have revenue growth over the past 5 and 8 years at 12.4% and 14.7% per year. The revenue per share growth over the past 5 and 8 years is at 7.1% and 8.3% per year.
Earnings growth over the past 5 and 6 years has been decent at 7.9% and 7.4% per year, respectively. Cash flow growth has been at 12.2% and 7.7% per year over the past 5 and 6 years, respectively. There has been no growth in book value. Because income trust companies pay out in distributions more than they earn, book value generally goes down. For the 1st quarter of 2012 the book value went up modestly.
The Liquidity Ratio tends to be a little low, with the current ratio at 1.27. However, the company does have a good cash flow. The Debt Ratio is very good, with a current ratio of 3.21. The current Leverage and Debt/Equity Ratios are also good at 1.45 and 0.45, respectively.
The Return on Equity has been very good over the past three years with a rate just over 12% and in the good 10% to 15% range. The ROE for 2011 was 12.6% and the 5 year median ROE is 12.3%. The comprehensive income is always quite close to the net income and the ROE for comprehensive income for 2011 was also 12.6%.
This company has made the transit from income trust to corporation looking very good. The dividend increase in 2011 shows that the management is optimistic of the future.
K-Bro is the largest owner and operator of laundry and linen processing facilities in Canada. K-Bro provides a comprehensive range of general linen and operating room linen processing, management and distribution services to healthcare institutions, hotels and other commercial accounts. K-Bro currently has seven processing plants in six Canadian cities: Quebec City, Toronto, Edmonton, Calgary, Vancouver and Victoria. Its web site is here K-Bro. See my spreadsheet at kbl.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 do not own this stock of K-Bro Linen Inc. (TSX-KBL). I have found this stock interesting ever since I have first heard about it at the 2009 Toronto Money Show. A lot of speakers were talking about the great yields that could still be gotten from Unit Trust companies. This company was a Unit Trust at that time.
This company stopped dividend increases in 2006 when the tax laws for income trusts were changed. Since that time dividend yield has been travelling south, but so have the Dividend Payout Ratios. In 2006 the median yield was 7.55% and DPRs for earnings and cash flow were 141% and 132%. In 2011, median yield was 5.56% and DPRs for earnings and cash flow were 99% and 42%, respectively.
In 2011 was the first year they raised the dividends and this was a 4.5% increase. DPR for earnings is expected to be 85% for 2012. Current dividend yield is down to 4.55%.
The total return over the past 5 and 7 years is at 23.1% and 16.7% per year. The portion of this return from dividends is 7.9% and 7.1% per year. The portion of this return from capital gain is 15.2% and 9.6% per year. Dividend income makes up 34% and 44% of the total return.
There are a couple of reasons that future growth may not be the same. The first reason is dividend yield has come down. The median dividend yield over the past 5 years is 8%. The current dividend yield is 4.55%. It was expected that a combination of dividend decreases and/or stock price increases would lower dividend yield on old income trust stock to the 4% to 5% range. It has been stock increases that have been going on for this stock to lower the dividend yield.
I am not saying that you will get a decent return going forward; I am just saying that that you should not expect it to be as good as in the past. Dividend growth companies tend to have capital gains in line with dividend increases on a long term basis. If you go by what is currently happening, the future total return would be in the range of around 9%, with 4.5% from dividends and 4.5% from capital gains.
They have twice issued more stock, in 2006 and 2008. They used the money for equipment and business acquisitions. So, the 5 and 6 year increase in shares is at 5% and 8% per year. This affects the "per share" values and you can see that such things as earnings and revenues have grown much quicker than earnings per share (EPS) and revenue per shares. As a stock investor, you are, of course, interested in both, but mostly in the "per share" values.
Because this company only went public as an income trust on February 3, 2005, I generally have only 6 and 7 years maximum of financial information available. The original company was started in the early 1950"s in Edmonton.
Too see differences because of the issuance of new stock, I have revenue growth over the past 5 and 8 years at 12.4% and 14.7% per year. The revenue per share growth over the past 5 and 8 years is at 7.1% and 8.3% per year.
Earnings growth over the past 5 and 6 years has been decent at 7.9% and 7.4% per year, respectively. Cash flow growth has been at 12.2% and 7.7% per year over the past 5 and 6 years, respectively. There has been no growth in book value. Because income trust companies pay out in distributions more than they earn, book value generally goes down. For the 1st quarter of 2012 the book value went up modestly.
The Liquidity Ratio tends to be a little low, with the current ratio at 1.27. However, the company does have a good cash flow. The Debt Ratio is very good, with a current ratio of 3.21. The current Leverage and Debt/Equity Ratios are also good at 1.45 and 0.45, respectively.
The Return on Equity has been very good over the past three years with a rate just over 12% and in the good 10% to 15% range. The ROE for 2011 was 12.6% and the 5 year median ROE is 12.3%. The comprehensive income is always quite close to the net income and the ROE for comprehensive income for 2011 was also 12.6%.
This company has made the transit from income trust to corporation looking very good. The dividend increase in 2011 shows that the management is optimistic of the future.
K-Bro is the largest owner and operator of laundry and linen processing facilities in Canada. K-Bro provides a comprehensive range of general linen and operating room linen processing, management and distribution services to healthcare institutions, hotels and other commercial accounts. K-Bro currently has seven processing plants in six Canadian cities: Quebec City, Toronto, Edmonton, Calgary, Vancouver and Victoria. Its web site is here K-Bro. See my spreadsheet at kbl.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.
Friday, July 13, 2012
Algonquin Power & Utilities Corp 2
On my comment blog is my comment on "Why I put my stuff online". See comments blog.
I do not own Algonquin Power & Utilities Corp (TSX-AQN). However, I do own Emera Inc. (TSX-EMA) which owns 21.5% of this stock. Because the heavy involvement of Emera in this company, I do not think it would be a wise idea to own both stocks.
When I look at insider trading, I find a minimum of insider buying and no insider selling. CEO, CFO and officers have more options than shares. For example the CEO has $2.8M in shares and $8M in options. Directors have both options and Rights Deferred Share Units and they seem to have as much in shares as they have in options and Rights Deferred Share Units.
According to AQN, there are 55 institutions that hold 24% of the outstanding shares. Recent changes (they do not state time period) have these institutions increasing their outstanding shares by 6.5%. Reuters says that there are 37 institutions holding 17% of the shares and over the past 3 months their shares have increased by 3.5%. It would appear that institutional holdings are increasing. This is a positive.
The 5 year low, median and high Price/Earnings Ratios are 17.86, 21.00, and 24.14. The current P/E of 32.55 would suggest that the current stock price is rather high. However, the P/E based on the 2013 earnings is 21.7, which is a relatively moderate P/E Ratio. This company is not expected to earnings much this year according to the consensus EPS estimates. For the 1st Quarter, the EPS came in right on the consensus estimate.
I get a Graham price of $4.15. The 10 year low, median and high Price/Graham price Ratios are 1.20, 1.37 and 1.50. The current P/GP Ratio of 1.57 suggest that the stock price is rather high. However, the Graham Price is $5.09 in 2013 and the P/GP then is 1.28, a moderate ratio.
I get a 10 year Price/Book Value of 1.43 and a current P/B Ratio of 1.70. The current ratio is some 19% above the 10 year median. This would also suggest a rather high current stock price. The Book Value has taken a beating over the last 10 years. I do not see this changing quickly as the company is set to payout more in dividends than they are earning this year. A P/B Ratio of 1.70 is not that high in absolute terms.
The Dividend Yield is not going to give us a better story as the dividends have had a recent massive decline. We have a 5 year median dividend yield of 9% and a current dividend yield of 4.3%. On the other hand, we did expect that dividend yields would decline on old income trust stock to a range of 4 to5%. The current dividend yield is in the bottom half of this range.
The only Ratio that shows that the stock price might be a reasonable one is the Price/Sales per Share Ratio. The 10 year median P/S Ratio is 3.60 and the current P/S Ratio is 2.56. This is a relatively low ratio and shows a very good price. However, when you have to go looking for something that makes a stock look better in regards to price, you are often just grabbing at straws rather than really evaluating the stock price.
When I look at analysts" recommendations, I find Strong Buy, Buy and Hold. Most of the recommendations are Strong Buy and Buy and the consensus recommendations would be a Buy. One Buy recommendations comes with a 12 months stock price or $7.50. They also think that dividends will continue to rise in the mid-term as the DPR compared to AFFO is less than 100%. (DPR re AFFO is expected to be 97% and 80% in 2012 and 2013.)
12 Month stock price target is $7.28. This implies a total return of 16.13%, with 11.83% from capital gain and 4.30% from dividends. They have a Wikipedia entry.
Our newspapers have a couple of recent articles on this company. The first is from G&M called "Electrify your dividends with power company stocks" aqn.htm. It says that this stock could be a dividend yield play. The second one is from the National Post and is called "Algonquin"s target cut on lower earnings for new properties" and is by Julia Johnson. It says that Scotia Capital Inc. analyst Matthew Akman cut his 12 month stock price from $7.50 to $7.25, but that he still has a positive attitude towards this stock.
This company increased their shares by 42.7% in 2011. The increase was due to conversion of debentures and selling of shares. Emera Inc. increased their shares by 12M and 12.6%. They have subscription for almost 19M more shares.
In the near term this stock is overpriced. However, it may not be in the long term and this is where investors want to go. What we do not know is how well the company will manage in the long term. The G&M article that calls it a yield play may just have it right as yield is still a very good 4.3%.
APUC owns and operates a diversified portfolio of clean renewable electric generation and sustainable utility distribution businesses in North America. Liberty Water Co., APUC's water utility subsidiary, provides regulated water utility services. Through its wholly owned subsidiary Liberty Energy Utilities Co., APUC provides regulated electricity and natural gas distribution services. Algonquin Power Co., APUC's electric generation subsidiary, includes renewable energy facilities and thermal energy facilities. Its web site is here Algonquin Power. See my spreadsheet at aqn.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 do not own Algonquin Power & Utilities Corp (TSX-AQN). However, I do own Emera Inc. (TSX-EMA) which owns 21.5% of this stock. Because the heavy involvement of Emera in this company, I do not think it would be a wise idea to own both stocks.
When I look at insider trading, I find a minimum of insider buying and no insider selling. CEO, CFO and officers have more options than shares. For example the CEO has $2.8M in shares and $8M in options. Directors have both options and Rights Deferred Share Units and they seem to have as much in shares as they have in options and Rights Deferred Share Units.
According to AQN, there are 55 institutions that hold 24% of the outstanding shares. Recent changes (they do not state time period) have these institutions increasing their outstanding shares by 6.5%. Reuters says that there are 37 institutions holding 17% of the shares and over the past 3 months their shares have increased by 3.5%. It would appear that institutional holdings are increasing. This is a positive.
The 5 year low, median and high Price/Earnings Ratios are 17.86, 21.00, and 24.14. The current P/E of 32.55 would suggest that the current stock price is rather high. However, the P/E based on the 2013 earnings is 21.7, which is a relatively moderate P/E Ratio. This company is not expected to earnings much this year according to the consensus EPS estimates. For the 1st Quarter, the EPS came in right on the consensus estimate.
I get a Graham price of $4.15. The 10 year low, median and high Price/Graham price Ratios are 1.20, 1.37 and 1.50. The current P/GP Ratio of 1.57 suggest that the stock price is rather high. However, the Graham Price is $5.09 in 2013 and the P/GP then is 1.28, a moderate ratio.
I get a 10 year Price/Book Value of 1.43 and a current P/B Ratio of 1.70. The current ratio is some 19% above the 10 year median. This would also suggest a rather high current stock price. The Book Value has taken a beating over the last 10 years. I do not see this changing quickly as the company is set to payout more in dividends than they are earning this year. A P/B Ratio of 1.70 is not that high in absolute terms.
The Dividend Yield is not going to give us a better story as the dividends have had a recent massive decline. We have a 5 year median dividend yield of 9% and a current dividend yield of 4.3%. On the other hand, we did expect that dividend yields would decline on old income trust stock to a range of 4 to5%. The current dividend yield is in the bottom half of this range.
The only Ratio that shows that the stock price might be a reasonable one is the Price/Sales per Share Ratio. The 10 year median P/S Ratio is 3.60 and the current P/S Ratio is 2.56. This is a relatively low ratio and shows a very good price. However, when you have to go looking for something that makes a stock look better in regards to price, you are often just grabbing at straws rather than really evaluating the stock price.
When I look at analysts" recommendations, I find Strong Buy, Buy and Hold. Most of the recommendations are Strong Buy and Buy and the consensus recommendations would be a Buy. One Buy recommendations comes with a 12 months stock price or $7.50. They also think that dividends will continue to rise in the mid-term as the DPR compared to AFFO is less than 100%. (DPR re AFFO is expected to be 97% and 80% in 2012 and 2013.)
12 Month stock price target is $7.28. This implies a total return of 16.13%, with 11.83% from capital gain and 4.30% from dividends. They have a Wikipedia entry.
Our newspapers have a couple of recent articles on this company. The first is from G&M called "Electrify your dividends with power company stocks" aqn.htm. It says that this stock could be a dividend yield play. The second one is from the National Post and is called "Algonquin"s target cut on lower earnings for new properties" and is by Julia Johnson. It says that Scotia Capital Inc. analyst Matthew Akman cut his 12 month stock price from $7.50 to $7.25, but that he still has a positive attitude towards this stock.
This company increased their shares by 42.7% in 2011. The increase was due to conversion of debentures and selling of shares. Emera Inc. increased their shares by 12M and 12.6%. They have subscription for almost 19M more shares.
In the near term this stock is overpriced. However, it may not be in the long term and this is where investors want to go. What we do not know is how well the company will manage in the long term. The G&M article that calls it a yield play may just have it right as yield is still a very good 4.3%.
APUC owns and operates a diversified portfolio of clean renewable electric generation and sustainable utility distribution businesses in North America. Liberty Water Co., APUC's water utility subsidiary, provides regulated water utility services. Through its wholly owned subsidiary Liberty Energy Utilities Co., APUC provides regulated electricity and natural gas distribution services. Algonquin Power Co., APUC's electric generation subsidiary, includes renewable energy facilities and thermal energy facilities. Its web site is here Algonquin Power. See my spreadsheet at aqn.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.
Thursday, July 12, 2012
Algonquin Power & Utilities Corp
I do not own this stock (TSX-AQN). I started to track utilities that were not pipelines a while back as I have a lot of money in pipelines and that I might want to move some of this money into other types of utilities. I do think that utilities into new types of power generation are not going away. I started to track this particular utility in 2011.
This company was an income fund prior to 2009. It became a corporation that year and decreased its dividends by almost 98%. Company said that it wanted to become a dividend paying growth oriented company. The Dividend Payout Ratios changed from almost 300% of earnings prior to 62% in 2009. DPR for cash flow went from 89% in 2008 to 45% in 2009.
Dividends were increased twice in 2011 for a total dividend increase of 16.7%. Unfortunately, DPR for earnings is getting high again with the DPR for earnings at 130% for 2011. The DPR for cash flow is better at 50.8%.
Total return over the past 5 and 10 years is very low. The 5 year total return is a negative 2.5%. Dividend return was 5.9% per year. The capital loss each year was 8.4%. The 10 year total return was 3.7%. Dividend return was 8.4%. The capital loss each year was 4.7%.
The current 5 year median dividend yield is 9%. The dividend yield has decreased considerable and is currently at 4.3%. You are not going to see again the high dividend yields that occurred when this stock was an income trust. It was expected that x-income trusts would end in a 4% to 5% dividend range. This stock is coming in in this range.
The problem with this stock is that the number of shares went up some 42% in 2011, but other per share values did not go up the same. The increase in shares for 2011 was due to conversion of convertible debentures (16%) and shares issuance (26.6%). The convertible debentures have interest rates of $6.35% to 7.5%. There was a further 7.6% increase in shares in the first quarter due to debenture conversion.
Note that in some cases, the conversion stock price is low. Convertible Debentures Series 3 has a conversion price $4.20, which is currently a 55% discount to the current stock price. Series 1A conversion price was $4.08 an even better discount of 59.6% to current price. Series 2A conversion price was $6.00 which is only an 8.5% discount to the current price. There are currently just some Series 3 debentures still to be converted.
Usually, a company increasing their dividends signals that they expect a rosy future. However, there are lots of analysts following this stock and none believe that they will be able to cover the current dividends per share by the earnings per share in 2012 and some even think this is true for 2013 as well.
The dividend is $0.28 per share. The consensus EPS for 2012 is $.020, with a range of $.011 to $.027. The consensus EPS for 2013 is $.030 with a range of $.18 to $0.52.
Earnings per Share (EPS) over the past 5 years are down by 12.5%. EPS have also not grown much over the past 10 years and its growth is just 1.6% per year. Analysts expect no growth in EPS for 2012 and just good growth in 2013. EPS for the first quarter of 2012 came in right at the consensus level. Net income is up by 14.8% per year over the past 10 years. However, net income over the past 5 years shows no growth at all. On the other hand, this company only had one year of earnings loss and that was in 2008.
Revenue growth is not bad with 5 and 10 year growth at 7.4% and 19.9% per year, respectively. However, if you look at revenue per share, it is down by 5.2% per year over the past 5 years. It is up by 8.7% per year over the past 10 years and this is a nice increase. Analysts expect good growth in revenue and revenue per share in 2012 and 2013. But again, the revenue will probably grow faster than revenue per share.
Cash flow is up over the past 10 years, but not over the past 5 years. Cash Flow per Share is up just 2% per year over the past 10 years, but is down some 11.5% per year over the past 5 years. They have had no years of negative cash flow over the past 10 years.
Book Value per share is down 9.2% per year and 7.3% per year over the past 5 and 10 years. For most income trust stocks book value declines. However, for this stock, book value continued to decline to 2010. Since then it is up only modestly.
Debt ratios have mostly been fine on this stock. The current Liquidity Ratio is 1.51. It has been lower as the 5 year median ratio is just 1.15. The current Debt Ratio is 1.90. The 5 year median Debt Ratio is fine also at 1.62. The current Leverage and Debt/Equity Ratio are also ok at 2.25 and 1.18.
The Return of Equity has always been low with the 2011 at 5.6% and the 5 year median at 5.1%. Until this year, the ROE based on comprehensive income was always much lower than the ROE on net income, with the 5 year median ROE on comprehensive income just 1%. The ROE on comprehensive income for 2011 was 6.1%. They have changed the way they report on comprehensive income in 2011, which seems to be how they report on foreign currency transactions. In 2011, 68% of their revenue is from the US.
Another thing about this company is that they did not switch their accounting to IFRS. Some TSX companies have the option of going to US GAAP instead and this company chose this route.
In conclusion, I note that they say they want to be a "dividend paying growth oriented company". However, I find that their Dividend Payout Ratios are too high for such a company. This is especially true of the DPR for earnings. Tomorrow I will look at the stock price and what analysts say about this company.
APUC owns and operates a diversified portfolio of clean renewable electric generation and sustainable utility distribution businesses in North America. Liberty Water Co., APUC's water utility subsidiary, provides regulated water utility services. Through its wholly owned subsidiary Liberty Energy Utilities Co., APUC provides regulated electricity and natural gas distribution services. Algonquin Power Co., APUC's electric generation subsidiary, includes renewable energy facilities and thermal energy facilities. Its web site is here Algonquin Power. See my spreadsheet at aqn.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.
This company was an income fund prior to 2009. It became a corporation that year and decreased its dividends by almost 98%. Company said that it wanted to become a dividend paying growth oriented company. The Dividend Payout Ratios changed from almost 300% of earnings prior to 62% in 2009. DPR for cash flow went from 89% in 2008 to 45% in 2009.
Dividends were increased twice in 2011 for a total dividend increase of 16.7%. Unfortunately, DPR for earnings is getting high again with the DPR for earnings at 130% for 2011. The DPR for cash flow is better at 50.8%.
Total return over the past 5 and 10 years is very low. The 5 year total return is a negative 2.5%. Dividend return was 5.9% per year. The capital loss each year was 8.4%. The 10 year total return was 3.7%. Dividend return was 8.4%. The capital loss each year was 4.7%.
The current 5 year median dividend yield is 9%. The dividend yield has decreased considerable and is currently at 4.3%. You are not going to see again the high dividend yields that occurred when this stock was an income trust. It was expected that x-income trusts would end in a 4% to 5% dividend range. This stock is coming in in this range.
The problem with this stock is that the number of shares went up some 42% in 2011, but other per share values did not go up the same. The increase in shares for 2011 was due to conversion of convertible debentures (16%) and shares issuance (26.6%). The convertible debentures have interest rates of $6.35% to 7.5%. There was a further 7.6% increase in shares in the first quarter due to debenture conversion.
Note that in some cases, the conversion stock price is low. Convertible Debentures Series 3 has a conversion price $4.20, which is currently a 55% discount to the current stock price. Series 1A conversion price was $4.08 an even better discount of 59.6% to current price. Series 2A conversion price was $6.00 which is only an 8.5% discount to the current price. There are currently just some Series 3 debentures still to be converted.
Usually, a company increasing their dividends signals that they expect a rosy future. However, there are lots of analysts following this stock and none believe that they will be able to cover the current dividends per share by the earnings per share in 2012 and some even think this is true for 2013 as well.
The dividend is $0.28 per share. The consensus EPS for 2012 is $.020, with a range of $.011 to $.027. The consensus EPS for 2013 is $.030 with a range of $.18 to $0.52.
Earnings per Share (EPS) over the past 5 years are down by 12.5%. EPS have also not grown much over the past 10 years and its growth is just 1.6% per year. Analysts expect no growth in EPS for 2012 and just good growth in 2013. EPS for the first quarter of 2012 came in right at the consensus level. Net income is up by 14.8% per year over the past 10 years. However, net income over the past 5 years shows no growth at all. On the other hand, this company only had one year of earnings loss and that was in 2008.
Revenue growth is not bad with 5 and 10 year growth at 7.4% and 19.9% per year, respectively. However, if you look at revenue per share, it is down by 5.2% per year over the past 5 years. It is up by 8.7% per year over the past 10 years and this is a nice increase. Analysts expect good growth in revenue and revenue per share in 2012 and 2013. But again, the revenue will probably grow faster than revenue per share.
Cash flow is up over the past 10 years, but not over the past 5 years. Cash Flow per Share is up just 2% per year over the past 10 years, but is down some 11.5% per year over the past 5 years. They have had no years of negative cash flow over the past 10 years.
Book Value per share is down 9.2% per year and 7.3% per year over the past 5 and 10 years. For most income trust stocks book value declines. However, for this stock, book value continued to decline to 2010. Since then it is up only modestly.
Debt ratios have mostly been fine on this stock. The current Liquidity Ratio is 1.51. It has been lower as the 5 year median ratio is just 1.15. The current Debt Ratio is 1.90. The 5 year median Debt Ratio is fine also at 1.62. The current Leverage and Debt/Equity Ratio are also ok at 2.25 and 1.18.
The Return of Equity has always been low with the 2011 at 5.6% and the 5 year median at 5.1%. Until this year, the ROE based on comprehensive income was always much lower than the ROE on net income, with the 5 year median ROE on comprehensive income just 1%. The ROE on comprehensive income for 2011 was 6.1%. They have changed the way they report on comprehensive income in 2011, which seems to be how they report on foreign currency transactions. In 2011, 68% of their revenue is from the US.
Another thing about this company is that they did not switch their accounting to IFRS. Some TSX companies have the option of going to US GAAP instead and this company chose this route.
In conclusion, I note that they say they want to be a "dividend paying growth oriented company". However, I find that their Dividend Payout Ratios are too high for such a company. This is especially true of the DPR for earnings. Tomorrow I will look at the stock price and what analysts say about this company.
APUC owns and operates a diversified portfolio of clean renewable electric generation and sustainable utility distribution businesses in North America. Liberty Water Co., APUC's water utility subsidiary, provides regulated water utility services. Through its wholly owned subsidiary Liberty Energy Utilities Co., APUC provides regulated electricity and natural gas distribution services. Algonquin Power Co., APUC's electric generation subsidiary, includes renewable energy facilities and thermal energy facilities. Its web site is here Algonquin Power. See my spreadsheet at aqn.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.
Wednesday, July 11, 2012
Enbridge Income Fund Holdings 2
On my comment blog is my comment on article about the Sad End of Investing (in ETFs). See comments blog.
I do not own Enbridge Income Fund Holdings (TSX-ENF). This company has reorganized and effectively changed from an income trust to a corporation. The problem is that they are mucking about with the accounting with this reorganization and there is not much in the way of continuity as far as I can see with the old accounting records.
There is a minimum of insider buying by a director. The insider trading report shows no insider selling. There are no stock options outstanding as far as I can see. There are some 17 institutions owning 17% of the outstanding shares. Over that past 3 months they have increased their shares by 3.5%. This is a positive.
The 5 year low, median and high Price/Earnings Ratios are 15.08, 18.25 and 21.43. The current P/E Ratios is 23.98 on a stock price of $23.50. This test shows a relatively high current stock price. I would also think that a P/E ratio of 23.98 on a utility stock is rather a high one.
I get a current Graham price of $21.50. The stock price of $23.50 is 9.25% higher that the Graham Price or has a Price/Graham price Ratio of 1.09. The 10 year low, median and high P/GP Ratios are 1.21, 1.43 and 1.66. This low P/GP Ratio suggest a good stock price. However, the Graham price doubled in value in 2011 because of the huge increase in book value. I would treat this test with caution.
The 10 year median Price/Book Value is 0.56. This is a rather low value as it implies that the stock price is almost half the book value. The current book value is 1.12. It is some 98% higher than the 10 year median P/B Ratio and therefore implies a rather high stock price. However, 1.12 is a rather good P/B Ratio. On the other hand, the book value has increased dramatically with the restructuring and so I would also treat this test with caution.
My last test and usually the most important one is the Dividend yield test. The 5 year median Dividend yield is 8.62% and the current Dividend yield is 5.26%. What you want to see is the current yield higher than the 5 year median to signal a good stock price. This does not do this. However, as with other companies changing from income trust to corporations, you would expect the dividend yield to go lower, usually, to between 4 and 5%. This company has done this.
The upshot of this this is that I do not think that any of my usual tests are remotely reliable. The Price/Earnings ratio does come the closes, if only other people agreed that this company earned $1.33 per share this year. There are, of course, other ratios I can use, but here again there are lots of "howevers".
I do not see that the Price/Cash Flow Ratio will help as the Cash Flow reported for 2011 is a lot lower than that for 2010. Also, no analyst seems to be giving out cash flow estimates anymore and there is no company guidance on this. The Price/Distributable Income is no help as other sites give Distributable Incomes other than what the company is giving and they are all much lower than what the company is giving. (There can be various ways of calculating the Distributable Income.)
The only values that seem to have some continuity are the Revenue figures. I get 10 year low, median and high Price/Sales per Share Ratios of 1.36, 1.72 and 2.05. The current P/S Ratio is 3.24. As with a lot of Ratios, a lower one is better. In this case, the current P/S Ratios is much higher than the 10 year median high P/S Ratio of 2.05. This test suggests a relatively high stock price.
When I look at analysts, recommendations I find a lot of Hold recommendations. There is also some Underperform and Sell recommendations. The consensus recommendation would be a Hold. The 12 month consensus stock price target is $22.20. This implies a capital loss of 5.23% and with a dividend yield of 5.57%, an investor would basically break even.
One analysts giving a Hold rating and a 12 months stock price of $25.00 says that the company has a very attractive dividend yield. This would imply a capital gain of 6.38% and with a dividend yield of 5.57 would give a total return of 11.95%.
DBRS (Dominion Bond Rating Service) gives this company a stability rating of BBB (high). This would mean that the company is a good credit risk.
I haven,t changed my mind on this company. I do not like it when everywhere you look someone else has a different idea what the EPS is. I do like it that it that there seems to be a lack of continuity in the account for this company. I do not like that fact that the company seems to have a book value of $20.98, but that their investment is only in a fund which shows a negative book value.
There are obviously lots I do not understand about the accounting for this company. I therefore would not invest in this company because there seems to be lots I do not understand about it.
Enbridge Income Fund Holdings Inc. is a publicly traded corporation. The Company, through its investment in Enbridge Income Fund, holds high quality, low risk energy infrastructure assets. The Fund's assets include a 50% interest in the Canadian segment of the Alliance Pipeline, a 100% interest in the various pipelines comprising the Saskatchewan System, and interests in more than 400 megawatts of renewable and alternative power generation capacity. Its web site is here Enbridge Income. See my spreadsheet at enf.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 do not own Enbridge Income Fund Holdings (TSX-ENF). This company has reorganized and effectively changed from an income trust to a corporation. The problem is that they are mucking about with the accounting with this reorganization and there is not much in the way of continuity as far as I can see with the old accounting records.
There is a minimum of insider buying by a director. The insider trading report shows no insider selling. There are no stock options outstanding as far as I can see. There are some 17 institutions owning 17% of the outstanding shares. Over that past 3 months they have increased their shares by 3.5%. This is a positive.
The 5 year low, median and high Price/Earnings Ratios are 15.08, 18.25 and 21.43. The current P/E Ratios is 23.98 on a stock price of $23.50. This test shows a relatively high current stock price. I would also think that a P/E ratio of 23.98 on a utility stock is rather a high one.
I get a current Graham price of $21.50. The stock price of $23.50 is 9.25% higher that the Graham Price or has a Price/Graham price Ratio of 1.09. The 10 year low, median and high P/GP Ratios are 1.21, 1.43 and 1.66. This low P/GP Ratio suggest a good stock price. However, the Graham price doubled in value in 2011 because of the huge increase in book value. I would treat this test with caution.
The 10 year median Price/Book Value is 0.56. This is a rather low value as it implies that the stock price is almost half the book value. The current book value is 1.12. It is some 98% higher than the 10 year median P/B Ratio and therefore implies a rather high stock price. However, 1.12 is a rather good P/B Ratio. On the other hand, the book value has increased dramatically with the restructuring and so I would also treat this test with caution.
My last test and usually the most important one is the Dividend yield test. The 5 year median Dividend yield is 8.62% and the current Dividend yield is 5.26%. What you want to see is the current yield higher than the 5 year median to signal a good stock price. This does not do this. However, as with other companies changing from income trust to corporations, you would expect the dividend yield to go lower, usually, to between 4 and 5%. This company has done this.
The upshot of this this is that I do not think that any of my usual tests are remotely reliable. The Price/Earnings ratio does come the closes, if only other people agreed that this company earned $1.33 per share this year. There are, of course, other ratios I can use, but here again there are lots of "howevers".
I do not see that the Price/Cash Flow Ratio will help as the Cash Flow reported for 2011 is a lot lower than that for 2010. Also, no analyst seems to be giving out cash flow estimates anymore and there is no company guidance on this. The Price/Distributable Income is no help as other sites give Distributable Incomes other than what the company is giving and they are all much lower than what the company is giving. (There can be various ways of calculating the Distributable Income.)
The only values that seem to have some continuity are the Revenue figures. I get 10 year low, median and high Price/Sales per Share Ratios of 1.36, 1.72 and 2.05. The current P/S Ratio is 3.24. As with a lot of Ratios, a lower one is better. In this case, the current P/S Ratios is much higher than the 10 year median high P/S Ratio of 2.05. This test suggests a relatively high stock price.
When I look at analysts, recommendations I find a lot of Hold recommendations. There is also some Underperform and Sell recommendations. The consensus recommendation would be a Hold. The 12 month consensus stock price target is $22.20. This implies a capital loss of 5.23% and with a dividend yield of 5.57%, an investor would basically break even.
One analysts giving a Hold rating and a 12 months stock price of $25.00 says that the company has a very attractive dividend yield. This would imply a capital gain of 6.38% and with a dividend yield of 5.57 would give a total return of 11.95%.
DBRS (Dominion Bond Rating Service) gives this company a stability rating of BBB (high). This would mean that the company is a good credit risk.
I haven,t changed my mind on this company. I do not like it when everywhere you look someone else has a different idea what the EPS is. I do like it that it that there seems to be a lack of continuity in the account for this company. I do not like that fact that the company seems to have a book value of $20.98, but that their investment is only in a fund which shows a negative book value.
There are obviously lots I do not understand about the accounting for this company. I therefore would not invest in this company because there seems to be lots I do not understand about it.
Enbridge Income Fund Holdings Inc. is a publicly traded corporation. The Company, through its investment in Enbridge Income Fund, holds high quality, low risk energy infrastructure assets. The Fund's assets include a 50% interest in the Canadian segment of the Alliance Pipeline, a 100% interest in the various pipelines comprising the Saskatchewan System, and interests in more than 400 megawatts of renewable and alternative power generation capacity. Its web site is here Enbridge Income. See my spreadsheet at enf.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.
Tuesday, July 10, 2012
Enbridge Income Fund Holdings
I do not own this stock (TSX-ENF). This company has reorganized and effectively changed from an income trust to a corporation. The problem is that they are mucking about with the accounting with this reorganization and there is not much in the way of continuity as far as I can see with the old accounting records. I hate this. It is hard to get a handle on just how the value of your stock is really changing.
Another thing is that the company is reporting an EPS of $1.33, but sites are saying that the EPS for 2011 was $0.78 or 0.98 or 1.03, (that is anything, but $1.33.) In any event they are saying something other than what the company is reporting of $1.33. If you divide the $37.33M earnings by current outstanding shares, you get an EPS of $0.95. If you divide the earnings by the average number of outstanding shares you get $1.15. This is the usual method of determining EPS. In my spreadsheet, I am assuming EPS is $1.15.
The dividends on this company have a 5 year median dividend yield of 8.62%. However, as with all companies changing from an income trust structure to a corporation structure, the dividend yield has come down and is currently at 5.49%. The actual dividends have not decreased, and in fact have increased with this structural change.
The growth in dividends over the years has been moderate with usually some increase except for 2010. The 5 and 10 year growth in dividends is at 4.59% and 4.34%. The most recent dividend increase, which occurred in 2011, was for 7.3%.
The 5 year Dividend Payout Ratios are 160% for earnings and 42.34% for cash flow. The DPRs for 2011 were 100.8% for earnings and 129.2% for Cash flow. (If I look at the cash flow without non-cash items, the DPR is still very high at 121.8%.)
This is also pointing to the fact that the cash flow per share is higher than the EPS and is not considered to be a good sign. The cash flow fell steeply with the structural change. However, if you look at cash flow for the fund, it went up significantly.
Some good news is that the total return on this stock is very good over the past 5 and 10 years. The total return is 15.75% and 15.43% per year, respectively. The dividend portion of this total return is 6.97% and 7.36% per year over the past 5 and 10 years. The capital gain portion is 8.77% and 8.07% per year over the past 5 and 10 years. Dividends make up 44.28% and 47.72% of the total return.
Going forward, you would expect that the total return will come down by at least a couple of percentage points as the dividend yield is coming down. I also note that the 12 month consensus stock price is below what the stock price is today.
Revenue per share is up 6.9% and 13.3% per year over the past 5 and 10 years. Earnings per Share are up just 2.4% per year over the past 5 years. This is because I have used $1.15 for EPS rather than the report $1.33 EPS figures. EPS is up well at 17.8% per year over the past 10 years.
My spreadsheet shows that cash flow per share is down considerably. This is because, according to the statements after the restructuring cash flow is down considerably. However, there does seem to be a lack of continuity in the accounting records after the restructuring.
Also, after the restructuring, book value is up considerably. However, if you look at the Enbridge Fund accounting, the book value was very low at the end of 2011 and is negative in the first quarter of 2012.
If you look at the accounting for Enbridge Income Fund Holdings, the debt ratios are very good. It shows the Liquidity Ratio currently at 2.12 and the Debt Ratio 40.54. However, if you look at the Enbridge Income Fund, these ratios are 1.17 and 1.21. Utilities tend to have low debt ratios as they are companies with high debt loads. Hard to know what to make of the ones for this company compared to the income fund.
The Return on Equity for 2011 is rather low at 4.7%. The ROE has always been quite low on this stock. The ROE on comprehensive income for 2011 is rather good at 12.2%. It is unusual for the ROE on the comprehensive income to be so much higher than the ROE on the net income.
This is rather a difficult stock to analyze. Ownership is confusing. It would appear that Enbridge Inc. (TSX-ENB) owns shares in this company as well as units in the Enbridge Income Fund. Sometimes such research points out what not to be as well as what to buy.
I think that a good rule to follow is not to invest in things you do not understand. Therefore I personally would not buy because I find the accounting and ownership rather confusing. I do own Enbridge Inc. (TSX-ENB). I never had any problem understanding the statements from Enbridge Inc. From going through these statements could Enbridge Inc. be indulging in off balance sheet accounting? I do not know the answer to this question.
Tomorrow, I will look at what my spreadsheet says about the current price of this stock and what the analysts say.
Enbridge Income Fund Holdings Inc. is a publicly traded corporation. The Company, through its investment in Enbridge Income Fund, holds high quality, low risk energy infrastructure assets. The Fund's assets include a 50% interest in the Canadian segment of the Alliance Pipeline, a 100% interest in the various pipelines comprising the Saskatchewan System, and interests in more than 400 megawatts of renewable and alternative power generation capacity. Its web site is here Enbridge Income. See my spreadsheet at enf.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.
Another thing is that the company is reporting an EPS of $1.33, but sites are saying that the EPS for 2011 was $0.78 or 0.98 or 1.03, (that is anything, but $1.33.) In any event they are saying something other than what the company is reporting of $1.33. If you divide the $37.33M earnings by current outstanding shares, you get an EPS of $0.95. If you divide the earnings by the average number of outstanding shares you get $1.15. This is the usual method of determining EPS. In my spreadsheet, I am assuming EPS is $1.15.
The dividends on this company have a 5 year median dividend yield of 8.62%. However, as with all companies changing from an income trust structure to a corporation structure, the dividend yield has come down and is currently at 5.49%. The actual dividends have not decreased, and in fact have increased with this structural change.
The growth in dividends over the years has been moderate with usually some increase except for 2010. The 5 and 10 year growth in dividends is at 4.59% and 4.34%. The most recent dividend increase, which occurred in 2011, was for 7.3%.
The 5 year Dividend Payout Ratios are 160% for earnings and 42.34% for cash flow. The DPRs for 2011 were 100.8% for earnings and 129.2% for Cash flow. (If I look at the cash flow without non-cash items, the DPR is still very high at 121.8%.)
This is also pointing to the fact that the cash flow per share is higher than the EPS and is not considered to be a good sign. The cash flow fell steeply with the structural change. However, if you look at cash flow for the fund, it went up significantly.
Some good news is that the total return on this stock is very good over the past 5 and 10 years. The total return is 15.75% and 15.43% per year, respectively. The dividend portion of this total return is 6.97% and 7.36% per year over the past 5 and 10 years. The capital gain portion is 8.77% and 8.07% per year over the past 5 and 10 years. Dividends make up 44.28% and 47.72% of the total return.
Going forward, you would expect that the total return will come down by at least a couple of percentage points as the dividend yield is coming down. I also note that the 12 month consensus stock price is below what the stock price is today.
Revenue per share is up 6.9% and 13.3% per year over the past 5 and 10 years. Earnings per Share are up just 2.4% per year over the past 5 years. This is because I have used $1.15 for EPS rather than the report $1.33 EPS figures. EPS is up well at 17.8% per year over the past 10 years.
My spreadsheet shows that cash flow per share is down considerably. This is because, according to the statements after the restructuring cash flow is down considerably. However, there does seem to be a lack of continuity in the accounting records after the restructuring.
Also, after the restructuring, book value is up considerably. However, if you look at the Enbridge Fund accounting, the book value was very low at the end of 2011 and is negative in the first quarter of 2012.
If you look at the accounting for Enbridge Income Fund Holdings, the debt ratios are very good. It shows the Liquidity Ratio currently at 2.12 and the Debt Ratio 40.54. However, if you look at the Enbridge Income Fund, these ratios are 1.17 and 1.21. Utilities tend to have low debt ratios as they are companies with high debt loads. Hard to know what to make of the ones for this company compared to the income fund.
The Return on Equity for 2011 is rather low at 4.7%. The ROE has always been quite low on this stock. The ROE on comprehensive income for 2011 is rather good at 12.2%. It is unusual for the ROE on the comprehensive income to be so much higher than the ROE on the net income.
This is rather a difficult stock to analyze. Ownership is confusing. It would appear that Enbridge Inc. (TSX-ENB) owns shares in this company as well as units in the Enbridge Income Fund. Sometimes such research points out what not to be as well as what to buy.
I think that a good rule to follow is not to invest in things you do not understand. Therefore I personally would not buy because I find the accounting and ownership rather confusing. I do own Enbridge Inc. (TSX-ENB). I never had any problem understanding the statements from Enbridge Inc. From going through these statements could Enbridge Inc. be indulging in off balance sheet accounting? I do not know the answer to this question.
Tomorrow, I will look at what my spreadsheet says about the current price of this stock and what the analysts say.
Enbridge Income Fund Holdings Inc. is a publicly traded corporation. The Company, through its investment in Enbridge Income Fund, holds high quality, low risk energy infrastructure assets. The Fund's assets include a 50% interest in the Canadian segment of the Alliance Pipeline, a 100% interest in the various pipelines comprising the Saskatchewan System, and interests in more than 400 megawatts of renewable and alternative power generation capacity. Its web site is here Enbridge Income. See my spreadsheet at enf.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.
Monday, July 9, 2012
Dividend Growth Index
I am today joining a great group of guys who blog about investing, especially about dividend investing. Back in September 2011, a group of 8 dividend bloggers launched the Dividend Growth Index. Each blogger could pick 3 stocks for the index for a total of 24 stocks. Stock could be either US or CDN. Each quarter, each blogger will follow their picks and the overall portfolio results. One blogger, the Wealthy Canadian has stopped blogging so I will be joining this group.
The other members of this group are listed below. I have also posted links to their June 2012 update for the Dividend Growth Index (DGI) where I know what the link is. Please note that these links will not work until the entry is posted by each blogger on July 9, 2012.
Dividend Growth Investor and DGI
Dividend Guy
Dividend Mantra
Dividend Monk and DGI
Dividend Ninja and DGI
My Own Advisor and DGI
Passive Income Earner and DGI
See Dividend Guy's initial blog entry on this index.
My contribution to this index will be 3 stocks also. My pick to add to the Dividend Growth index is Fortis Inc. (TSX-FTS), Toromont Industries Ltd. (TSX-TIH), and Saputo (TSX-SAP). They are all dividend growth stocks of various risk levels and in different sectors.
What are my goals? I am never out to beat anyone or any index in my investing although I do track my portfolio against the TSX. I just want to make some solid returns on my money. I try to buy good companies and I try to diversify my portfolio so that a loss of a stock or dismal returns in one sector does not do irreparable damage to my investments. So, I will review my picks and why I like these particular stocks.
Fortis Inc. (TSX-FTS)
This stock was one of my first buys and I have had it since 1987. I also bought some for another account in 1995 and 1996 and then sold some in 1998 because this stock was too high a percentage of my portfolio. Overall, I have made a return of 13.24% per year on this stock. Some 8.31% per year of my return was in capital gain and 4.93% per year was in dividends.
If I look just at the stock bought in 1987, I have a similar return. Over the last 10 years, my return is even better at 17.74% per year, however, over the past 5 years, my return is worse at just 8.77% per year.
This company has a great record of increasing their dividends. The 5 year median dividend yield is 3.3%, which is a decent return. The 5 and 10 year growth in dividends is 11.6% and 9.5% per year. The yield I am earnings on my original investment in 1987 is 25.8% and the dividend yield I am earning for my 1995 investment is 13.4%.
The 5 year median Dividend Payout Ratios are 67% for earnings and 27% for cash flow.
See my spreadsheet at fts.htm. For my latest blog postings dated March 2012, click here or here.
This has been a good stock for me and a very solid earner. It is the sort of stock that new investors should start with as it is a utility stock.
Toromont Industries Ltd. (TSX-TIH)
I built my portfolio initially on utility stocks and bank stocks. Once your portfolio gets to a certain size you need to diversify. This is a much riskier stock than Fortis and is considered to be an industrial stock. It is also more volatile and subject to the ups and downs of the business cycle.
Over long periods of time, you would expect this stock to produce better capital gains than a stock like Fortis. However, that long period of time would have to include both a secular bear and bull markets. We have been in a secular bear market since 2000.
I first bought this stock in 2008 and then some more in 2011. The 5 year median dividend yield is 2.23%, which is lower than the one for Fortis. I have made a return of 7.83% on this stock. Some 4.36% per year of this return is in Capital Gain and 3.47% per year is dividend return.
The 5 and 10 year dividend growth is 5.7% and 12% per year. They were having a hard time in the latest recession and earnings are not growing well. So, dividends were decreased in 2011. The company started increasing the dividends again in 2012. This is an industrial stock, so you can expect some variations in dividends.
The 5 year Dividend Payout Ratios are 32% and 19.5% for earnings and cash flow respectively. I have had no growth in dividends from when I bought the stock, but I expect to have dividend increases in the long term.
This stock has brought diversification to my portfolio and I expect it to do well in the long term.
See my spreadsheet at tih.htm. For my most recent blog entries dated April 2012, click here or here.
Saputo (TSX-SAP)
As I had said above, I built my portfolio initially on utility and bank stock. This is also a riskier stock than Fortis. However, it is a consumer products (consumer staple) stock and this would bring some stability to this stock. The 5 year median dividend is just 1.8%. Consumer stocks tend to have lower Dividend Payout Ratios because they need money to grow and invest. Lower Dividend Payout Ratios lead to lower dividends.
I bought this stock first in 2006 and then some more in 2007. My total return on this stock is 16.93% per year. Some 15.73% per year comes from capital gain and 1.2% from dividends. For the stock I bought in 2006, my dividend yield on my original investment is 3.82% and for the stock I bought in 2007, my dividend yield on my original investment is 3.45%.
Dividends have grown over the past 5 and 10 years at the rate of 13% and 34% per year, respectively. The 5 year median Dividend Payout Ratios for this stock is 33% and 24% for earnings and cash flow, respectively.
This stock has brought diversification to my portfolio and I expect it to do well in the long term. I expect to earn more in capital gains than in dividends compared to utility and bank stocks.
See my spreadsheet at sap.htm. For my most recent blog entries dated June 2012, click here or here.
Below is a chart showing all the stocks covered by this index and by which blogger and with a link to their sites. Since the inception of this Dividend Growth Index, the return is 18.09%. The year to date return is 2.15%.
We are tracking our index against a number of ETFs. The main drag on our return comes from Canadian National Resources (TSX-CNQ) which is down over 30%. However, this company is into Oil and Gas and these products are down year to date, so this is hardly surprising.
See the spreadsheet at dgi.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.
The other members of this group are listed below. I have also posted links to their June 2012 update for the Dividend Growth Index (DGI) where I know what the link is. Please note that these links will not work until the entry is posted by each blogger on July 9, 2012.
Dividend Growth Investor and DGI
Dividend Guy
Dividend Mantra
Dividend Monk and DGI
Dividend Ninja and DGI
My Own Advisor and DGI
Passive Income Earner and DGI
See Dividend Guy's initial blog entry on this index.
My contribution to this index will be 3 stocks also. My pick to add to the Dividend Growth index is Fortis Inc. (TSX-FTS), Toromont Industries Ltd. (TSX-TIH), and Saputo (TSX-SAP). They are all dividend growth stocks of various risk levels and in different sectors.
What are my goals? I am never out to beat anyone or any index in my investing although I do track my portfolio against the TSX. I just want to make some solid returns on my money. I try to buy good companies and I try to diversify my portfolio so that a loss of a stock or dismal returns in one sector does not do irreparable damage to my investments. So, I will review my picks and why I like these particular stocks.
Fortis Inc. (TSX-FTS)
This stock was one of my first buys and I have had it since 1987. I also bought some for another account in 1995 and 1996 and then sold some in 1998 because this stock was too high a percentage of my portfolio. Overall, I have made a return of 13.24% per year on this stock. Some 8.31% per year of my return was in capital gain and 4.93% per year was in dividends.
If I look just at the stock bought in 1987, I have a similar return. Over the last 10 years, my return is even better at 17.74% per year, however, over the past 5 years, my return is worse at just 8.77% per year.
This company has a great record of increasing their dividends. The 5 year median dividend yield is 3.3%, which is a decent return. The 5 and 10 year growth in dividends is 11.6% and 9.5% per year. The yield I am earnings on my original investment in 1987 is 25.8% and the dividend yield I am earning for my 1995 investment is 13.4%.
The 5 year median Dividend Payout Ratios are 67% for earnings and 27% for cash flow.
See my spreadsheet at fts.htm. For my latest blog postings dated March 2012, click here or here.
This has been a good stock for me and a very solid earner. It is the sort of stock that new investors should start with as it is a utility stock.
Toromont Industries Ltd. (TSX-TIH)
I built my portfolio initially on utility stocks and bank stocks. Once your portfolio gets to a certain size you need to diversify. This is a much riskier stock than Fortis and is considered to be an industrial stock. It is also more volatile and subject to the ups and downs of the business cycle.
Over long periods of time, you would expect this stock to produce better capital gains than a stock like Fortis. However, that long period of time would have to include both a secular bear and bull markets. We have been in a secular bear market since 2000.
I first bought this stock in 2008 and then some more in 2011. The 5 year median dividend yield is 2.23%, which is lower than the one for Fortis. I have made a return of 7.83% on this stock. Some 4.36% per year of this return is in Capital Gain and 3.47% per year is dividend return.
The 5 and 10 year dividend growth is 5.7% and 12% per year. They were having a hard time in the latest recession and earnings are not growing well. So, dividends were decreased in 2011. The company started increasing the dividends again in 2012. This is an industrial stock, so you can expect some variations in dividends.
The 5 year Dividend Payout Ratios are 32% and 19.5% for earnings and cash flow respectively. I have had no growth in dividends from when I bought the stock, but I expect to have dividend increases in the long term.
This stock has brought diversification to my portfolio and I expect it to do well in the long term.
See my spreadsheet at tih.htm. For my most recent blog entries dated April 2012, click here or here.
Saputo (TSX-SAP)
As I had said above, I built my portfolio initially on utility and bank stock. This is also a riskier stock than Fortis. However, it is a consumer products (consumer staple) stock and this would bring some stability to this stock. The 5 year median dividend is just 1.8%. Consumer stocks tend to have lower Dividend Payout Ratios because they need money to grow and invest. Lower Dividend Payout Ratios lead to lower dividends.
I bought this stock first in 2006 and then some more in 2007. My total return on this stock is 16.93% per year. Some 15.73% per year comes from capital gain and 1.2% from dividends. For the stock I bought in 2006, my dividend yield on my original investment is 3.82% and for the stock I bought in 2007, my dividend yield on my original investment is 3.45%.
Dividends have grown over the past 5 and 10 years at the rate of 13% and 34% per year, respectively. The 5 year median Dividend Payout Ratios for this stock is 33% and 24% for earnings and cash flow, respectively.
This stock has brought diversification to my portfolio and I expect it to do well in the long term. I expect to earn more in capital gains than in dividends compared to utility and bank stocks.
See my spreadsheet at sap.htm. For my most recent blog entries dated June 2012, click here or here.
Below is a chart showing all the stocks covered by this index and by which blogger and with a link to their sites. Since the inception of this Dividend Growth Index, the return is 18.09%. The year to date return is 2.15%.
| Company | Symbol | Blogger |
| Chevron Corp | CVX-N | Dividend Growth Investor |
| Enterprise Product Partners | EPD-N | Dividend Growth Investor |
| McDonald's Corp | MCD-N | Dividend Growth Investor |
| Coca-Cola | KO-N | Dividend Guy |
| Intel | INTC-Q | Dividend Guy |
| National Bank | NA-T | Dividend Guy |
| Conoco Phillips | COP-N | Dividend Mantra |
| Phillip Morris | PM-N | Dividend Mantra |
| Procter & Gamble | PG-N | Dividend Mantra |
| Energy Transfer Equity | ETE-Np | Dividend Monk |
| Novartis AG | NVS-N | Dividend Monk |
| Wal-Mart | WMT-N | Dividend Monk |
| Husky Energy | HSE-T | Dividend Ninja |
| PepsiCo | PEP-N | Dividend Ninja |
| Staples | SPLS-Q | Dividend Ninja |
| Abbott Labs | ABT-N | My Own Advisor |
| Bank of Nova Scotia | BNS-T | My Own Advisor |
| CML Healthcare | CLC-T | My Own Advisor |
| Aflac | AFL-N | Passive Income Earner |
| Canadian Nat. Railway | CNR-T | Passive Income Earner |
| Canadian Nat. Resources | CNQ-T | Passive Income Earner |
| Fortis Inc | FTS-T | SPBrunner |
| Toromont Industries Ltd | TIH-T | SPBrunner |
| Saputo Inc | SAP-T | SPBrunner |
We are tracking our index against a number of ETFs. The main drag on our return comes from Canadian National Resources (TSX-CNQ) which is down over 30%. However, this company is into Oil and Gas and these products are down year to date, so this is hardly surprising.
| ETF | Symbol | YTD |
| S&P/TSX 60 Index Fund | XIU | -1.28% |
| Dow Jones Canada Select Dividend Index Fund | XDV | 0.46% |
| SPDR S&P 500 ETF | SPY | 9.47% |
| Vanguard Dividend Appreciation ETF | VIG | 4.80% |
| Dividend Growth Index | DGI | 2.15% |
See the spreadsheet at dgi.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.
Friday, July 6, 2012
HNZ Group Inc 2
I do not own this stock (TSX-HNZ.A; TSX-HNZ.B). This stock was formally Canadian Helicopter Group (TSX-CHL.A; TSX-CHL.B) but is changing the name effective in July 2012.
From the insider trading report, I find $2.09M of insider selling and $2.06M of net insider selling. So you can see there is a very small amount of insider buying. Buying seems to be all under the company plan. Insiders do own shares, but they do not seem to have any stock options. Buying is done via a company plan.
There are 16 institutions holding 49% of the shares of this company. Over the past 3 months they have reduced their exposure to this company by 5.2%, but there was 1 net new buyer of these shares. This is a negative, but you do not know why stock is being sold.
Price/Earnings Ratios on this stock has always been quite low. The 5 year low, median and high P/E Ratios are 4.14, 5.37 and 6.61. The current P/E Ratio is 7.61. This ratio is relatively high for this stock, but it is still quite a low actual ratio.
I get a Graham Price of $37.28. This stock’s price is generally below the Graham price. The 10 year low, median and high Price/Graham price Ratios are 0.39, 0.50 and 0.66. The current P/Gp ratio of 0.78 is relatively high. However such a ratio shows a rather low actual stock price. A good stock price is one at or below the Graham Price.
The 10 year Price/Book Value Ratio is 1.05 and the current P/B Ratio of 1.82 is some 74% higher. What you want is a current one around the 10 year P/B Ratio to show a reasonable current stock price, or one 80% lower to show a very good current stock price. The current ratio shows a relatively high stock price. However, the 10 year P/B Ratio is quite low and the current one is a good ratio.
The 5 year median dividend yield is 9.5% and the current yield of 3.77% is a lot lower. Generally, you are looking for a current one higher than the 5 year median. However, it was expected the dividend yields would go lower on companies switching from income trusts to corporations.
So what all my stock price tests show is that the stock price is relatively high for this stock. However, you can also see from these ratios that this stock has in the past had actually quite low ratios. When the income trust companies changed to corporations you would expect the dividend yields to come down, but you would not normally expect changes to the other ratios. So my conclusion is that the stock is selling at a relatively high price compared to its past.
When I look at analysts’ recommendations, I find recommendations of Strong Buy, Buy and Hold. The consensus recommendation would be a Buy. The 12 months stock price target is $37.80. This implies a total 12 month return of 33.05%, with 3.77 from dividends and 29.27% from capital gain. The expected return for this stock is quite high over the next 12 months.
An analyst with a Hold rating gave a 12 months stock price at $32.00. This would still be a very decent 13.21% return with 9.44% from capital gains.
The company has contracts for helicopters in Afghanistan and in Canada’s natural resources sections. It is felt that these might be at risk in the future. Everyone seems to feel that their purchase of Helicopter (NZ) Ltd. was a good move. One analyst with buy recommendations noted the low ratios for this company as a reason to buy. Another mentioned it low debt and its low Dividend Payout Ratios as a reasons to like this company.
Others are concerned about a downturn in resources in the near future and feel that their contracts in Afghanistan will come to an end as the US is pulling out.
It does seem like a very good company, with very good growth rates at a time that a lot of companies are having a hard time growing. This is all to the good. It probably had low ratios in the past because it was a small company and ratios should normalize as it grows.
I still prefer stock that increase dividends over time. I think that this stock is at a place where it could do this if it so desires.
HNZ Group Inc. is an international provider of helicopter transportation and related support services with fixed primary operations in Canada, Australia, New Zealand and regions of Southeast Asia. The group also delivers contracted on demand support in Afghanistan and Antarctica. Its web site is here HNZ Group. See my spreadsheet at hnz.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.
From the insider trading report, I find $2.09M of insider selling and $2.06M of net insider selling. So you can see there is a very small amount of insider buying. Buying seems to be all under the company plan. Insiders do own shares, but they do not seem to have any stock options. Buying is done via a company plan.
There are 16 institutions holding 49% of the shares of this company. Over the past 3 months they have reduced their exposure to this company by 5.2%, but there was 1 net new buyer of these shares. This is a negative, but you do not know why stock is being sold.
Price/Earnings Ratios on this stock has always been quite low. The 5 year low, median and high P/E Ratios are 4.14, 5.37 and 6.61. The current P/E Ratio is 7.61. This ratio is relatively high for this stock, but it is still quite a low actual ratio.
I get a Graham Price of $37.28. This stock’s price is generally below the Graham price. The 10 year low, median and high Price/Graham price Ratios are 0.39, 0.50 and 0.66. The current P/Gp ratio of 0.78 is relatively high. However such a ratio shows a rather low actual stock price. A good stock price is one at or below the Graham Price.
The 10 year Price/Book Value Ratio is 1.05 and the current P/B Ratio of 1.82 is some 74% higher. What you want is a current one around the 10 year P/B Ratio to show a reasonable current stock price, or one 80% lower to show a very good current stock price. The current ratio shows a relatively high stock price. However, the 10 year P/B Ratio is quite low and the current one is a good ratio.
The 5 year median dividend yield is 9.5% and the current yield of 3.77% is a lot lower. Generally, you are looking for a current one higher than the 5 year median. However, it was expected the dividend yields would go lower on companies switching from income trusts to corporations.
So what all my stock price tests show is that the stock price is relatively high for this stock. However, you can also see from these ratios that this stock has in the past had actually quite low ratios. When the income trust companies changed to corporations you would expect the dividend yields to come down, but you would not normally expect changes to the other ratios. So my conclusion is that the stock is selling at a relatively high price compared to its past.
When I look at analysts’ recommendations, I find recommendations of Strong Buy, Buy and Hold. The consensus recommendation would be a Buy. The 12 months stock price target is $37.80. This implies a total 12 month return of 33.05%, with 3.77 from dividends and 29.27% from capital gain. The expected return for this stock is quite high over the next 12 months.
An analyst with a Hold rating gave a 12 months stock price at $32.00. This would still be a very decent 13.21% return with 9.44% from capital gains.
The company has contracts for helicopters in Afghanistan and in Canada’s natural resources sections. It is felt that these might be at risk in the future. Everyone seems to feel that their purchase of Helicopter (NZ) Ltd. was a good move. One analyst with buy recommendations noted the low ratios for this company as a reason to buy. Another mentioned it low debt and its low Dividend Payout Ratios as a reasons to like this company.
Others are concerned about a downturn in resources in the near future and feel that their contracts in Afghanistan will come to an end as the US is pulling out.
It does seem like a very good company, with very good growth rates at a time that a lot of companies are having a hard time growing. This is all to the good. It probably had low ratios in the past because it was a small company and ratios should normalize as it grows.
I still prefer stock that increase dividends over time. I think that this stock is at a place where it could do this if it so desires.
HNZ Group Inc. is an international provider of helicopter transportation and related support services with fixed primary operations in Canada, Australia, New Zealand and regions of Southeast Asia. The group also delivers contracted on demand support in Afghanistan and Antarctica. Its web site is here HNZ Group. See my spreadsheet at hnz.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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