Friday, August 17, 2012

Nordion Inc. 2

I do not own this stock (TSX-NDN, NYSE-NDZ), but I used to, but when I owned it, it was MDS Inc. (TSX-MDS). I bought this stock in 1996, 1997 and 1998 and sold it off in 2006. So, I had it some 9 years and I made 4.95% per year. I made capital gains of 4.4% per year and dividends of 0.55% per year. I sold because I thought that the company was going nowhere.

Over the past year there was a very little amount of insider buying and this occurred in the early part of 2012. There is no insider selling. Insiders seem to be retaining their options at the moment and this is a good sign. All insiders seem to have lots more options and options like vehicles than actual common shares.

There are an awful lot options outstanding. There are options, Restricted Share units, Common Shares Deferred Share Units and Common Shares Performance Share Units. For example, the CEO has options and options like things outstanding worth $9.6M and totaling almost 1.6% of the outstanding shares. The CFO has options and options like things outstanding worth $2.5M and 0.4% of the outstanding shares.

According to the information I can find, there are 69 institutions that hold some 74% of the shares of this company. Over the past 3 months they have marginally increased their holdings.

There are too many recent years of no earnings so I cannot get a fix on the 5 year median Price/Earnings ratios. The 10 year low, median and high P/E Ratios are 21.52, 24.98 and 28.44. These are rather high P/E Ratios, but when the company did have earnings, the P/E Ratios tended to be on the high side. The current P/E Ratio of 17.45 on a stock price of $9.78 would suggest that the current stock price is relatively low.

I get a Graham Price of $7.46 and the current stock price of $9.78 gives a Price/Graham Price Ratio of 1.31. I find that the 10 year low, median and high P/GP Ratios are 1.44, 1.73and 2.23. The current P/GP Ratio of 1.31 would suggest a relatively low stock price.

The 10 year Price/Book Value Ratio is 1.76. The current Ratio of 2.22 is some 26% higher. Problem is that the Book Value has been dropping. However, this would suggest that the current stock price is relatively high. Since the company just restarted the dividends, I cannot do any sort of test on dividend yield.

Looking at Price/Cash Flow per share Ratio, I find that the 5 year P/CF Ratio is 11.64 and the P/CF Ratio using the CFPS for the last 12 months, gives a P/CF Ratio of 17.9. This would also suggest a rather high current stock price.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus recommendation would be a Buy. The 12 month consensus stock price is $11.01. This would imply a 12 month total return of 16.7%.

One analysts with a Hold recommendations thought that the poor second quarter of 2012 results from this company was corroborating his long term view of flat to declining revenue performance. He thought that the company would have difficulty reversing its soft performance trends. Paradigm Research has a buy on this company by its analyst Alan Ridgeway. He thinks the shares are undervalued. See article.

An interesting article is about the fact that U.S. anti-proliferation move could harm Nordion's medical isotopes business. See article.

Personally, I do not think that this would be a good stock to have in your portfolio. It is having a hard time now and we could be heading for more economic uncertainty, so I cannot imagine this company would do much for anyone's portfolio for a while.

Nordion Inc. is a global life sciences company that provides products and services for the development of drugs and diagnosis and treatment of disease. The company is a provider of pharmaceutical contract research, medical isotopes for molecular imaging, radiotherapeutics, and analytical instruments. Its web site is here Nordion. See my spreadsheet at ndn.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.

1 comment:

  1. Is that a DRIP stock I seem to remember my Dad owning that stock.

    BTW thanks for taking the time to answer my questions, am slowly figuring out how I want to invest