On my other blog I am today writing about the Money Show in Toronto for 2012. I will be putting my notes up as I transcribe them...continue...
I do not own this stock of Alliance Grain Traders Inc. (TSX-AGT). I started to follow this stock after it was mentioned by a number of speakers at the 2009 Toronto Money Show. At that time it had already converted from an Alliance Grain Traders Income Fund (TSX-AGT.UN) to a corporation. When it converted, the stock price when up and the dividend yield dropped from almost 7% to around 2%.
When I look at insider trading, I find minimal insider buying (of $0.3M) and no insider selling. The annual statement says that the Arslan family owns some 27.5% of the outstanding shares. Some insiders have options, and the CFO and one officer has more options than shares. However, some insiders, including members of the Arslan family do own millions of dollars in shares. For example, the CEO owns some $4M in shares.
There are some 27 institutional holders and hold around 33% of the outstanding shares. Over the past 3 months they have decreased their share holdings by 5%.
The historical Price/Earnings Ratios are rather mucked up because of negative earnings in 2011 and since this company was only established in 2005, I do not have many years to look at. P/E ratios for this stock are also all over the place. The median Ratios range from a low of 4.25 and a high of 32.42 (ignoring the negative one for 2011). The 6 year low, median and high median P/E Ratios are 5.27, 8.41 and 11.54. All these are P/E Ratios or low to moderate. The current P/E ratio is 20.44. This is a bit high, but not overly so.
I get a Graham Number of $14.47. The 6 year low, median and high median Price/Graham Price Ratios are 0.78, 0.79 and 1.05. The current P/GP Ratio is 0.96. When this ratio is below 1.00, it means that the stock price is lower than the Graham Price. Theoretically, you want to buy a stock when the stock price is at or below the Graham Price. The current ratio is also between the median and high range of ratios. I think that this reasoning gives us a reasonable stock price.
The 6 year Price/Book Value per Share Ratio is 1.51 and the current P/B Ratio is 1.02. The current ratio is only 67% of the longer term ratio. This low current ratio suggests that the stock price is low.
The 5 year Dividend yield is 2.84% and the current dividend yield is 4.32%. This current dividend yield is some 52% higher than the 5 year median dividend yield and this suggests that the stock price is low.
When I look at analysts' recommendations, I find Strong Buy, Buy, Hold, Underperform and Sell recommendations. The consensus recommendations would be a Hold. The consensus 12 months stock price is $16.20 and this implies and total return of 20.86%, with 4.32% from dividends and 16.55% from capital gains.
There is an article in the Financial Post dated July 2012 talking about Canaccord upgrading this stock from a hold to a buy because of a dryer than usual monsoon season in India. A more recent article in Forbes dated October 2012 says that this company is oversold. (When a stock is oversold it means it is a good time to buy it.) The Happy Capitalism blogger has also recently written about this stock.
I still think that this stock is rather risky, but you could buy it for diversification.
Alliance Grain Traders Inc. through its subsidiaries, Alliance Pulse Processors Inc. ("Alliance") and Arbel Group ("Arbel"), is engaged in the business of sourcing and processing (cleaning, splitting, sorting and bagging) specialty crops, primarily for export markets. Alliance and its subsidiaries in Canada, U.S., Australia and Turkey handle the full range of pulses and specialty crops including lentils, peas, chickpeas, beans and canary seed through six processing plants. The company recent bought the Arbel Group of Mersin, Turkey. Its web site is here Alliance Grain Traders. See my spreadsheet at agt.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 or StockTwits.
Wednesday, October 31, 2012
Tuesday, October 30, 2012
Alliance Grain Traders Inc
On my other blog I am today writing about the Money Show in Toronto for 2012. I will be putting my notes up as I transcribe them...continue...
I do not own this stock (TSX-AGT). I started to follow this stock after it was mentioned by a number of speakers at the 2009 Toronto Money Show. At that time it had already converted from an Alliance Grain Traders Income Fund (TSX-AGT.UN) to a corporation. When it converted, the stock price when up and the dividend yield dropped from almost 7% to around 2%.
The current dividend yield is 4.32% (as stock price has dropped). The 5 year median dividend yield is lower at 2.84%. The 2011 financial year was not a good year for this stock as it lost money. This stock is in the grain business which can be volatile.
The Dividend Payout Ratio is expected to be around 88% for EPS in 2012. The 5 year median DPR for adjusted cash flow is 42%. The DPR for adjusted cash flow for the financial year of 2011 is 54%. The dividends were raised in 2011 by 11.1%. There has been no dividend raised for 2012.
The total return over the past 5 and 7 years is at 40.01% and 28.53% per year, respectively. The dividend portion of this return was 16.97% and 20.92% per year, respectively. The capital gain portion of this return was 33.22% and 22.56%. On a go forward basis, the dividends will be lower as dividend yield has dropped and will not go back up to the value it was when this company was an income trust.
Shares have increased because they have been issuing new shares. Shares are up 71% and 64% per year over the past 5 and 6 years. Revenues have grown by 128% and 114% per year over the past 5 and 6 years. Revenues per Share have grown nicely at 33% and 29% per year over the past 5 and 6 years. The difference between revenue increase and revenue per share increase is because of the new shares being issued.
I can give no growth for Earnings per Share as the company has a loss for the financial year of 2011. They are expected to have positive earnings this year and so far the first two quarters have had positive earnings. The growth in book value per share is also good with the 5 and 6 year growth at 23% and 20% per year, respectively.
Until 2011, the Return on Equity was quite good. The 5 year median ROE is 12.1%. The ROE is expected to be around 9.9% for 2012. The ROE based on comprehensive income is not quite as good with the 5 year median being lower at 10.9%. (However, a good ROE is considered to be between 10% and 15% so this company is not doing badly).
The Liquidity Ratio has been rather low lately and it basically has not been very high. The current assets can cover the current liabilities, but not with the comfort I like. The Liquidity Ratio for 2011 is 1.26 and the current ratio is 1.29. I would prefer this to be 1.50.
The Debt Ratio is much better with a 2011 ratio of 1.65 and a current ratio of 1.65. Both the current Leverage and Debt/Equity Ratios are fine at 2.54 and 1.54, respectively.
I expect this stock to be rather volatile and I think it is risky. Whether investors will do well over the long term and be paid well for taking the risk of this volatile stock is unknown. This stock has not been around very long.
There is a couple of warnings because the accrual ratios are quite high (over 5.00%) and the EPS/CF Ratio has a couple times, in the past 5 years been higher than 1.00. These do not point to any particular problem, but show that investors should be cautious. There have been studies that show statistically companies with these characteristics to not do well over the long term. See article on accruals and article cash flow and earnings. Both these articles talk about work done by Professor Richard Sloan.
Alliance Grain Traders Inc. through its subsidiaries, Alliance Pulse Processors Inc. ("Alliance") and Arbel Group ("Arbel"), is engaged in the business of sourcing and processing (cleaning, splitting, sorting and bagging) specialty crops, primarily for export markets. Alliance and its subsidiaries in Canada, U.S., Australia and Turkey handle the full range of pulses and specialty crops including lentils, peas, chickpeas, beans and canary seed through six processing plants. The company recent bought the Arbel Group of Mersin, Turkey. Its web site is here Alliance Grain Traders. See my spreadsheet at agt.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 or StockTwits.
I do not own this stock (TSX-AGT). I started to follow this stock after it was mentioned by a number of speakers at the 2009 Toronto Money Show. At that time it had already converted from an Alliance Grain Traders Income Fund (TSX-AGT.UN) to a corporation. When it converted, the stock price when up and the dividend yield dropped from almost 7% to around 2%.
The current dividend yield is 4.32% (as stock price has dropped). The 5 year median dividend yield is lower at 2.84%. The 2011 financial year was not a good year for this stock as it lost money. This stock is in the grain business which can be volatile.
The Dividend Payout Ratio is expected to be around 88% for EPS in 2012. The 5 year median DPR for adjusted cash flow is 42%. The DPR for adjusted cash flow for the financial year of 2011 is 54%. The dividends were raised in 2011 by 11.1%. There has been no dividend raised for 2012.
The total return over the past 5 and 7 years is at 40.01% and 28.53% per year, respectively. The dividend portion of this return was 16.97% and 20.92% per year, respectively. The capital gain portion of this return was 33.22% and 22.56%. On a go forward basis, the dividends will be lower as dividend yield has dropped and will not go back up to the value it was when this company was an income trust.
Shares have increased because they have been issuing new shares. Shares are up 71% and 64% per year over the past 5 and 6 years. Revenues have grown by 128% and 114% per year over the past 5 and 6 years. Revenues per Share have grown nicely at 33% and 29% per year over the past 5 and 6 years. The difference between revenue increase and revenue per share increase is because of the new shares being issued.
I can give no growth for Earnings per Share as the company has a loss for the financial year of 2011. They are expected to have positive earnings this year and so far the first two quarters have had positive earnings. The growth in book value per share is also good with the 5 and 6 year growth at 23% and 20% per year, respectively.
Until 2011, the Return on Equity was quite good. The 5 year median ROE is 12.1%. The ROE is expected to be around 9.9% for 2012. The ROE based on comprehensive income is not quite as good with the 5 year median being lower at 10.9%. (However, a good ROE is considered to be between 10% and 15% so this company is not doing badly).
The Liquidity Ratio has been rather low lately and it basically has not been very high. The current assets can cover the current liabilities, but not with the comfort I like. The Liquidity Ratio for 2011 is 1.26 and the current ratio is 1.29. I would prefer this to be 1.50.
The Debt Ratio is much better with a 2011 ratio of 1.65 and a current ratio of 1.65. Both the current Leverage and Debt/Equity Ratios are fine at 2.54 and 1.54, respectively.
I expect this stock to be rather volatile and I think it is risky. Whether investors will do well over the long term and be paid well for taking the risk of this volatile stock is unknown. This stock has not been around very long.
There is a couple of warnings because the accrual ratios are quite high (over 5.00%) and the EPS/CF Ratio has a couple times, in the past 5 years been higher than 1.00. These do not point to any particular problem, but show that investors should be cautious. There have been studies that show statistically companies with these characteristics to not do well over the long term. See article on accruals and article cash flow and earnings. Both these articles talk about work done by Professor Richard Sloan.
Alliance Grain Traders Inc. through its subsidiaries, Alliance Pulse Processors Inc. ("Alliance") and Arbel Group ("Arbel"), is engaged in the business of sourcing and processing (cleaning, splitting, sorting and bagging) specialty crops, primarily for export markets. Alliance and its subsidiaries in Canada, U.S., Australia and Turkey handle the full range of pulses and specialty crops including lentils, peas, chickpeas, beans and canary seed through six processing plants. The company recent bought the Arbel Group of Mersin, Turkey. Its web site is here Alliance Grain Traders. See my spreadsheet at agt.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 or StockTwits.
Monday, October 29, 2012
Stantec Inc 2
On my other blog I am today writing about the Money Show in Toronto for 2012. I will be putting my notes up as I transcribe them...continue...
I do not own this stock of Stantec Inc. (TSX-STN, NYSE-STN), but I used to. I had originally bought it for some capital gain and held it from 2008 to 2011 and lost some 23% on this transaction. I did not buy much and my timing was off.
Insider trading shows some insider buying and a net of insider selling of $6.2M. Insider selling is at $6.3M. Insider selling is by CEO, CFO, officers and directors. Insider selling by directors is at $5.6M, and so is the most. It seems like insider are getting rid of options. (Often insiders tread options as part of their pay.)
Insiders not only have options but they also have Common Shares Restricted Share Units and Common Shares Deferred Share Units. There are a lot of options and option like vehicles outstanding. There is not only the CEO, CFO and directors with lots of options, but executive officers and other officers have lots of options also. Insiders do have lots of common shares also and shares worth into the millions. For example the CEO has common shares with $2.8M, a director has shares worth $5.2M and a senior executive has shares worth $3.7M.
The 5 year low, median and high median Price/Earnings Ratios are 15.52, 20.40 and 25.29. The current P/E ratio is 13.89 based on 2012 earnings of $2.50 and a stock price of $34.72. On this basis the stock price is low.
I get a current Graham Price of $28.81. The 10 year low, median and high median Price/Graham Price Ratios are 0.98, 1.26 and 1.49. The current P/GP ratio is 1.20. This shows that the current stock price is reasonable.
I get a 10 year Price/Book Value per Share Ratio of 2.53. The current P/B Ratio is 2.35, a value some 93% of the 10 year ratio. This shows that the current stock price is reasonable.
This company has just started to pay dividends, so I can do a stock test using dividend yield. However, I see it as a good sign that the company has started to pay dividends.
When I look at analysts' recommendations I find Strong Buy, Buy and Hold recommendations. The consensus recommendation is a Buy. The 12 month consensus stock price is $36.10 which implies a total return of 5.7% with 3.97% from capital gains and 1.73% from dividends. (To me that seems like little return for a Buy consensus.)
On October 17th, Canaccord Genuity raises target to C$41.50 from C$35 for Stantec Inc. The rating stays at Buy. See Jags Report. An article in the Financial Post talks about SmarTrend identifying an uptrend in this stock.
Good company. The price is reasonable to low. Starting dividends adds a new dimension to this stock.
Stantec, founded in 1954, provides professional consulting services in planning, engineering, architecture, interior design, landscape architecture, surveying, environmental sciences, project management, and project economics for infrastructure and facilities projects. We support public and private sector clients in a diverse range of markets, at every stage, from initial concept and financial feasibility to project completion and beyond. Their services are provided on projects around the world operating out of more than 170 locations in North America and 4 locations internationally. Its web site is here Stantec. See my spreadsheet at stn.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 or StockTwits.
I do not own this stock of Stantec Inc. (TSX-STN, NYSE-STN), but I used to. I had originally bought it for some capital gain and held it from 2008 to 2011 and lost some 23% on this transaction. I did not buy much and my timing was off.
Insider trading shows some insider buying and a net of insider selling of $6.2M. Insider selling is at $6.3M. Insider selling is by CEO, CFO, officers and directors. Insider selling by directors is at $5.6M, and so is the most. It seems like insider are getting rid of options. (Often insiders tread options as part of their pay.)
Insiders not only have options but they also have Common Shares Restricted Share Units and Common Shares Deferred Share Units. There are a lot of options and option like vehicles outstanding. There is not only the CEO, CFO and directors with lots of options, but executive officers and other officers have lots of options also. Insiders do have lots of common shares also and shares worth into the millions. For example the CEO has common shares with $2.8M, a director has shares worth $5.2M and a senior executive has shares worth $3.7M.
The 5 year low, median and high median Price/Earnings Ratios are 15.52, 20.40 and 25.29. The current P/E ratio is 13.89 based on 2012 earnings of $2.50 and a stock price of $34.72. On this basis the stock price is low.
I get a current Graham Price of $28.81. The 10 year low, median and high median Price/Graham Price Ratios are 0.98, 1.26 and 1.49. The current P/GP ratio is 1.20. This shows that the current stock price is reasonable.
I get a 10 year Price/Book Value per Share Ratio of 2.53. The current P/B Ratio is 2.35, a value some 93% of the 10 year ratio. This shows that the current stock price is reasonable.
This company has just started to pay dividends, so I can do a stock test using dividend yield. However, I see it as a good sign that the company has started to pay dividends.
When I look at analysts' recommendations I find Strong Buy, Buy and Hold recommendations. The consensus recommendation is a Buy. The 12 month consensus stock price is $36.10 which implies a total return of 5.7% with 3.97% from capital gains and 1.73% from dividends. (To me that seems like little return for a Buy consensus.)
On October 17th, Canaccord Genuity raises target to C$41.50 from C$35 for Stantec Inc. The rating stays at Buy. See Jags Report. An article in the Financial Post talks about SmarTrend identifying an uptrend in this stock.
Good company. The price is reasonable to low. Starting dividends adds a new dimension to this stock.
Stantec, founded in 1954, provides professional consulting services in planning, engineering, architecture, interior design, landscape architecture, surveying, environmental sciences, project management, and project economics for infrastructure and facilities projects. We support public and private sector clients in a diverse range of markets, at every stage, from initial concept and financial feasibility to project completion and beyond. Their services are provided on projects around the world operating out of more than 170 locations in North America and 4 locations internationally. Its web site is here Stantec. See my spreadsheet at stn.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 or StockTwits.
Friday, October 26, 2012
Stantec Inc
On my other blog I am today writing about the Money Show in Toronto for 2012. I will be putting my notes up as I transcribe them...continue...
I do not own this stock of Stantec Inc. (TSX-STN, NYSE-STN), but I used to. I had originally bought it for some capital gain and held it from 2008 to 2011 and lost some 23% on this transaction. I did not buy much and my timing was off.
In 2012, Stantec started to pay a dividend. The dividend yield is rather low at 1.75%. However, the Dividend Payout Ratios are also low. The DPR for earnings is expected to be 24% this year. The DPR for cash flow for the last 12 months gives us a DPR for cash flow of 18%.
There has been an increase in the outstanding shares over the last 5 years at 0.14% per year and this is due to stock options. The increase over the past 10 year is higher at 3% per year and this is due to stock options each year, plus a stock issuance in 2005 which increased the shares that year by 18%.
Total Return has not been very good over the past 5 years and it is only at 2.07% per year. Total return is much better over the past 10 years at 17.06% per year. The problem with the financial year of 2011 is that they had to take a write off of their good will. This hit their earnings hard.
The growth in revenue is at 15.5% and 16.8% per year over the past 5 and 10 years, respectively. The growth in revenue per share is at a very good 15% and 13% per year over the past 5 and 10 years.
Growth in earnings per share is at 11% and 17.5% per year over the past 5 and 10 years. Cash flow per share growth is not quite as good as other growth and it is at 5.7% and 13.5% per year over the past 5 and 10 years. Book value per share growth is at 8.7% and 15.8% per year over the past 5 and 10 years.
Return on Equity is good for this stock with ROE at the end of 2011 at 16.4% and the 5 year ROE at 15%. (Note this excludes the goodwill write-off.) The ROE for 2012 is expected to be similar to the ROE for 2011. The ROE on comprehensive income can vary from the ROE on net income. It can be both significantly lower as well as significantly higher.
The debt ratios have always been very good on this stock. The current Liquidity Ratio is 1.85. The current Debt Ratio is 1.97. The current Leverage and Debt/Equity Ratios are good at 2.03 and 1.03.
This company has had good growth in the past, but the main problem is that they are in the construction industry. The company's manager seem to have faith in the future has they have started paying a dividend.
Stantec, founded in 1954, provides professional consulting services in planning, engineering, architecture, interior design, landscape architecture, surveying, environmental sciences, project management, and project economics for infrastructure and facilities projects. We support public and private sector clients in a diverse range of markets, at every stage, from initial concept and financial feasibility to project completion and beyond. Their services are provided on projects around the world operating out of more than 170 locations in North America and 4 locations internationally. Its web site is here Stantec. See my spreadsheet at stn.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 or StockTwits.
I do not own this stock of Stantec Inc. (TSX-STN, NYSE-STN), but I used to. I had originally bought it for some capital gain and held it from 2008 to 2011 and lost some 23% on this transaction. I did not buy much and my timing was off.
In 2012, Stantec started to pay a dividend. The dividend yield is rather low at 1.75%. However, the Dividend Payout Ratios are also low. The DPR for earnings is expected to be 24% this year. The DPR for cash flow for the last 12 months gives us a DPR for cash flow of 18%.
There has been an increase in the outstanding shares over the last 5 years at 0.14% per year and this is due to stock options. The increase over the past 10 year is higher at 3% per year and this is due to stock options each year, plus a stock issuance in 2005 which increased the shares that year by 18%.
Total Return has not been very good over the past 5 years and it is only at 2.07% per year. Total return is much better over the past 10 years at 17.06% per year. The problem with the financial year of 2011 is that they had to take a write off of their good will. This hit their earnings hard.
The growth in revenue is at 15.5% and 16.8% per year over the past 5 and 10 years, respectively. The growth in revenue per share is at a very good 15% and 13% per year over the past 5 and 10 years.
Growth in earnings per share is at 11% and 17.5% per year over the past 5 and 10 years. Cash flow per share growth is not quite as good as other growth and it is at 5.7% and 13.5% per year over the past 5 and 10 years. Book value per share growth is at 8.7% and 15.8% per year over the past 5 and 10 years.
Return on Equity is good for this stock with ROE at the end of 2011 at 16.4% and the 5 year ROE at 15%. (Note this excludes the goodwill write-off.) The ROE for 2012 is expected to be similar to the ROE for 2011. The ROE on comprehensive income can vary from the ROE on net income. It can be both significantly lower as well as significantly higher.
The debt ratios have always been very good on this stock. The current Liquidity Ratio is 1.85. The current Debt Ratio is 1.97. The current Leverage and Debt/Equity Ratios are good at 2.03 and 1.03.
This company has had good growth in the past, but the main problem is that they are in the construction industry. The company's manager seem to have faith in the future has they have started paying a dividend.
Stantec, founded in 1954, provides professional consulting services in planning, engineering, architecture, interior design, landscape architecture, surveying, environmental sciences, project management, and project economics for infrastructure and facilities projects. We support public and private sector clients in a diverse range of markets, at every stage, from initial concept and financial feasibility to project completion and beyond. Their services are provided on projects around the world operating out of more than 170 locations in North America and 4 locations internationally. Its web site is here Stantec. See my spreadsheet at stn.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 or StockTwits.
Thursday, October 25, 2012
Innergex Renewable Energy 2
On my other blog I am today writing about the Money Show in Toronto for 2012. I will be putting my notes up as I transcribe them...continue...
I do not own this stock Innergex Renewable Energy (TSX-INE), but I used to. I bought it in 2006 because it was a utility company that was into alternative energy. TD Newcrest rated it highly. Then it was an income trust called Innergex Power Income Fund (TSX-IEF.UN). I sold it in 2008. It was still an income trust, but it was not increasing its dividends. It was not doing well and I also notice that although it is still followed by some analysts, it is not as well followed, as it was when I first bought this stock.
The insider trading report shows that there is no insider buying or insider selling over the past year. Insiders retained options granted late last year and early this year. Insiders have options and options like vehicles called Rights d'actions liées au rendement (Rights of Performance Shares).
There are a lot of outstanding options and other option like vehicles, but some insiders do own a fair amount of shares. For example the CEO owns shares worth around $6.6M. A director owns shares with around $1.6M.The CEO shares and options are worth approximately the same amount. The CFO and officers have more options than shares. The directors do not have options of any sort.
Caisse de dépôt et placement du Québec bought around 12% of this company starting in July 2012. These shares are worth just over $100M. I cannot find much in the way of institutional ownership outside of the Caisse de dépôt et placement du Québec.
Because there are a number of years of negative earnings I cannot get a fix on Price/Earnings Ratios for the last 5 years. The 9 year low, median and high median P/E ratios are 9.78, 10.73 and 11.69. The current P/E is 136. The P/E for 2013 is expected to be around 57. This test gets you nowhere.
I get a Graham Price of $3.12. The 10 year low, median and high median Price/Graham Price Ratios are 1.20, 1.34 and 1.49. The current P/GP ratio is 3.50. This suggests that the current stock price is high. However, the Graham price is trending down as the stock price is trending up. Usually, the Graham Price trends up because on most stocks, earnings and book values are tending up. Graham Price is down 50% over the past 8 years. I am not sure how useful this test is.
The 10 year median Price/Book Value Ratio is 1.54. The current P/B Ratio is 2.02, a value some 31% higher than the 10 year ratio. This suggests that the stock price is relatively high. The Book Value has been trending down. (Basically this is because of years of no earnings and they are still buying dividends.)
The current dividend yield is 5.32% and the 5 year median dividend yield is 7.85%. So the current yield is some 30% lower than the 5 year median yield. The problem with this is that this company went from an income trust to a corporation. It was expected that companies going from income trusts to corporation would have lower dividend yields and that they would be between 4 and 5%. On this basis, it has a good dividend yield.
If you look at Price/Cash Flow per share Ratios, the one using cash flow per share for the past 12 months is 12.12. The 5 year median P/CF Ratio is 12.05 and the 10 year P/CF ratio is 12.60. By this measure, the stock price is reasonable.
When I look at analysts' recommendations I find Strong Buy, Buy and Hold. The consensus recommendation would be a Buy (but just barely). This is the most common recommendation format for any stock. The 12 month consensus stock price is $11.40. This implies a 12 month total return of 9.91%, with 4.59% in capital gains and 5.32% in dividends.
A number of analysts thought that this company was well managed. One analyst with a Hold said that there is not much upside for the company, but the dividend was good. A couple of analysts thought that the company was fully valued. A few mentioned that they only expect modest growth going forward.
There is an article about Caisse de dépôt et placement du Québec putting $100M into this company. See Montreal Gazette. (To tell you the truth, I have never been much impressed with Caisse de dépôt et placement du Québec's investment skills. Their investments seem more political than anything else.)
My personal stance is that I am never impressed with a company that cannot make money.
Innergex is involved in Canada's renewable energy industry. The Company develops, owns and operates facilities located in North America, leveraging run-of-river hydroelectric power generating facilities, wind farms and photovoltaic solar parks. Its web site is here Innergex. See my spreadsheet at ine.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 or StockTwits.
I do not own this stock Innergex Renewable Energy (TSX-INE), but I used to. I bought it in 2006 because it was a utility company that was into alternative energy. TD Newcrest rated it highly. Then it was an income trust called Innergex Power Income Fund (TSX-IEF.UN). I sold it in 2008. It was still an income trust, but it was not increasing its dividends. It was not doing well and I also notice that although it is still followed by some analysts, it is not as well followed, as it was when I first bought this stock.
The insider trading report shows that there is no insider buying or insider selling over the past year. Insiders retained options granted late last year and early this year. Insiders have options and options like vehicles called Rights d'actions liées au rendement (Rights of Performance Shares).
There are a lot of outstanding options and other option like vehicles, but some insiders do own a fair amount of shares. For example the CEO owns shares worth around $6.6M. A director owns shares with around $1.6M.The CEO shares and options are worth approximately the same amount. The CFO and officers have more options than shares. The directors do not have options of any sort.
Caisse de dépôt et placement du Québec bought around 12% of this company starting in July 2012. These shares are worth just over $100M. I cannot find much in the way of institutional ownership outside of the Caisse de dépôt et placement du Québec.
Because there are a number of years of negative earnings I cannot get a fix on Price/Earnings Ratios for the last 5 years. The 9 year low, median and high median P/E ratios are 9.78, 10.73 and 11.69. The current P/E is 136. The P/E for 2013 is expected to be around 57. This test gets you nowhere.
I get a Graham Price of $3.12. The 10 year low, median and high median Price/Graham Price Ratios are 1.20, 1.34 and 1.49. The current P/GP ratio is 3.50. This suggests that the current stock price is high. However, the Graham price is trending down as the stock price is trending up. Usually, the Graham Price trends up because on most stocks, earnings and book values are tending up. Graham Price is down 50% over the past 8 years. I am not sure how useful this test is.
The 10 year median Price/Book Value Ratio is 1.54. The current P/B Ratio is 2.02, a value some 31% higher than the 10 year ratio. This suggests that the stock price is relatively high. The Book Value has been trending down. (Basically this is because of years of no earnings and they are still buying dividends.)
The current dividend yield is 5.32% and the 5 year median dividend yield is 7.85%. So the current yield is some 30% lower than the 5 year median yield. The problem with this is that this company went from an income trust to a corporation. It was expected that companies going from income trusts to corporation would have lower dividend yields and that they would be between 4 and 5%. On this basis, it has a good dividend yield.
If you look at Price/Cash Flow per share Ratios, the one using cash flow per share for the past 12 months is 12.12. The 5 year median P/CF Ratio is 12.05 and the 10 year P/CF ratio is 12.60. By this measure, the stock price is reasonable.
When I look at analysts' recommendations I find Strong Buy, Buy and Hold. The consensus recommendation would be a Buy (but just barely). This is the most common recommendation format for any stock. The 12 month consensus stock price is $11.40. This implies a 12 month total return of 9.91%, with 4.59% in capital gains and 5.32% in dividends.
A number of analysts thought that this company was well managed. One analyst with a Hold said that there is not much upside for the company, but the dividend was good. A couple of analysts thought that the company was fully valued. A few mentioned that they only expect modest growth going forward.
There is an article about Caisse de dépôt et placement du Québec putting $100M into this company. See Montreal Gazette. (To tell you the truth, I have never been much impressed with Caisse de dépôt et placement du Québec's investment skills. Their investments seem more political than anything else.)
My personal stance is that I am never impressed with a company that cannot make money.
Innergex is involved in Canada's renewable energy industry. The Company develops, owns and operates facilities located in North America, leveraging run-of-river hydroelectric power generating facilities, wind farms and photovoltaic solar parks. Its web site is here Innergex. See my spreadsheet at ine.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 or StockTwits.
Wednesday, October 24, 2012
Innergex Renewable Energy
On my other blog I am today writing about the Money Show in Toronto for 2012. I will be putting my notes up as I transcribe them...continue...
I do not own this stock Innergex Renewable Energy (TSX-INE), but I used to. I bought it in 2006 because it was a utility company that was into alternative energy. TD Newcrest rated it highly. Then it was an income trust called Innergex Power Income Fund (TSX-IEF.UN). I sold it in 2008. It was still an income trust, but it was not increasing its dividends. It was not doing well and I also notice that although it is still followed by some analysts, it is not as well followed, as it was when I first bought this stock.
When they changed from an income Trust they decreased their dividends by 42% (2010) and the dividends have been flat since then. They cannot raise the dividends as they are not making any profit. The Dividend Payout Ratio from cash flow is 108%. However, the DPR form adjusted CF is better at 70%.
The company is expected to earn a profit in 2012; however, the expected profit has been trending down from $0.13 a month ago to $0.08 today. If you look at the EPS over the past 12 months to the 2nd Quarter of 2012, they still have an EPS loss.
Over the past 5 and 10 years this company has been making money for its shareholders in total return. The 5 and 8 year total return has been 9.28% and 9.92% per year, respectively. The portion attributable to dividends is 6.73% and 7.15% per year, respectively. There has been capital gain at 2.55% and 2.77% per year, respectively. However, since dividends are now lower, the total return will probably be lower. Current dividend yield is at 5.32%.
The outstanding shares in this company have increased by 18% per year and 15% per year over the past 5 and 8 years. The increases all seem to be public offerings. Note that this company has only been around since 2003, and that is why the maximum of years I can cover would be 8 to 9 years.
The increase in revenue is good for this company. The increase in revenue over the past 5 and 8 years is 29% and 27% per year, respectively. Even the revenue per share has increased nicely at 9.8% and 10.6% per year. Revenue is not a problem for this company.
Since the company has an earnings loss in 2011, there is no earnings growth. Even if they do make $.08 this year, earnings will be down since the company started in 2003. Since the company was started they, so far, have had 4 years of losses. Not a good showing for a company that is paying a dividend.
Cash flow has not done well either. Looking at adjusted cash flow, it is only up 2.8% and 7.3% over the past 5 and 8 years. There has also been a modest increase in book value per share of 3.8% and 1.8% per year over the past 5 and 8 years.
Since there is no profit, the return on equity would be negative.
The current Liquidity Ratio is 1.46, which is ok, but I would prefer it to be 1.50. This ratio has often been low and the 5 year median ratio is just 1.09. The current Debt Ratio is just 1.37 and here again I would prefer it to be 1.50. However, it has often been better and the 5 year median ratio is 1.60.
The current Leverage and Debt/Equity Ratios are rather high at 4.68 and 3.43. They took on more long term debt in 2011 for acquisitions. Utilities often have more debt than other companies.
As far as I can see, alternative energy companies are not doing well. At one time, I thought alternative energy would be a good thing. However, none of the companies I follow are doing well. I do not follow them all, but at the moment I have no desire to. Alternative energy will not be viable unless it is profitable.
Innergex is involved in Canada's renewable energy industry. The Company develops, owns and operates facilities located in North America, leveraging run-of-river hydroelectric power generating facilities, wind farms and photovoltaic solar parks. Its web site is here Innergex. See my spreadsheet at ine.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 or StockTwits.
I do not own this stock Innergex Renewable Energy (TSX-INE), but I used to. I bought it in 2006 because it was a utility company that was into alternative energy. TD Newcrest rated it highly. Then it was an income trust called Innergex Power Income Fund (TSX-IEF.UN). I sold it in 2008. It was still an income trust, but it was not increasing its dividends. It was not doing well and I also notice that although it is still followed by some analysts, it is not as well followed, as it was when I first bought this stock.
When they changed from an income Trust they decreased their dividends by 42% (2010) and the dividends have been flat since then. They cannot raise the dividends as they are not making any profit. The Dividend Payout Ratio from cash flow is 108%. However, the DPR form adjusted CF is better at 70%.
The company is expected to earn a profit in 2012; however, the expected profit has been trending down from $0.13 a month ago to $0.08 today. If you look at the EPS over the past 12 months to the 2nd Quarter of 2012, they still have an EPS loss.
Over the past 5 and 10 years this company has been making money for its shareholders in total return. The 5 and 8 year total return has been 9.28% and 9.92% per year, respectively. The portion attributable to dividends is 6.73% and 7.15% per year, respectively. There has been capital gain at 2.55% and 2.77% per year, respectively. However, since dividends are now lower, the total return will probably be lower. Current dividend yield is at 5.32%.
The outstanding shares in this company have increased by 18% per year and 15% per year over the past 5 and 8 years. The increases all seem to be public offerings. Note that this company has only been around since 2003, and that is why the maximum of years I can cover would be 8 to 9 years.
The increase in revenue is good for this company. The increase in revenue over the past 5 and 8 years is 29% and 27% per year, respectively. Even the revenue per share has increased nicely at 9.8% and 10.6% per year. Revenue is not a problem for this company.
Since the company has an earnings loss in 2011, there is no earnings growth. Even if they do make $.08 this year, earnings will be down since the company started in 2003. Since the company was started they, so far, have had 4 years of losses. Not a good showing for a company that is paying a dividend.
Cash flow has not done well either. Looking at adjusted cash flow, it is only up 2.8% and 7.3% over the past 5 and 8 years. There has also been a modest increase in book value per share of 3.8% and 1.8% per year over the past 5 and 8 years.
Since there is no profit, the return on equity would be negative.
The current Liquidity Ratio is 1.46, which is ok, but I would prefer it to be 1.50. This ratio has often been low and the 5 year median ratio is just 1.09. The current Debt Ratio is just 1.37 and here again I would prefer it to be 1.50. However, it has often been better and the 5 year median ratio is 1.60.
The current Leverage and Debt/Equity Ratios are rather high at 4.68 and 3.43. They took on more long term debt in 2011 for acquisitions. Utilities often have more debt than other companies.
As far as I can see, alternative energy companies are not doing well. At one time, I thought alternative energy would be a good thing. However, none of the companies I follow are doing well. I do not follow them all, but at the moment I have no desire to. Alternative energy will not be viable unless it is profitable.
Innergex is involved in Canada's renewable energy industry. The Company develops, owns and operates facilities located in North America, leveraging run-of-river hydroelectric power generating facilities, wind farms and photovoltaic solar parks. Its web site is here Innergex. See my spreadsheet at ine.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 or StockTwits.
Tuesday, October 23, 2012
Brookfield Office Properties 2
On my other blog I am today writing about the Money Show in Toronto for 2012. I will be putting my notes up as I transcribe them...continue...
I do not own this stock Brookfield Office Properties (TSX-BPO). I started to track this stock because it was on the Dividend Aristocrats List (see indices) and I was not tracking it. . Note that this company is no longer on the Dividend Aristocrats list. This company is own 49% by Brookfield Asset Management Company (TSX-BAM.A).
The insider trading report says that there is minimal insider buying and $5.7M of insider selling. Net insider selling is $5.6M. The company has also been doing some buying back of outstanding shares.
This company not only has options, they have Deferred Units, Restricted Shares and Option Equivalents also. There are a lot of options outstanding, with CEO, CFO and officers having minimal to no shares, but lots of options and options like vehicles. There are a lot of officers with options and option like vehicles. Only Directors have more shares collectively than options.
Reuters shows very little institutional ownership, but NASDAQ says that some 93.3% is held by institutions (including Brookfield Asset Management). It also says that institutional ownership has gone done marginally by 1.8%.
The P/E Ratios have been quite low lately, with 5 year low, median and high median ratios at 4.66, 6.91 and 10.64. The 10 year low, median and high median ratios seems to be more in line with past values and these ratios are 11.76, 14.03 and 17.77. For the last couple of years the EPS have been unusually high. The current P/E ratio is 5.40. By any measure this shows that the stock price is a reasonable one.
I get a Graham Price of $21.98. The 10 year low, median and high median Price/Graham Price Ratios are 0.89, 1.02 and 1.21. The current P/GP Ratio is 0.73 which suggests a relatively low current stock price.
The 10 year median Price/Book Value per share Ratio is 1.87. The current P/B Ratio is 0.85. This new P/B Ratio is only 45% of the 10 year ratio and this low ratio suggests that the stock price is low. Also, when the P/B Ratio is below 1.00, it says that the stock price is lower than the book value.
I should point out that this company switched to IFRS account early (in 2010) and it seems that both earnings and book value have increased quite a bit under these new accounting rules. Since the P/E Ratios, P/GP Ratios and P/B Ratios use earnings and book value, you wonder how good these measures are in determining the current stock price's reasonability.
Only the dividend yield shows a different story. The current dividend yield at 3.50 is lower than the 5 year median dividend yield of 3.57. What you want is a dividend yield higher than the 5 year median year to suggest a good stock price. However, these are close and this would suggest that the stock price is probably reasonable. Recently the dividend yield has been higher than normal. The 10 year median dividend yield is just 2.27%. The stock price hit a high in 2007 and then over the next couple of years it crashed some 75%. The stock price is still some 57% off the highs of 2007.
When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The vast majority of the recommendations are in the Hold category. The consensus recommendation would be a Hold. I can only find one 12 month target price and that is at $17.00 from an analyst with a Hold recommendation. This implies a 9.09% return with 3.5% from dividends and 5.59% from capital gains.
This stock has come up in some stock screening articles like Value and dividends: Kissing cousins that together can boost your returns. However, my experience is that you have to be very careful about stocks coming up in such screening. You can get duds and you have to carefully investigate each one.
Scotia Capital Sets Brookfield Office Properties Price Target at $19.00 (BPO) from $19.25 on August 7, 2012. See article at Daily Political site.
One analyst with a strong buy said that the company is well managed and has a good yield. Another with a Buy recommendation said that this company will do well when inflation picks up. Another analyst with a buy recommendation said that it is a great company with great assets and that the current price is a good entry point.
I think that the price is reasonable. One objection I have with Brookfield companies is that insiders pay themselves very well. The CEO of this company has options worth some $50M. There are an awful lot of outstanding options, and other option like vehicles under this company.
Brookfield Properties is a leading North American commercial real estate company that invests in premier-quality office properties in high-growth markets driven by financial service, government, and energy tenants. The portfolio is composed of office properties in 12 top U.S. and Canadian markets. Its web site is here Brookfield Office Properties. See my spreadsheet at bpo.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 or StockTwits.
I do not own this stock Brookfield Office Properties (TSX-BPO). I started to track this stock because it was on the Dividend Aristocrats List (see indices) and I was not tracking it. . Note that this company is no longer on the Dividend Aristocrats list. This company is own 49% by Brookfield Asset Management Company (TSX-BAM.A).
The insider trading report says that there is minimal insider buying and $5.7M of insider selling. Net insider selling is $5.6M. The company has also been doing some buying back of outstanding shares.
This company not only has options, they have Deferred Units, Restricted Shares and Option Equivalents also. There are a lot of options outstanding, with CEO, CFO and officers having minimal to no shares, but lots of options and options like vehicles. There are a lot of officers with options and option like vehicles. Only Directors have more shares collectively than options.
Reuters shows very little institutional ownership, but NASDAQ says that some 93.3% is held by institutions (including Brookfield Asset Management). It also says that institutional ownership has gone done marginally by 1.8%.
The P/E Ratios have been quite low lately, with 5 year low, median and high median ratios at 4.66, 6.91 and 10.64. The 10 year low, median and high median ratios seems to be more in line with past values and these ratios are 11.76, 14.03 and 17.77. For the last couple of years the EPS have been unusually high. The current P/E ratio is 5.40. By any measure this shows that the stock price is a reasonable one.
I get a Graham Price of $21.98. The 10 year low, median and high median Price/Graham Price Ratios are 0.89, 1.02 and 1.21. The current P/GP Ratio is 0.73 which suggests a relatively low current stock price.
The 10 year median Price/Book Value per share Ratio is 1.87. The current P/B Ratio is 0.85. This new P/B Ratio is only 45% of the 10 year ratio and this low ratio suggests that the stock price is low. Also, when the P/B Ratio is below 1.00, it says that the stock price is lower than the book value.
I should point out that this company switched to IFRS account early (in 2010) and it seems that both earnings and book value have increased quite a bit under these new accounting rules. Since the P/E Ratios, P/GP Ratios and P/B Ratios use earnings and book value, you wonder how good these measures are in determining the current stock price's reasonability.
Only the dividend yield shows a different story. The current dividend yield at 3.50 is lower than the 5 year median dividend yield of 3.57. What you want is a dividend yield higher than the 5 year median year to suggest a good stock price. However, these are close and this would suggest that the stock price is probably reasonable. Recently the dividend yield has been higher than normal. The 10 year median dividend yield is just 2.27%. The stock price hit a high in 2007 and then over the next couple of years it crashed some 75%. The stock price is still some 57% off the highs of 2007.
When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The vast majority of the recommendations are in the Hold category. The consensus recommendation would be a Hold. I can only find one 12 month target price and that is at $17.00 from an analyst with a Hold recommendation. This implies a 9.09% return with 3.5% from dividends and 5.59% from capital gains.
This stock has come up in some stock screening articles like Value and dividends: Kissing cousins that together can boost your returns. However, my experience is that you have to be very careful about stocks coming up in such screening. You can get duds and you have to carefully investigate each one.
Scotia Capital Sets Brookfield Office Properties Price Target at $19.00 (BPO) from $19.25 on August 7, 2012. See article at Daily Political site.
One analyst with a strong buy said that the company is well managed and has a good yield. Another with a Buy recommendation said that this company will do well when inflation picks up. Another analyst with a buy recommendation said that it is a great company with great assets and that the current price is a good entry point.
I think that the price is reasonable. One objection I have with Brookfield companies is that insiders pay themselves very well. The CEO of this company has options worth some $50M. There are an awful lot of outstanding options, and other option like vehicles under this company.
Brookfield Properties is a leading North American commercial real estate company that invests in premier-quality office properties in high-growth markets driven by financial service, government, and energy tenants. The portfolio is composed of office properties in 12 top U.S. and Canadian markets. Its web site is here Brookfield Office Properties. See my spreadsheet at bpo.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.
Monday, October 22, 2012
Brookfield Office Properties
On my other blog I am today writing about the Money Show in Toronto for 2012...continue...
I do not own this stock Brookfield Office Properties (TSX-BPO, NYSE-BPO). I started to track this stock because it was on the Dividend Aristocrats List (see indices) and I was not tracking it. . Note that this company is no longer on the Dividend Aristocrats list. This company is own 49% by Brookfield Asset Management Company (TSX-BAM.A).
Dividends are paid in US$, so a Canadian investor will have dividends fluctuating with currency exchange. In CDN$ terms dividends have decreased marginally over the past 5 years at 0.76% per year. Over the past 10 years they have increased by 9.37% per year. In US$ terms dividends have increased over the past 5 and 10 years at 1.89% and 14.34% per year, respectively. Over the next while CDN$ will probably stay around parity, so there should not be such a discrepancy between US$ dividends and CDN$ dividends going forward.
Dividend Payout Ratios have fluctuated a lot over the years. The 10 year median DPRs are 51% of EPS and 48% of Cash Flow. The DPR for earnings is expected to be around 50% in 2012. The DPR for cash flow over the past 12 months is 59%. This company has not raised dividends since 2008 and even then, the last increase was only for 1.8%, a very low raise.
Canadians have not made much on this stock recently. The 5 year total return is a negative 9.28% per year. Dividends attributable to this 5 year return would be at 2.55% per year and there is a capital loss of 11.83% per year. The 10 year total return is better, but not great with returns of 6.50% per year. Some 3.46% per year of this return is attributable to dividends and there is a capital gain of 2.60% per year. US investors have fared a bit better, but not that significantly better.
The shares outstanding have increased by 4.9% and 3.3% per year over the past 5 and 10 years. They have issued options, issued shares under DRIP and also have bought back shares. There have also been a couple of years when new shares have been issued.
Revenues can fluctuate. In this case, revenues are down 2.41 and 1.33% per year over the past 5 and 10 years in US$ terms. Revenues per Share is down by 5.9% and 5.5% per year over the past 5 and 10 years in US$ terms. The difference, of course, is because of the increase in shares over the past 5 and 10 years.
Currently Earnings per Share growth looks very good with growth at 51% and 17% per year over the past 5 and 10 years in US$. The problem is that EPS can fluctuate. EPS is expected to drop over 60% in 2012. They have not any negative earnings years, but the EPS does fluctuate.
As far as Cash Flow per share goes, over the past 5 years CFPS has grown by 21% per year in US$ terms. Over the past 10 years, CFPS has declined by 3.8% per year in US$ terms. The problem here is that CF also fluctuates, but company does tend to have positive cash flow.
As far a book value per share, it has grown at least twice as fast in US$ terms than in CDN$ terms. However, it has not done badly in CDN$ terms growing over the past 5 and 10 years at the rate of 15% and 8% per year in CDN$ terms.
The Return on Equity bounces around a lot also. It has been good over the last few years with the ROE for 2011 at 20.9%. The ROE based on comprehensive income is a bit lower (some 17% lower) at 17.4%. This is still a very good ROE. (ROE is the same in CDN$ and US$ terms).
I have only calculated the Liquidity Ratio for a couple of years and it is very low at 0.37. It is always very low. The current Debt Ratio is quite good at 1.86. This ratio has not always been as good as the 5 and 10 year median Debt Ratios are 1.39 and 1.38.
The current Leverage and Debt/Equity Ratios are relatively good at 2.77 and 1.49. These also have not always been as good as the 10 year median ratios are 4.53 and 3.29, respectively.
I note that on one site this stock was listed as having a medium or average risk. I would disagree. I think because of the fluctuations in revenue, earnings and cash flow, this stock is of a higher risk level. As an investor of dividend paying stock, what I do not like about this stock is that values (i.e. EPS) fluctuate.
I like companies that can grow well and have somewhat steady growth pattern. Yes, these values decline in recession, but then make a nice steady return to growth. The values under this company fluctuate too much for me to be interested in this stock. It also pays dividends in US$, and this just adds more fluctuations for a Canadian investor.
Brookfield Properties is a leading North American commercial real estate company that invests in premier-quality office properties in high-growth markets driven by financial service, government, and energy tenants. The portfolio is composed of office properties in 12 top U.S. and Canadian markets. Its web site is here Brookfield Office Properties. See my spreadsheet at bpo.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.
I do not own this stock Brookfield Office Properties (TSX-BPO, NYSE-BPO). I started to track this stock because it was on the Dividend Aristocrats List (see indices) and I was not tracking it. . Note that this company is no longer on the Dividend Aristocrats list. This company is own 49% by Brookfield Asset Management Company (TSX-BAM.A).
Dividends are paid in US$, so a Canadian investor will have dividends fluctuating with currency exchange. In CDN$ terms dividends have decreased marginally over the past 5 years at 0.76% per year. Over the past 10 years they have increased by 9.37% per year. In US$ terms dividends have increased over the past 5 and 10 years at 1.89% and 14.34% per year, respectively. Over the next while CDN$ will probably stay around parity, so there should not be such a discrepancy between US$ dividends and CDN$ dividends going forward.
Dividend Payout Ratios have fluctuated a lot over the years. The 10 year median DPRs are 51% of EPS and 48% of Cash Flow. The DPR for earnings is expected to be around 50% in 2012. The DPR for cash flow over the past 12 months is 59%. This company has not raised dividends since 2008 and even then, the last increase was only for 1.8%, a very low raise.
Canadians have not made much on this stock recently. The 5 year total return is a negative 9.28% per year. Dividends attributable to this 5 year return would be at 2.55% per year and there is a capital loss of 11.83% per year. The 10 year total return is better, but not great with returns of 6.50% per year. Some 3.46% per year of this return is attributable to dividends and there is a capital gain of 2.60% per year. US investors have fared a bit better, but not that significantly better.
The shares outstanding have increased by 4.9% and 3.3% per year over the past 5 and 10 years. They have issued options, issued shares under DRIP and also have bought back shares. There have also been a couple of years when new shares have been issued.
Revenues can fluctuate. In this case, revenues are down 2.41 and 1.33% per year over the past 5 and 10 years in US$ terms. Revenues per Share is down by 5.9% and 5.5% per year over the past 5 and 10 years in US$ terms. The difference, of course, is because of the increase in shares over the past 5 and 10 years.
Currently Earnings per Share growth looks very good with growth at 51% and 17% per year over the past 5 and 10 years in US$. The problem is that EPS can fluctuate. EPS is expected to drop over 60% in 2012. They have not any negative earnings years, but the EPS does fluctuate.
As far as Cash Flow per share goes, over the past 5 years CFPS has grown by 21% per year in US$ terms. Over the past 10 years, CFPS has declined by 3.8% per year in US$ terms. The problem here is that CF also fluctuates, but company does tend to have positive cash flow.
As far a book value per share, it has grown at least twice as fast in US$ terms than in CDN$ terms. However, it has not done badly in CDN$ terms growing over the past 5 and 10 years at the rate of 15% and 8% per year in CDN$ terms.
The Return on Equity bounces around a lot also. It has been good over the last few years with the ROE for 2011 at 20.9%. The ROE based on comprehensive income is a bit lower (some 17% lower) at 17.4%. This is still a very good ROE. (ROE is the same in CDN$ and US$ terms).
I have only calculated the Liquidity Ratio for a couple of years and it is very low at 0.37. It is always very low. The current Debt Ratio is quite good at 1.86. This ratio has not always been as good as the 5 and 10 year median Debt Ratios are 1.39 and 1.38.
The current Leverage and Debt/Equity Ratios are relatively good at 2.77 and 1.49. These also have not always been as good as the 10 year median ratios are 4.53 and 3.29, respectively.
I note that on one site this stock was listed as having a medium or average risk. I would disagree. I think because of the fluctuations in revenue, earnings and cash flow, this stock is of a higher risk level. As an investor of dividend paying stock, what I do not like about this stock is that values (i.e. EPS) fluctuate.
I like companies that can grow well and have somewhat steady growth pattern. Yes, these values decline in recession, but then make a nice steady return to growth. The values under this company fluctuate too much for me to be interested in this stock. It also pays dividends in US$, and this just adds more fluctuations for a Canadian investor.
Brookfield Properties is a leading North American commercial real estate company that invests in premier-quality office properties in high-growth markets driven by financial service, government, and energy tenants. The portfolio is composed of office properties in 12 top U.S. and Canadian markets. Its web site is here Brookfield Office Properties. See my spreadsheet at bpo.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 or StockTwits.
Wednesday, October 17, 2012
The Keg Royalties Income Fund 2
First of all, I will be going to the Money Show next week on Thursday, Friday and Saturday. I will not be posting on stocks on all of these days. If I post, it will be on what I learn at this show. I will depend on what time I get home whether I post on Thursday or not.
On my other blog I am today writing about what is in my portfolio...continue...
I do not own this stock of The Keg Royalties Income Fund (TSX-KEG.UN, OHC-KRIUF). It was a stock suggested by one of my readers. I like dinning at The Keg. I fund the food very good. At stock forums I viewed, investors liked this company as it is guaranteed 4% of the sales at Keg restaurants as income to the fund. So I decided to take a look at it.
Looking at insider trading, there was no insider selling or insider buying. It would appear that KBL and insiders own exchangeable shares equal to 26% of the outstanding shares (or units) of this fund. The CFO and some directors hold some shares. There does not seem to be any options.
There seems to be 4 institutions that hold 24% of the outstanding shares. Over the past 3 months they have increased their shares by 14%. This is a positive, I guess. You have to assume that the analyzed this company before investing. (However, it was shocking how many institutions, including banks, which bought US pooled mortgage funds without understanding what it was that they bought. So, the moral of this story is that you cannot assume that institutions know what they are doing.)
I get 5 year low, median and high median Price/Earnings Ratios of 8.53, 9.30 and 10.07. Using the 12 months earnings to June 30, 2012, I get a P/E Ratio of 21.32. This high ratio suggests that this stock is high
I get a Graham Price of $11.78. The 10 year low, median and high median Price/Graham Price Ratios are 0.68, 0.75 and 0.82. The current P/GP Ratio is 1.25. This high ratio suggests that the stock price is high.
I get a 10 year Price/Book Value per Share ratio of 1.21. The current ratio is 35% higher at 1.64. This suggests that the stock price is high.
I get a 5 year median dividend yield of 11.08% and a current dividend yield of 6.53%. The current yield is some 40% lower than the 5 year median and this current yield suggests that the stock price is high. Of course this is an x-income trust company and it was expected that the stock price would rise and the yield would come down after new taxation rules on income trusts came in. Also the dividend was decreased by 24% in 2011.
As far as I can see there were at least some analysts following this stock as late as 2010. However, there are no analysts now following it. I think the stock is price very high. This stock has gained some 16% since the end of 2011. (Could it be because novice investors are going for juicy dividend yields?)
Another caution I would make. Currently, intangible assets make up 72% of this company's assets and 94% of this company's market cap. (This intangible asset is this company's rights to receive royalties from KRL.)
I see no reason to buy this stock and lots of reasons to sell it if I owned it. I think that this is a very risky stock to hold and I do not see they investors would get rewarded for the current risk level. That is, potential rewards do not match risk.
Vancouver-based Keg Restaurants Ltd. is the leading operator and franchisor of steakhouse restaurants in Canada and has a substantial presence in select regional markets in the United States. KRL continues to operate The Keg restaurant system and expand that system through the addition of both corporate and franchised Keg steakhouses. Its web site is here Keg. See my spreadsheet at keg.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 or StockTwits.
On my other blog I am today writing about what is in my portfolio...continue...
I do not own this stock of The Keg Royalties Income Fund (TSX-KEG.UN, OHC-KRIUF). It was a stock suggested by one of my readers. I like dinning at The Keg. I fund the food very good. At stock forums I viewed, investors liked this company as it is guaranteed 4% of the sales at Keg restaurants as income to the fund. So I decided to take a look at it.
Looking at insider trading, there was no insider selling or insider buying. It would appear that KBL and insiders own exchangeable shares equal to 26% of the outstanding shares (or units) of this fund. The CFO and some directors hold some shares. There does not seem to be any options.
There seems to be 4 institutions that hold 24% of the outstanding shares. Over the past 3 months they have increased their shares by 14%. This is a positive, I guess. You have to assume that the analyzed this company before investing. (However, it was shocking how many institutions, including banks, which bought US pooled mortgage funds without understanding what it was that they bought. So, the moral of this story is that you cannot assume that institutions know what they are doing.)
I get 5 year low, median and high median Price/Earnings Ratios of 8.53, 9.30 and 10.07. Using the 12 months earnings to June 30, 2012, I get a P/E Ratio of 21.32. This high ratio suggests that this stock is high
I get a Graham Price of $11.78. The 10 year low, median and high median Price/Graham Price Ratios are 0.68, 0.75 and 0.82. The current P/GP Ratio is 1.25. This high ratio suggests that the stock price is high.
I get a 10 year Price/Book Value per Share ratio of 1.21. The current ratio is 35% higher at 1.64. This suggests that the stock price is high.
I get a 5 year median dividend yield of 11.08% and a current dividend yield of 6.53%. The current yield is some 40% lower than the 5 year median and this current yield suggests that the stock price is high. Of course this is an x-income trust company and it was expected that the stock price would rise and the yield would come down after new taxation rules on income trusts came in. Also the dividend was decreased by 24% in 2011.
As far as I can see there were at least some analysts following this stock as late as 2010. However, there are no analysts now following it. I think the stock is price very high. This stock has gained some 16% since the end of 2011. (Could it be because novice investors are going for juicy dividend yields?)
Another caution I would make. Currently, intangible assets make up 72% of this company's assets and 94% of this company's market cap. (This intangible asset is this company's rights to receive royalties from KRL.)
I see no reason to buy this stock and lots of reasons to sell it if I owned it. I think that this is a very risky stock to hold and I do not see they investors would get rewarded for the current risk level. That is, potential rewards do not match risk.
Vancouver-based Keg Restaurants Ltd. is the leading operator and franchisor of steakhouse restaurants in Canada and has a substantial presence in select regional markets in the United States. KRL continues to operate The Keg restaurant system and expand that system through the addition of both corporate and franchised Keg steakhouses. Its web site is here Keg. See my spreadsheet at keg.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 or StockTwits.
Tuesday, October 16, 2012
The Keg Royalties Income Fund
I do not own this stock (TSX-KEG.UN, ). It was a stock suggested by one of my readers. I like dinning at The Keg. I find the food very good. At stock forums I viewed, investors liked this company as it is guaranteed 4% of the sales at Keg restaurants as income to the fund. So I decided to take a look at it.
I will be upfront. I would not invest in this stock. If I understand the accounting records, I would be deeply concerned about two things, just as far as income is concerned. One, money is flowing into this fund from Keg Restaurants Ltd. (KRL) and this company, after a disastrous year in 2009, stopped publishing their accounting statements. The restaurant business is a tough business. If KRL is not making money how will they be able to pay money into this fund?
The second concern I have is that interest income makes up a large portion of the income of this fund. If I am reading the statements correctly, the fund loaned KRL $57M and is collecting 7.5% interest on this loan. This is a high interest rate under the current circumstances. And, we go back to the thought of if KRL is not making money how will they be able to pay this interest?
Also, if I am reading the financial statements correctly, this fund pays a distribution to Class C shares held by KRL of $.0625 per share. In 2011 $4.275M was paid on Class C shares and fund got paid interest of $4.281M on KRL's loan. The notes say that this distribution is due to KRL as long as the note is outstanding.
I know that this income fund is due 4% of revenue for Keg restaurants. I understand that people think this is great, because no matter what, the fund is due this 4%. However, I would be very concerned about the ability of the restaurants to make money and paid this royalty.
So, let's now go on to look at distributions. The 5 and 10 year drop in distributions is at 2.6% and 1.1% per year, respectively. Distributions were growing until 2011 when they were decreased by 24.9%. The current dividend yield is still a healthy 6.53%. The 5 year median dividend is a lot higher at 11.08%.
I get 5 year median Dividend Payout Ratios of 103% for earnings and 99% for cash flow. There is no analysts quoting estimates, but looking at the past 12 months to June 30, 2012, the DPRs would be 139% for earnings and 63.8% for cash flow. However, since there is a big difference in CFPS and Adjusted CFPS, we might want to use the Adjust CFPS and that gives us a DPR for CFPS of 80%.
Total return on this stock has been 11.47% and 12.01% per year over the past 5 and 10 years. The dividend portion of this return was 9.98% and 9.59%. Income is 87% and 80% of the total return. The capital gain on this stock over the past 5 and 10 years was 1.48% and 2.42% per year, respectively.
KRL hold a number of classes of shares from A to D. All these, except for Class C are exchangeable into fund units. Class C shares are a liability. All these shares get distributions. As I read the notes, they are paid their distributions before fund units are.
The ROE for the KEG looks good with a 5 year median of 11.7% with the ROE for the end of 2011 at 10.8%. The ROE on the comprehensive income was the same as the ROE on net income. For the first 12 months of this year the ROE is lower at 8.6%. I cannot get a ROE on KRL because it had a negative book value.
The debt ratios for the KEG look great with the current Liquidity Ratio at 2.17 and the current Debt Ratio at 1.88. The current Leverage and Debt/Equity Ratio are also fine at 2.13 and 1.13. The last debt ratios I got from KRL are very low. They were always below 1.00 with the Liquidity Ratio in 2009 at 0.46 and the Debt Ratio at 0.69. (This means that current assets could not cover current liabilities and assets cannot cover liabilities.)
I would not buy. All their income depends on one company that no longer publishes their financial statements. When that company did publish their statements, they did not seem to be able to make any money and their debt ratios were awful. I would worry about their ability to pay the royalties promised.
Vancouver-based Keg Restaurants Ltd. is the leading operator and franchisor of steakhouse restaurants in Canada and has a substantial presence in select regional markets in the United States. KRL continues to operate The Keg restaurant system and expand that system through the addition of both corporate and franchised Keg steakhouses. Its web site is here Keg. See my spreadsheet at keg.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 or StockTwits.
I will be upfront. I would not invest in this stock. If I understand the accounting records, I would be deeply concerned about two things, just as far as income is concerned. One, money is flowing into this fund from Keg Restaurants Ltd. (KRL) and this company, after a disastrous year in 2009, stopped publishing their accounting statements. The restaurant business is a tough business. If KRL is not making money how will they be able to pay money into this fund?
The second concern I have is that interest income makes up a large portion of the income of this fund. If I am reading the statements correctly, the fund loaned KRL $57M and is collecting 7.5% interest on this loan. This is a high interest rate under the current circumstances. And, we go back to the thought of if KRL is not making money how will they be able to pay this interest?
Also, if I am reading the financial statements correctly, this fund pays a distribution to Class C shares held by KRL of $.0625 per share. In 2011 $4.275M was paid on Class C shares and fund got paid interest of $4.281M on KRL's loan. The notes say that this distribution is due to KRL as long as the note is outstanding.
I know that this income fund is due 4% of revenue for Keg restaurants. I understand that people think this is great, because no matter what, the fund is due this 4%. However, I would be very concerned about the ability of the restaurants to make money and paid this royalty.
So, let's now go on to look at distributions. The 5 and 10 year drop in distributions is at 2.6% and 1.1% per year, respectively. Distributions were growing until 2011 when they were decreased by 24.9%. The current dividend yield is still a healthy 6.53%. The 5 year median dividend is a lot higher at 11.08%.
I get 5 year median Dividend Payout Ratios of 103% for earnings and 99% for cash flow. There is no analysts quoting estimates, but looking at the past 12 months to June 30, 2012, the DPRs would be 139% for earnings and 63.8% for cash flow. However, since there is a big difference in CFPS and Adjusted CFPS, we might want to use the Adjust CFPS and that gives us a DPR for CFPS of 80%.
Total return on this stock has been 11.47% and 12.01% per year over the past 5 and 10 years. The dividend portion of this return was 9.98% and 9.59%. Income is 87% and 80% of the total return. The capital gain on this stock over the past 5 and 10 years was 1.48% and 2.42% per year, respectively.
KRL hold a number of classes of shares from A to D. All these, except for Class C are exchangeable into fund units. Class C shares are a liability. All these shares get distributions. As I read the notes, they are paid their distributions before fund units are.
The ROE for the KEG looks good with a 5 year median of 11.7% with the ROE for the end of 2011 at 10.8%. The ROE on the comprehensive income was the same as the ROE on net income. For the first 12 months of this year the ROE is lower at 8.6%. I cannot get a ROE on KRL because it had a negative book value.
The debt ratios for the KEG look great with the current Liquidity Ratio at 2.17 and the current Debt Ratio at 1.88. The current Leverage and Debt/Equity Ratio are also fine at 2.13 and 1.13. The last debt ratios I got from KRL are very low. They were always below 1.00 with the Liquidity Ratio in 2009 at 0.46 and the Debt Ratio at 0.69. (This means that current assets could not cover current liabilities and assets cannot cover liabilities.)
I would not buy. All their income depends on one company that no longer publishes their financial statements. When that company did publish their statements, they did not seem to be able to make any money and their debt ratios were awful. I would worry about their ability to pay the royalties promised.
Vancouver-based Keg Restaurants Ltd. is the leading operator and franchisor of steakhouse restaurants in Canada and has a substantial presence in select regional markets in the United States. KRL continues to operate The Keg restaurant system and expand that system through the addition of both corporate and franchised Keg steakhouses. Its web site is here Keg. See my spreadsheet at keg.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 or StockTwits.
Monday, October 15, 2012
Brookfield Asset Management 2
On my other blog I am today writing about why I think austerity measures do not work...continue...
I do not own this stock (TSX-BAM.A, NYSE-BAM). First of all, I should mention that this company has a long history of name changes. I bought it as Hees International between 1987 and 1990. I sold it as Edperbrascan in 1999. I made a return of 3.7% per year. I sold it as I felt the company was going nowhere. The company started to have problems in 1989 and I am glad a sold when I did.
When I look at insider trading I find no insider buying and $16.5M of insider selling. Not only are there options, but insiders have Deferred Share Units, Restricted Share Units, Restricted Shares-CDN and Restricted Shares-US.
I must admit that insiders do have a lot of shares, some in the $100M area. For example the CEO has stock worth $470M. However, since he has over 3M options and option like vehicles, it would not take that long to acquire his 14M shares via stock options. Insiders seem to have more shares than options, but there are millions and millions of options outstanding. A million shares are worth around $33M with today's share price.
It is only directors that have a more modest amount of options and option like vehicles. Director's options are worth more in line with $2M or less. There is also Subsidiary Executives who have shares and options and other options like vehicles for this company. Management is paying itself very well indeed.
There seems to be around 420 Institutions that hold some 62.51% of the outstanding shares of this company. Over the past 3 months they have increased their exposure marginally by 1.12%. This is for the Canadian market. On the US market, there is very low ownership, around 0.13% with 7 institutional holders and they have increased their exposure by 11%. However, overall increase by institutions is just 1.14%.
The 5 year low median and high median Price/Earnings ratios are 12.54, 20.21 and 27.89. The current P/E ratio is 28.47 based on a stock price of $33.15 CDN$ and 2012 earnings of 1.16 CDN$. This shows that the current stock price is relatively high.
I get a current Graham Price of $27.06 CDN$. The 10 year low, median and high median Price/Graham Price Ratios are 0.89, 1.28 and 1.59. The current P/GP Ratio based on $33.15CDN$ is 1.23. This ratio says that the current stock price is reasonable.
The 10 year median Price/Book Value is 1.89. The current P/B Ratio is 1.19 and this ratio is only some 62% of the 10 year median. This ratio suggests that the current stock price is low.
The 5 year median dividend yield is 1.89%. The current dividend yield is 1.73 a value that is 9% lower. This yield suggests that the stock price is on the high side, but it is not unreasonable. (The 10 year low dividend yield is 1.58%.)
The stock price tests results are rather mixed, but overall and giving preference to dividend yield and P/B Ratios, it would seem that the stock price is probably reasonable.
When I look at the analysts' recommendations, I find Strong Buy, Buy and Hold. The most recommendations are for Buy and the consensus recommendation is a Buy recommendation. The 12 months stock price is $38.57 CDN$. This suggests total returns of 18.08% with 1.73 from dividends and 16.35% from capital gains.
One analysts with a Buy recommendation suggested that institutional investments will go more strongly to real estate over the next 10 years because of the low yields on government bonds. The BAM management seems to be admired. Some analysts consider this company to be a REIT.
One analyst thought that if you wanted to buy this stock, you should get it at a better entry point (i.e. wait until it is relatively cheaper). Another thought the current yield was too low to be attractive. Another thought it was the biggest real estate name on the TSX, although it has a lot property in the US. Canaccord recently downgraded Brookfield Asset Management to a Hold in an article in the G&M. John Reese considers this stock one to beat the market, along with 9 others.
The management of this company certainly pays itself very well. The stock price seems to be currently reasonable on a number of different levels, but it is not cheap
This Canadian Asset Managing company invests in and operates a variety of assets on its own behalf as well as co-investors. It is focused on property, power and infrastructure assets. It operates in Canada, US and internationally. The subsidiaries of the Company are Brookfield Homes Corporation, Brookfield Properties Corporation, BPO Properties Limited, Multiplex, Brookfield Power Inc., Great Lakes Hydro Income Fund, Brascan Brasil, S.A., Brascan Residential Properties, S.A. and Brookfield Investments Corporation. Partners Ltd owns 17%. Its web site is here Brookfield. See my spreadsheet at bam.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 or StockTwits.
I do not own this stock (TSX-BAM.A, NYSE-BAM). First of all, I should mention that this company has a long history of name changes. I bought it as Hees International between 1987 and 1990. I sold it as Edperbrascan in 1999. I made a return of 3.7% per year. I sold it as I felt the company was going nowhere. The company started to have problems in 1989 and I am glad a sold when I did.
When I look at insider trading I find no insider buying and $16.5M of insider selling. Not only are there options, but insiders have Deferred Share Units, Restricted Share Units, Restricted Shares-CDN and Restricted Shares-US.
I must admit that insiders do have a lot of shares, some in the $100M area. For example the CEO has stock worth $470M. However, since he has over 3M options and option like vehicles, it would not take that long to acquire his 14M shares via stock options. Insiders seem to have more shares than options, but there are millions and millions of options outstanding. A million shares are worth around $33M with today's share price.
It is only directors that have a more modest amount of options and option like vehicles. Director's options are worth more in line with $2M or less. There is also Subsidiary Executives who have shares and options and other options like vehicles for this company. Management is paying itself very well indeed.
There seems to be around 420 Institutions that hold some 62.51% of the outstanding shares of this company. Over the past 3 months they have increased their exposure marginally by 1.12%. This is for the Canadian market. On the US market, there is very low ownership, around 0.13% with 7 institutional holders and they have increased their exposure by 11%. However, overall increase by institutions is just 1.14%.
The 5 year low median and high median Price/Earnings ratios are 12.54, 20.21 and 27.89. The current P/E ratio is 28.47 based on a stock price of $33.15 CDN$ and 2012 earnings of 1.16 CDN$. This shows that the current stock price is relatively high.
I get a current Graham Price of $27.06 CDN$. The 10 year low, median and high median Price/Graham Price Ratios are 0.89, 1.28 and 1.59. The current P/GP Ratio based on $33.15CDN$ is 1.23. This ratio says that the current stock price is reasonable.
The 10 year median Price/Book Value is 1.89. The current P/B Ratio is 1.19 and this ratio is only some 62% of the 10 year median. This ratio suggests that the current stock price is low.
The 5 year median dividend yield is 1.89%. The current dividend yield is 1.73 a value that is 9% lower. This yield suggests that the stock price is on the high side, but it is not unreasonable. (The 10 year low dividend yield is 1.58%.)
The stock price tests results are rather mixed, but overall and giving preference to dividend yield and P/B Ratios, it would seem that the stock price is probably reasonable.
When I look at the analysts' recommendations, I find Strong Buy, Buy and Hold. The most recommendations are for Buy and the consensus recommendation is a Buy recommendation. The 12 months stock price is $38.57 CDN$. This suggests total returns of 18.08% with 1.73 from dividends and 16.35% from capital gains.
One analysts with a Buy recommendation suggested that institutional investments will go more strongly to real estate over the next 10 years because of the low yields on government bonds. The BAM management seems to be admired. Some analysts consider this company to be a REIT.
One analyst thought that if you wanted to buy this stock, you should get it at a better entry point (i.e. wait until it is relatively cheaper). Another thought the current yield was too low to be attractive. Another thought it was the biggest real estate name on the TSX, although it has a lot property in the US. Canaccord recently downgraded Brookfield Asset Management to a Hold in an article in the G&M. John Reese considers this stock one to beat the market, along with 9 others.
The management of this company certainly pays itself very well. The stock price seems to be currently reasonable on a number of different levels, but it is not cheap
This Canadian Asset Managing company invests in and operates a variety of assets on its own behalf as well as co-investors. It is focused on property, power and infrastructure assets. It operates in Canada, US and internationally. The subsidiaries of the Company are Brookfield Homes Corporation, Brookfield Properties Corporation, BPO Properties Limited, Multiplex, Brookfield Power Inc., Great Lakes Hydro Income Fund, Brascan Brasil, S.A., Brascan Residential Properties, S.A. and Brookfield Investments Corporation. Partners Ltd owns 17%. Its web site is here Brookfield. See my spreadsheet at bam.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 or StockTwits.
Friday, October 12, 2012
Brookfield Asset Management
First of all, I will be going to the Money Show next week on Thursday, Friday and Saturday. I will not be posting on all of these days. If I post, it will be on what I learn at this show.
I do not own this stock (TSX-BAM.A, NYSE-BAM). First of all, I should mention that this company has a long history of name changes. I bought it as Hees International between 1987 and 1990. I sold it as Edperbrascan in 1999. I made a return of 3.7% per year. I sold it as I felt the company was going nowhere. The company started to have problems in 1989 and I am glad a sold when I did.
Dividends are low (5 year median dividend yield at 1.89%, current yield is 1.73%) and growth is rather low at 5 and 10 year rates of 3.17% and 5.64% per year in CDN$ terms The growth is better in US$ terms at 5.92% and 10.44% over the past 5 and 10 years. However, if you are a Canadian, the growth in CDN$ terms is what you are really interested in. Still growth is not good in US$ terms considering that the dividend yield is lower than 2%.
Dividend Payout Ratios are good at 37.01% for earnings and 25.35% for cash for 5 year median values. The dividend yields are low, so low DPRs are expected. Earnings are expected to drop in 2012, so DPR for earnings in 2012 is expected to be around 48%.
Dividends were flat in 2010 and 2011. However, they were raised some 7.7% in US$ for 2012. The raise in CDN$ terms is lower at 5.7%. Canadian investors have not done as well as US investors as far as dividends are concerned. The other problems Canadians have in investing in this stock is that the dividends are paid in US$, so dividends will fluctuate constantly, depending on current exchange rate.
Total return for Canadian investors would be a negative return of 3.41% per year over the past 5 years and a positive 16.19% per year over the past 10 years. The dividend portions of the 5 and 10 year return would be 2.27% and 3.54% per year over these periods. The 5 year capital loss would be 5.68% per year. The 10 year capital gain would be 12.65%.
Total return for US investors would be a negative return of 0.77% per year over the past 5 years and a positive 21.76 per year over the past 10 years. The dividend portions of the 5 and 10 year return would be 2.30% and 3.91% per year over these periods. The 5 year capital loss would be 3.07% per year. The 10 year capital gain would be 17.84% per year.
The outstanding shares have increased marginally over the past 5 and 10 years at the rate of 1.26% per year and 0.78% per year, respectively. (The company has been buying back shares for cancellation.)
The company has had good revenue growth with growth over the past 5 and 10 years at 18.21% and 18.42% per year, respectively. Revenue per share growth is also good and over the past 5 and 10 years has increased by 16.75% and 17.50% per year, respectively. This growth is in US$. In CDN$ terms growth would be less.
The Earnings per Share growth is also good at 8.19% and 26.19% per year over the past 5 and 10 years. This growth is in US$ terms. In CDN$ terms growth is less. Also, EPS has fluctuated somewhat in the past and EPS is expected to be some 60% lower in 2012. The EPS over the past 12 months to June 2012 would seem to confirm this. So earnings growth is a lot less than it appears. The EPS for 2013 is expected to be better, but not that much better.
Cash Flow per Share has also fluctuated and it is down 8.54% per year over the past 5 years. However, it is up some 11.63% per year over the past 10 years. This growth is in US$ terms and growth in CDN$ terms is lower.
Book Value per Share growth looks very good. However, book value increased substantially because of the new accounting rules of IFRS. Book value growth is 23.88% and 19.20% per year over the past 5 and 10 years in US$ terms. It has grown at 20.65% and 14.02% per year over the past 5 and 10 years in CDN$ terms.
Return on Equity has been quite high over the past two years, with ROE for the financial year ending in December 2012 at 43.9%. The 5 year median is 14.2%. However, the ROE based on comprehensive income while also quite good also is a lot lower at 27.5% for the financial year ending in 2011. This implies that the earnings are not as good as they might appear. (ROE is the same in US$ and CDN$.)
Also, the EPS/CF Ratio is above 1.00 at 1.87 for the financial year of 2011. This ratio is also currently above 1.00 at 1.48. While this does not point to any particular problems, companies that have this ratio consistently over 1.00 tend to do worse than companies with this ratio under 1.00. (When this ratio is over 1.00, it says you should maybe caution.)
The current Liquidity Ratio is a bit low at 1.17. This ratio seems to fluctuate a lot, but is ok. The Debt Ratios have often been low, but the current ratio at 1.67 is good. The current Leverage and Debt/Equity Ratios are a bit high at 5.74 and 3.44, respectively, but have been higher.
It is not unusual today for companies reporting in US$ to do better in US$ than in CDN$ terms. Canadians have not done badly with this stock. However, it does have a low dividend yield with a rather lower dividend growth. So I think that Canadians could do better looking elsewhere.
This Canadian Asset Managing company invests in and operates a variety of assets on its own behalf as well as co-investors. It is focused on property, power and infrastructure assets. It operates in Canada, US and internationally. The subsidiaries of the Company are Brookfield Homes Corporation, Brookfield Properties Corporation, BPO Properties Limited, Multiplex, Brookfield Power Inc., Great Lakes Hydro Income Fund, Brascan Brasil, S.A., Brascan Residential Properties, S.A. and Brookfield Investments Corporation. Partners Ltd owns 17%. Its web site is here Brookfield. See my spreadsheet at bam.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 or StockTwits.
I do not own this stock (TSX-BAM.A, NYSE-BAM). First of all, I should mention that this company has a long history of name changes. I bought it as Hees International between 1987 and 1990. I sold it as Edperbrascan in 1999. I made a return of 3.7% per year. I sold it as I felt the company was going nowhere. The company started to have problems in 1989 and I am glad a sold when I did.
Dividends are low (5 year median dividend yield at 1.89%, current yield is 1.73%) and growth is rather low at 5 and 10 year rates of 3.17% and 5.64% per year in CDN$ terms The growth is better in US$ terms at 5.92% and 10.44% over the past 5 and 10 years. However, if you are a Canadian, the growth in CDN$ terms is what you are really interested in. Still growth is not good in US$ terms considering that the dividend yield is lower than 2%.
Dividend Payout Ratios are good at 37.01% for earnings and 25.35% for cash for 5 year median values. The dividend yields are low, so low DPRs are expected. Earnings are expected to drop in 2012, so DPR for earnings in 2012 is expected to be around 48%.
Dividends were flat in 2010 and 2011. However, they were raised some 7.7% in US$ for 2012. The raise in CDN$ terms is lower at 5.7%. Canadian investors have not done as well as US investors as far as dividends are concerned. The other problems Canadians have in investing in this stock is that the dividends are paid in US$, so dividends will fluctuate constantly, depending on current exchange rate.
Total return for Canadian investors would be a negative return of 3.41% per year over the past 5 years and a positive 16.19% per year over the past 10 years. The dividend portions of the 5 and 10 year return would be 2.27% and 3.54% per year over these periods. The 5 year capital loss would be 5.68% per year. The 10 year capital gain would be 12.65%.
Total return for US investors would be a negative return of 0.77% per year over the past 5 years and a positive 21.76 per year over the past 10 years. The dividend portions of the 5 and 10 year return would be 2.30% and 3.91% per year over these periods. The 5 year capital loss would be 3.07% per year. The 10 year capital gain would be 17.84% per year.
The outstanding shares have increased marginally over the past 5 and 10 years at the rate of 1.26% per year and 0.78% per year, respectively. (The company has been buying back shares for cancellation.)
The company has had good revenue growth with growth over the past 5 and 10 years at 18.21% and 18.42% per year, respectively. Revenue per share growth is also good and over the past 5 and 10 years has increased by 16.75% and 17.50% per year, respectively. This growth is in US$. In CDN$ terms growth would be less.
The Earnings per Share growth is also good at 8.19% and 26.19% per year over the past 5 and 10 years. This growth is in US$ terms. In CDN$ terms growth is less. Also, EPS has fluctuated somewhat in the past and EPS is expected to be some 60% lower in 2012. The EPS over the past 12 months to June 2012 would seem to confirm this. So earnings growth is a lot less than it appears. The EPS for 2013 is expected to be better, but not that much better.
Cash Flow per Share has also fluctuated and it is down 8.54% per year over the past 5 years. However, it is up some 11.63% per year over the past 10 years. This growth is in US$ terms and growth in CDN$ terms is lower.
Book Value per Share growth looks very good. However, book value increased substantially because of the new accounting rules of IFRS. Book value growth is 23.88% and 19.20% per year over the past 5 and 10 years in US$ terms. It has grown at 20.65% and 14.02% per year over the past 5 and 10 years in CDN$ terms.
Return on Equity has been quite high over the past two years, with ROE for the financial year ending in December 2012 at 43.9%. The 5 year median is 14.2%. However, the ROE based on comprehensive income while also quite good also is a lot lower at 27.5% for the financial year ending in 2011. This implies that the earnings are not as good as they might appear. (ROE is the same in US$ and CDN$.)
Also, the EPS/CF Ratio is above 1.00 at 1.87 for the financial year of 2011. This ratio is also currently above 1.00 at 1.48. While this does not point to any particular problems, companies that have this ratio consistently over 1.00 tend to do worse than companies with this ratio under 1.00. (When this ratio is over 1.00, it says you should maybe caution.)
The current Liquidity Ratio is a bit low at 1.17. This ratio seems to fluctuate a lot, but is ok. The Debt Ratios have often been low, but the current ratio at 1.67 is good. The current Leverage and Debt/Equity Ratios are a bit high at 5.74 and 3.44, respectively, but have been higher.
It is not unusual today for companies reporting in US$ to do better in US$ than in CDN$ terms. Canadians have not done badly with this stock. However, it does have a low dividend yield with a rather lower dividend growth. So I think that Canadians could do better looking elsewhere.
This Canadian Asset Managing company invests in and operates a variety of assets on its own behalf as well as co-investors. It is focused on property, power and infrastructure assets. It operates in Canada, US and internationally. The subsidiaries of the Company are Brookfield Homes Corporation, Brookfield Properties Corporation, BPO Properties Limited, Multiplex, Brookfield Power Inc., Great Lakes Hydro Income Fund, Brascan Brasil, S.A., Brascan Residential Properties, S.A. and Brookfield Investments Corporation. Partners Ltd owns 17%. Its web site is here Brookfield. See my spreadsheet at bam.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 or StockTwits.
Thursday, October 11, 2012
ATCO Ltd 2
On my other blog I am today writing about what I think of a U of T lecture series a friend of my mine wanted to go to. The lecture series seemed to be a series about conspiracy theories galore... continue...
I do not own this stock (TSX-ACO.X). I have followed this stock for some time. It is a utility stock that has been and is still on the dividend lists that I follow of Dividend Achievers (see resources) and Dividend Aristocrats (see indices). Some consider this stock to be a dividend growth stock.
When I look at insider trading I find $1.4M of insider buying and $0.9M of insider selling with a net of insider buying of $0.5M. This company not only has options but also Share Appreciation Rights (SARs). There seems to be an awful lot of options and rights outstanding.
Both the CEO and CFO have lots of these options and rights and far more of these than actual shares. However, they both own shares worth in the millions (5 to 7 million). There are also lots of officers with options and rights. As a group, officers have lots more options and rights than shares. There are also subsidiary Executives who have rights and options. They seem to have more options and rights than actual shares. It is only the directors who have no options or rights, but they do not own much in shares either.
There are voting shares (TSX-ACO.Y) and non-voting shares (TSX-ACO.X). Ronald Southern owns around 84% of the voting shares and therefore controls the company. There only seems to be minimal amount of institutional ownership of shares.
The 5 year low, median and high median Price/Earnings Ratios are 8.94, 10.49 and 11.73. The current P/E Ratio of 12.09 on stock price of $75.17 and 2012 Earnings of 6.22 show a relatively high stock price, but not excessively high stock price. (Note 10 year median P/E Ratios are similar to the 5 year median ratios.)
I get a Graham Price of $74.38. The 10 year low, median and high median Price/Graham Price Ratios are 0.69, 0.79 and 0.97. The current ratio of 1.01 again shows a relatively high current stock price, but not an excessively high stock price.
I get a 10 year Price/Book Value per share Ratio of 1.48 and a current P/B Ratio of 1.90. The current ratio is some 29% higher than the 10 year ratio. This shows a relatively high stock price.
The 5 year median dividend yield is 2.01% and the current dividend yield is 1.74%. The current one is almost 14% lower than the 5 year median yield. This shows that the current stock price is relatively high. (Note that the 10 year median low dividend yield is 1.77%.)
All my stock tests show the same trend and that is a current relatively high stock price.
When I look at analysts' recommendations, I find Buy and Hold recommendations. Most recommendations are a Hold. The consensus 12 months stock price is $80.80. This implies a total return of $9.23, with 7.49% from capital gain and 1.74% from dividend income.
One Analyst with a Buy recommendation gives a 12 month stock price of $87.00. (This implies a 17.48% total return with 15.74% from capital gain.) They considered this stock to be a low risk stock. Another with a buy recommendation said it was a "Great western Canadian success story".
Globe Investor Number Cruncher on September 17 mentioned this stock in their story on "In the value hunt, these bargain stocks measure up". They were looking for stock with P/E lower than the market average. (I always look at P/E relative to this stock and also consider P/E on similar stocks. In my experience the P/E for utilities tend to be relatively lower than the market average. See the MacLeod Gazette for an item on the historical background of this company.
I still think this is a good company. However, along with a lot of Canadian utility stocks, the stock price is relatively high.
ATCO LTD. is a management holding company with operating subsidiaries in electric and natural gas utility operations, independent power operations, production, storage, processing, gathering, delivery of natural gas, technical facilities management for the industrial, defense and transportation sectors, the manufacture, sale and leasing of industrial shelters and industrial noise abatement technologies. ATCO has just over 50% stake in Canadian Utilities Ltd. The company utilizes a dual share structure of voting and non-voting shares. Its web site is here ATCO. See my spreadsheet at aco.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 or StockTwits.
I do not own this stock (TSX-ACO.X). I have followed this stock for some time. It is a utility stock that has been and is still on the dividend lists that I follow of Dividend Achievers (see resources) and Dividend Aristocrats (see indices). Some consider this stock to be a dividend growth stock.
When I look at insider trading I find $1.4M of insider buying and $0.9M of insider selling with a net of insider buying of $0.5M. This company not only has options but also Share Appreciation Rights (SARs). There seems to be an awful lot of options and rights outstanding.
Both the CEO and CFO have lots of these options and rights and far more of these than actual shares. However, they both own shares worth in the millions (5 to 7 million). There are also lots of officers with options and rights. As a group, officers have lots more options and rights than shares. There are also subsidiary Executives who have rights and options. They seem to have more options and rights than actual shares. It is only the directors who have no options or rights, but they do not own much in shares either.
There are voting shares (TSX-ACO.Y) and non-voting shares (TSX-ACO.X). Ronald Southern owns around 84% of the voting shares and therefore controls the company. There only seems to be minimal amount of institutional ownership of shares.
The 5 year low, median and high median Price/Earnings Ratios are 8.94, 10.49 and 11.73. The current P/E Ratio of 12.09 on stock price of $75.17 and 2012 Earnings of 6.22 show a relatively high stock price, but not excessively high stock price. (Note 10 year median P/E Ratios are similar to the 5 year median ratios.)
I get a Graham Price of $74.38. The 10 year low, median and high median Price/Graham Price Ratios are 0.69, 0.79 and 0.97. The current ratio of 1.01 again shows a relatively high current stock price, but not an excessively high stock price.
I get a 10 year Price/Book Value per share Ratio of 1.48 and a current P/B Ratio of 1.90. The current ratio is some 29% higher than the 10 year ratio. This shows a relatively high stock price.
The 5 year median dividend yield is 2.01% and the current dividend yield is 1.74%. The current one is almost 14% lower than the 5 year median yield. This shows that the current stock price is relatively high. (Note that the 10 year median low dividend yield is 1.77%.)
All my stock tests show the same trend and that is a current relatively high stock price.
When I look at analysts' recommendations, I find Buy and Hold recommendations. Most recommendations are a Hold. The consensus 12 months stock price is $80.80. This implies a total return of $9.23, with 7.49% from capital gain and 1.74% from dividend income.
One Analyst with a Buy recommendation gives a 12 month stock price of $87.00. (This implies a 17.48% total return with 15.74% from capital gain.) They considered this stock to be a low risk stock. Another with a buy recommendation said it was a "Great western Canadian success story".
Globe Investor Number Cruncher on September 17 mentioned this stock in their story on "In the value hunt, these bargain stocks measure up". They were looking for stock with P/E lower than the market average. (I always look at P/E relative to this stock and also consider P/E on similar stocks. In my experience the P/E for utilities tend to be relatively lower than the market average. See the MacLeod Gazette for an item on the historical background of this company.
I still think this is a good company. However, along with a lot of Canadian utility stocks, the stock price is relatively high.
ATCO LTD. is a management holding company with operating subsidiaries in electric and natural gas utility operations, independent power operations, production, storage, processing, gathering, delivery of natural gas, technical facilities management for the industrial, defense and transportation sectors, the manufacture, sale and leasing of industrial shelters and industrial noise abatement technologies. ATCO has just over 50% stake in Canadian Utilities Ltd. The company utilizes a dual share structure of voting and non-voting shares. Its web site is here ATCO. See my spreadsheet at aco.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 or StockTwits.
Wednesday, October 10, 2012
ATCO Ltd
I do not own this stock (TSX-ACO.X). I have followed this stock for some time. It is a utility stock that has been and is still on the dividend lists that I follow of Dividend Achievers (see resources) and Dividend Aristocrats (see indices). Some consider this stock to be a dividend growth stock.
The dividend has always been quite low with a 5 year median dividend yield of just 2%. The 5 and 10 year growth in dividends is at 6.8% and 8.2% per year, respectively. So dividend is low and the increases are also low to moderate. The exception is the increase for 2012, and this increase is at 14.9%. However, before 2001, especially in the 1990's, dividend increases were higher around 14% per year.
Dividend increases mean a lot for the future income to long term investors. In 15 years' time using current dividend of 1.74% and current 5 year growth of 6.81% would get you a 4.68% return on your original stock purchase. However, if you look at what people are getting who invested in this company 15 years ago, the current yield on your original investment would be 9% to 13%.
The Dividend Payout Ratios are quite good with the 5 year median DPR for earnings at 20.49% and for cash flow at 6.17%. The DPRs for 2011 financial year were comparable at 20.21% and 4.44%. The DPRs for 2012 are expected to be slightly higher at 21.06 and 9.11%. These are all quite low DPRs. Their policy provides decent dividends to shareholders and leaves money for the company to grow.
Total return over the past 5 and 10 years is at 5.54% and 12.27% per year. The portion of this growth attributable to dividends is 1.85% and 2.34% per year over the past 5 and 10 years. Dividends make up 33% and 19% of the total return over these periods. The portion of the total return attributable to capital gain was 3.69% and 9.93% per year over these periods.
The shares outstanding have gone down slightly over the past 5 and 10 years, with the decline at 0.25% and 0.30% per year over the past 5 and 10 years, respectively. Basically the company has purchased back enough shares to cover stock options exercised.
Over the last 5 and 10 years, revenue has grown at 6.9% and 0.6% per year, respectively. Over the last 5 and 10 years revenue per share has grown at the rate of 7.2% and 0.9% per year, respectively.
The Earnings per Share has done quite a bit better with growth at 10.3% and 10.6% per year over the past 5 and 10 years. Cash flow is even better at 15% and 11% per year over the past 5 and 10 years. Even book value per share has grown not badly at 8.8% and 9.4% per year over the past 5 and 10 years.
Last year was a very good year for Return on Equity. The ROE was extremely good at 27.6%. However, the ROE based on comprehensive income was lower by some 18% coming in at 22.7%. Mind you, 22.7% is still a very good number. However, it points to the fact that the net income may not be quite as good as it first looks like.
The 5 year median ROE based on net income is 15.3%. The 5 year median ROE based on comprehensive income is not far off at 14.3%. These are also good values.
The current Liquidity Ratio at 1.33 is rather low and it is much lower than the 5 year median Liquidity Ratio of 2.24. The Liquidity Ratio for the end of the financial year of 2011 was better at 1.62. The current Debt Ratio was also lower at 1.57. The Debt Ratio for the financial year of 2011 was also better at 1.60. The 5 year median Debt Ratio is also higher at 1.74. In the first half of 2012 the company took out $309M of long term debt to finance capital expenditures.
The Leverage Ratio is rather high at 5.76. Although, I must admit that this company has always had a high Leverage Ratio. The 10 year median Leverage Ratio is 5.49. The Debt/Equity Ratio is also high at 3.60. However, other utilities have Debt/Equity Ratios in this range.
Bye and large, this company has done well considering what the economic climate has been over the past few years. It is holding its own and making money for its shareholders. It has a long record of dividend increases. The management obviously expects 2012 to be a good year as it raised its dividend 14.9%. This is a lot higher than the recent years of 7 to 8% increases.
ATCO LTD. is a management holding company with operating subsidiaries in electric and natural gas utility operations, independent power operations, production, storage, processing, gathering, delivery of natural gas, technical facilities management for the industrial, defense and transportation sectors, the manufacture, sale and leasing of industrial shelters and industrial noise abatement technologies. ATCO has just over 50% stake in Canadian Utilities Ltd. The company utilizes a dual share structure of voting and non-voting shares. Its web site is here ATCO. See my spreadsheet at aco.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 or StockTwits.
The dividend has always been quite low with a 5 year median dividend yield of just 2%. The 5 and 10 year growth in dividends is at 6.8% and 8.2% per year, respectively. So dividend is low and the increases are also low to moderate. The exception is the increase for 2012, and this increase is at 14.9%. However, before 2001, especially in the 1990's, dividend increases were higher around 14% per year.
Dividend increases mean a lot for the future income to long term investors. In 15 years' time using current dividend of 1.74% and current 5 year growth of 6.81% would get you a 4.68% return on your original stock purchase. However, if you look at what people are getting who invested in this company 15 years ago, the current yield on your original investment would be 9% to 13%.
The Dividend Payout Ratios are quite good with the 5 year median DPR for earnings at 20.49% and for cash flow at 6.17%. The DPRs for 2011 financial year were comparable at 20.21% and 4.44%. The DPRs for 2012 are expected to be slightly higher at 21.06 and 9.11%. These are all quite low DPRs. Their policy provides decent dividends to shareholders and leaves money for the company to grow.
Total return over the past 5 and 10 years is at 5.54% and 12.27% per year. The portion of this growth attributable to dividends is 1.85% and 2.34% per year over the past 5 and 10 years. Dividends make up 33% and 19% of the total return over these periods. The portion of the total return attributable to capital gain was 3.69% and 9.93% per year over these periods.
The shares outstanding have gone down slightly over the past 5 and 10 years, with the decline at 0.25% and 0.30% per year over the past 5 and 10 years, respectively. Basically the company has purchased back enough shares to cover stock options exercised.
Over the last 5 and 10 years, revenue has grown at 6.9% and 0.6% per year, respectively. Over the last 5 and 10 years revenue per share has grown at the rate of 7.2% and 0.9% per year, respectively.
The Earnings per Share has done quite a bit better with growth at 10.3% and 10.6% per year over the past 5 and 10 years. Cash flow is even better at 15% and 11% per year over the past 5 and 10 years. Even book value per share has grown not badly at 8.8% and 9.4% per year over the past 5 and 10 years.
Last year was a very good year for Return on Equity. The ROE was extremely good at 27.6%. However, the ROE based on comprehensive income was lower by some 18% coming in at 22.7%. Mind you, 22.7% is still a very good number. However, it points to the fact that the net income may not be quite as good as it first looks like.
The 5 year median ROE based on net income is 15.3%. The 5 year median ROE based on comprehensive income is not far off at 14.3%. These are also good values.
The current Liquidity Ratio at 1.33 is rather low and it is much lower than the 5 year median Liquidity Ratio of 2.24. The Liquidity Ratio for the end of the financial year of 2011 was better at 1.62. The current Debt Ratio was also lower at 1.57. The Debt Ratio for the financial year of 2011 was also better at 1.60. The 5 year median Debt Ratio is also higher at 1.74. In the first half of 2012 the company took out $309M of long term debt to finance capital expenditures.
The Leverage Ratio is rather high at 5.76. Although, I must admit that this company has always had a high Leverage Ratio. The 10 year median Leverage Ratio is 5.49. The Debt/Equity Ratio is also high at 3.60. However, other utilities have Debt/Equity Ratios in this range.
Bye and large, this company has done well considering what the economic climate has been over the past few years. It is holding its own and making money for its shareholders. It has a long record of dividend increases. The management obviously expects 2012 to be a good year as it raised its dividend 14.9%. This is a lot higher than the recent years of 7 to 8% increases.
ATCO LTD. is a management holding company with operating subsidiaries in electric and natural gas utility operations, independent power operations, production, storage, processing, gathering, delivery of natural gas, technical facilities management for the industrial, defense and transportation sectors, the manufacture, sale and leasing of industrial shelters and industrial noise abatement technologies. ATCO has just over 50% stake in Canadian Utilities Ltd. The company utilizes a dual share structure of voting and non-voting shares. Its web site is here ATCO. See my spreadsheet at aco.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 or StockTwits.
Tuesday, October 9, 2012
Keyera Corp 2
On my other blog I am today writing about the Dividend Growth Index, of which I am a member ...
continue...
I do not own this stock (TSX-Key). This stock is also an x-income trust stock. The stock started out as KeySpan Facilities Income Fund (TSX-KEY.UN). Then name was changed in 2004 to Keyera Facilities Income Fund (TSX-KEY.UN). In 2010 it converted to a corporation and changed its name to Keyera Corp (TSX-KEY).
The Insider Trading report shows no insider buying and some insider selling at $0.5M. I do not see any options, but there are option like vehicles, like Rights Performance Share Awards, Rights Restricted Share Awards and Rights Share Awards. Lots of insiders have more of these option-like vehicles than shares, including CFO and officers. Directors only seem to have common shares.
The information on institutional investors seems inconsistent. However, institutions seem to be increasing their investment in this company. This is a positive. However, you might want to discount this because of inconsistencies in reporting.
I get 5 year low median and high median Price/Earnings Ratios of 13.14, 16.52 and 19.90. I get a current P/E Ratio of 27.42. This is based on EPS for 2012 at $1.79 and a stock price of $49.08. This test suggests that the current stock price is relatively high. The 10 year high median P/E Ratio is higher than the 5 year at 24.26. Even at this, the current stock price seems to be on the high side.
I get a Graham Number of $21.37. The low, median and high median Price/Graham Price Ratios are 1.03, 1.26 and 1.52. Using a current stock price of $49.08, I get a current P/GP Ratio of 2.30. This high ratio suggests that the stock price is relatively high.
I get a 10 year median Price/Book Value per Share Ratio of 2.08. The current P/B Ratio is 4.33. The current P/B Ratio is more than twice higher than the current one and also suggests that the current stock price is relatively high. Mitigating circumstances is the book value per shares has been falling partly due to new accounting rules and partly due to the change from an income fund to a corporation.
The last test is the dividend yield test and the 5 year dividend yield at 8.29% is some 50% higher than the current dividend yield of 4.16%. However, this was an income trust and most income trusts were expected to have their dividend reduced to a 4 to 5% range. This is what has occurred here.
However, there is no measure I can see that will say that the current price is not relatively high. This includes the Price/Cash Flow Ratio and Price/Sales ratios also. Also, I note that the current stock price is not quite up to the highest ever, but is it is very close. This stock hit its highest level ever in January 2012.
When I look at the analysts' recommendations, I find Buy and Hold recommendations. Because there are more Buy recommendations than Hold recommendations, the consensus recommendation is a Buy. Analysts' recommendations also depend where you look. At least one site shows some Strong Buy recommendations. However, the consensus is the same at a Buy recommendation. The 12 month consensus stock price is $50.90. This implies a total return of 7.87% with 4.16% from dividends and 3.71% from capital gains.
One analyst with a Hold recommendation has a 12 months stock price at $48.00, which is a bit lower than the current stock price. Davis Rea's John O'Connell says on September 12, 2012, that this stock is one of his top picks.
One analyst with a Buy recommendation thought it is a well-run company. Another thought the company was a long term buy. Another thought it had a good record for dividend increases and a number of analysts remarked on the good 4% dividend.
I am a long term investor. What I have found is that to pay more than a reasonable price for a stock greatly affects your long term return on a stock. Part of the problem is that this year is not turning out to be a great one for this company. However, the main reason that the stock price is relatively high is that the stock has had a great run recently and the stock price is up 178% since 2008.
Keyera provides essential services and products to oil and gas producers in western Canada, and markets related natural gas liquids (NGLs) throughout North America. Its web site is here Keyera. See my spreadsheet at key.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 or StockTwits.
I do not own this stock (TSX-Key). This stock is also an x-income trust stock. The stock started out as KeySpan Facilities Income Fund (TSX-KEY.UN). Then name was changed in 2004 to Keyera Facilities Income Fund (TSX-KEY.UN). In 2010 it converted to a corporation and changed its name to Keyera Corp (TSX-KEY).
The Insider Trading report shows no insider buying and some insider selling at $0.5M. I do not see any options, but there are option like vehicles, like Rights Performance Share Awards, Rights Restricted Share Awards and Rights Share Awards. Lots of insiders have more of these option-like vehicles than shares, including CFO and officers. Directors only seem to have common shares.
The information on institutional investors seems inconsistent. However, institutions seem to be increasing their investment in this company. This is a positive. However, you might want to discount this because of inconsistencies in reporting.
I get 5 year low median and high median Price/Earnings Ratios of 13.14, 16.52 and 19.90. I get a current P/E Ratio of 27.42. This is based on EPS for 2012 at $1.79 and a stock price of $49.08. This test suggests that the current stock price is relatively high. The 10 year high median P/E Ratio is higher than the 5 year at 24.26. Even at this, the current stock price seems to be on the high side.
I get a Graham Number of $21.37. The low, median and high median Price/Graham Price Ratios are 1.03, 1.26 and 1.52. Using a current stock price of $49.08, I get a current P/GP Ratio of 2.30. This high ratio suggests that the stock price is relatively high.
I get a 10 year median Price/Book Value per Share Ratio of 2.08. The current P/B Ratio is 4.33. The current P/B Ratio is more than twice higher than the current one and also suggests that the current stock price is relatively high. Mitigating circumstances is the book value per shares has been falling partly due to new accounting rules and partly due to the change from an income fund to a corporation.
The last test is the dividend yield test and the 5 year dividend yield at 8.29% is some 50% higher than the current dividend yield of 4.16%. However, this was an income trust and most income trusts were expected to have their dividend reduced to a 4 to 5% range. This is what has occurred here.
However, there is no measure I can see that will say that the current price is not relatively high. This includes the Price/Cash Flow Ratio and Price/Sales ratios also. Also, I note that the current stock price is not quite up to the highest ever, but is it is very close. This stock hit its highest level ever in January 2012.
When I look at the analysts' recommendations, I find Buy and Hold recommendations. Because there are more Buy recommendations than Hold recommendations, the consensus recommendation is a Buy. Analysts' recommendations also depend where you look. At least one site shows some Strong Buy recommendations. However, the consensus is the same at a Buy recommendation. The 12 month consensus stock price is $50.90. This implies a total return of 7.87% with 4.16% from dividends and 3.71% from capital gains.
One analyst with a Hold recommendation has a 12 months stock price at $48.00, which is a bit lower than the current stock price. Davis Rea's John O'Connell says on September 12, 2012, that this stock is one of his top picks.
One analyst with a Buy recommendation thought it is a well-run company. Another thought the company was a long term buy. Another thought it had a good record for dividend increases and a number of analysts remarked on the good 4% dividend.
I am a long term investor. What I have found is that to pay more than a reasonable price for a stock greatly affects your long term return on a stock. Part of the problem is that this year is not turning out to be a great one for this company. However, the main reason that the stock price is relatively high is that the stock has had a great run recently and the stock price is up 178% since 2008.
Keyera provides essential services and products to oil and gas producers in western Canada, and markets related natural gas liquids (NGLs) throughout North America. Its web site is here Keyera. See my spreadsheet at key.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 or StockTwits.
Friday, October 5, 2012
Keyera Corp
I do not own this stock (TSX-KEY). The stock started out as KeySpan Facilities Income Fund (TSX-KEY.UN). Then name was changed in 2004 to Keyera Facilities Income Fund (TSX-KEY.UN). In 2010 it converted to a corporation and changed its name to Keyera Corp (TSX-KEY). This was one of the stocks recommended by Jennifer Dowty from a column she wrote and I reviewed in February 2010 on Special Dividends paid. See Dividends and Special Dividends.
As with other utilities stock, this stock has a good dividend at 4.16%. The Dividend Payout Ratios are high with 5 year median DPR at 99.45% for earnings and 76.34% for cash flow. The DPR for earnings is expected to be over 100% in both 2012 and 2013. This company does have to get their DPR for earnings at a more reasonable rate, but they do have some tax pools which affect taxes they have to pay and also what is available for distributions.
The company obviously seems confident in its distribution rate as they raised the dividends by 6.3% at the end of 2011. However, they will have to get their DPRs in line in the near future. Dividend increases have been slowing down. The growth in dividends is 5.9% per year and 16.9% per year over the past 5 and 8 years.
Except for book value, the growth values on this company are very good. The outstanding shares have been increasing at the rate of 3.3% and 19.7% over the past 3 and 8 years, respectively. So far this year outstanding shares have increased by 7.5%. The majority of this was an equity issue. They had an acquisition. They also issued some shares because of their DRIP plan and also for some debenture conversion.
Revenue has grown at the rate of 13.4% and 104% per year over the past 5 and 8 years. The Revenue per share has grown at the rate of 9.8% and 70.4% per year over the past 5 and 8 years. The difference between these growth rates is, of course, because of issuance of new shares. However, the growth rate per share is a good one. (This company only went public in 2003.)
Earnings per Share have grown at the rate of 11.6% and 18% per year over the past 5 and 8 years. Cash Flow has grown at the rate of 15.9% and 18.2% per year over the past 5 and 8 years.
Book value per share has been declining recently with the decline over the past 5 years at 1.6% per year. There is a slight increase in book value per share over the past 8 years at 0.4% per year. (This company has over some of the past years made distributions that were higher than their income.)
Until 2008, the Return on Equity on this company was very low. The ROE for the financial year 2011 was very good at 20.2%. The company also has a 5 year median ROE of 20.2%. The ROE based on comprehensive income is the same as the net income and it was at 20.2% for the 2011 financial year.
This looks like a solid utilities stock with quite good growth. This company will need to get their Dividend Payout Ratio lower.
Keyera provides essential services and products to oil and gas producers in western Canada, and markets related natural gas liquids (NGLs) throughout North America. Its web site is here Keyera. See my spreadsheet at key.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.
As with other utilities stock, this stock has a good dividend at 4.16%. The Dividend Payout Ratios are high with 5 year median DPR at 99.45% for earnings and 76.34% for cash flow. The DPR for earnings is expected to be over 100% in both 2012 and 2013. This company does have to get their DPR for earnings at a more reasonable rate, but they do have some tax pools which affect taxes they have to pay and also what is available for distributions.
The company obviously seems confident in its distribution rate as they raised the dividends by 6.3% at the end of 2011. However, they will have to get their DPRs in line in the near future. Dividend increases have been slowing down. The growth in dividends is 5.9% per year and 16.9% per year over the past 5 and 8 years.
Except for book value, the growth values on this company are very good. The outstanding shares have been increasing at the rate of 3.3% and 19.7% over the past 3 and 8 years, respectively. So far this year outstanding shares have increased by 7.5%. The majority of this was an equity issue. They had an acquisition. They also issued some shares because of their DRIP plan and also for some debenture conversion.
Revenue has grown at the rate of 13.4% and 104% per year over the past 5 and 8 years. The Revenue per share has grown at the rate of 9.8% and 70.4% per year over the past 5 and 8 years. The difference between these growth rates is, of course, because of issuance of new shares. However, the growth rate per share is a good one. (This company only went public in 2003.)
Earnings per Share have grown at the rate of 11.6% and 18% per year over the past 5 and 8 years. Cash Flow has grown at the rate of 15.9% and 18.2% per year over the past 5 and 8 years.
Book value per share has been declining recently with the decline over the past 5 years at 1.6% per year. There is a slight increase in book value per share over the past 8 years at 0.4% per year. (This company has over some of the past years made distributions that were higher than their income.)
Until 2008, the Return on Equity on this company was very low. The ROE for the financial year 2011 was very good at 20.2%. The company also has a 5 year median ROE of 20.2%. The ROE based on comprehensive income is the same as the net income and it was at 20.2% for the 2011 financial year.
This looks like a solid utilities stock with quite good growth. This company will need to get their Dividend Payout Ratio lower.
Keyera provides essential services and products to oil and gas producers in western Canada, and markets related natural gas liquids (NGLs) throughout North America. Its web site is here Keyera. See my spreadsheet at key.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, October 4, 2012
Northland Power Inc 2
I do not own this stock of Northland Power Inc. (TSX-NPI). This company is into generating electric power. I have a lot invested in pipelines and I would like to have more invested in electric power as my utilities investment. I read a report on this stock last year that said it was a good defensive stock to buy. That is, it is a good stock to hold in a stock market correction. I can certainly see the logic of using utility stocks as defensive stocks.
When I look at insider trading, I find minimal trading with $0.10 insider buying and $0.14 insider selling. Insiders do not have options, but some have what is called "Replacement Rights" and these rights are convertible into shares. They were issued in connection with the merger with NPI. I would again like to point out one thing that I mentioned yesterday and that is that most of the convertible shares are owned by the previous Chairman of the Board. Because of the convertible and common shares he owns, I calculate that he owns around 70% of the outstanding shares.
There are 2 institutions that have shares in this company and own 0.55% of the company. Over the past 3 months they have decreased their shares by 40%. One institution closed their position and one institution decreased their position in this company. (There are inconsistencies in this report, because when I looked on September 29, it was reported that 5 institutions held 1.81% of the shares.)
When I look at 5 year low, median and high median Price/Earnings Ratios, I get 9.40, 11.28 and 13.16. Note that there are problems with looking as over the past 5 years as the company had two negative earning years. The 10 year low, median and high median P/E Ratios are 17.58, 19.66 and 20.93. Because so little is expected in earnings this year, I get a current P/E of 136.71 and a forward P/E of 54.69. This certainly shows that the stock price is relatively and absolutely high.
I get a current Graham Price of $3.97. The 10 year low, median and high median Price/Graham Price Ratio are 1.03, 1.17 and 1.34. I get a current P/GP Ratio of 4.83 and this high ratio a very high relative stock price. The problem with this test is that the Graham Price has been falling lately because of bad earning years and dropping book value. As recently as 2009, Graham Price was $9.94. As the Graham Price has fallen, the P/GP Ratio has been raising.
I get a 10 year median Price/Book Value per share Ratio of 1.75. The current P/B Ratio is 3.83. This current ratio is some 118% higher than the 10 year ratio.
The 5 year median dividend yield is 8.48%. The current yield is 5.64%. Although the 5 year median dividend yield is high and the current one is a good one, it is some 33% lower. You normally would want a higher dividend yield currently than the 5 year median.
Looking quickly at other measures, I get a 10 year Price/Sales Ratio of 4.87 and a current one of 6.62. A better price is with a lower current ratio than the 10 year median one. The 10 year median Price/Cash Flow ratio is 11.41 and the current one, based on last 12 month's cash flow is 14.72. Here again, a better price is a lower ratio.
All tests point to a very high relative current stock price. This stock is having trouble making a profit and the price does not seem to reflect that. I know we price stock based on what we think that the future holds, but it would appear that the current price is relatively high.
When I look at analysts' recommendations, I find Strong Buy, Buy and Hold. The vast majority of the recommendations are a Hold. The consensus recommendation would be a Hold. The 12 month stock price is $19.00. This implies a capital loss of 0.73%, dividend yield at 5.64% for a total return of 4.91%.
A couple of analysts have mentioned that the Dividend Payout Ratio is too high. One analyst thought the management team was very good. Another thought that the DPR will be around 80% in a couple of years. Note that this company has outperformed the TSX Index and the TSX Utilities Index over the past 1 to 3 years.
This company was a recent pick for Scotia McLeod's Greg Newman. See G&M's article.
The one thing that would prevent me from buying this company is that their earnings cannot cover their dividends. You would want a utility to have a Dividend Payout Ratio for earnings no higher than 70 to 75%. This company does not even come close to earnings covering dividends and will not for a while, as far as I can see.
Northland Power Inc. indirectly owns interests in power projects. Northland's assets comprise facilities that produce electricity from "clean" natural gas and "green" renewable sources such as wind and biomass. Electricity generation is sold under long-term PPAs with creditworthy customers, and any fuel for natural-gas-fired projects, where required, is purchased under long-term contracts to assure stability of operating margins. This company operates in Canada, US and Germany. Its web site is here Northland Power. See my spreadsheet at npi.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, I find minimal trading with $0.10 insider buying and $0.14 insider selling. Insiders do not have options, but some have what is called "Replacement Rights" and these rights are convertible into shares. They were issued in connection with the merger with NPI. I would again like to point out one thing that I mentioned yesterday and that is that most of the convertible shares are owned by the previous Chairman of the Board. Because of the convertible and common shares he owns, I calculate that he owns around 70% of the outstanding shares.
There are 2 institutions that have shares in this company and own 0.55% of the company. Over the past 3 months they have decreased their shares by 40%. One institution closed their position and one institution decreased their position in this company. (There are inconsistencies in this report, because when I looked on September 29, it was reported that 5 institutions held 1.81% of the shares.)
When I look at 5 year low, median and high median Price/Earnings Ratios, I get 9.40, 11.28 and 13.16. Note that there are problems with looking as over the past 5 years as the company had two negative earning years. The 10 year low, median and high median P/E Ratios are 17.58, 19.66 and 20.93. Because so little is expected in earnings this year, I get a current P/E of 136.71 and a forward P/E of 54.69. This certainly shows that the stock price is relatively and absolutely high.
I get a current Graham Price of $3.97. The 10 year low, median and high median Price/Graham Price Ratio are 1.03, 1.17 and 1.34. I get a current P/GP Ratio of 4.83 and this high ratio a very high relative stock price. The problem with this test is that the Graham Price has been falling lately because of bad earning years and dropping book value. As recently as 2009, Graham Price was $9.94. As the Graham Price has fallen, the P/GP Ratio has been raising.
I get a 10 year median Price/Book Value per share Ratio of 1.75. The current P/B Ratio is 3.83. This current ratio is some 118% higher than the 10 year ratio.
The 5 year median dividend yield is 8.48%. The current yield is 5.64%. Although the 5 year median dividend yield is high and the current one is a good one, it is some 33% lower. You normally would want a higher dividend yield currently than the 5 year median.
Looking quickly at other measures, I get a 10 year Price/Sales Ratio of 4.87 and a current one of 6.62. A better price is with a lower current ratio than the 10 year median one. The 10 year median Price/Cash Flow ratio is 11.41 and the current one, based on last 12 month's cash flow is 14.72. Here again, a better price is a lower ratio.
All tests point to a very high relative current stock price. This stock is having trouble making a profit and the price does not seem to reflect that. I know we price stock based on what we think that the future holds, but it would appear that the current price is relatively high.
When I look at analysts' recommendations, I find Strong Buy, Buy and Hold. The vast majority of the recommendations are a Hold. The consensus recommendation would be a Hold. The 12 month stock price is $19.00. This implies a capital loss of 0.73%, dividend yield at 5.64% for a total return of 4.91%.
A couple of analysts have mentioned that the Dividend Payout Ratio is too high. One analyst thought the management team was very good. Another thought that the DPR will be around 80% in a couple of years. Note that this company has outperformed the TSX Index and the TSX Utilities Index over the past 1 to 3 years.
This company was a recent pick for Scotia McLeod's Greg Newman. See G&M's article.
The one thing that would prevent me from buying this company is that their earnings cannot cover their dividends. You would want a utility to have a Dividend Payout Ratio for earnings no higher than 70 to 75%. This company does not even come close to earnings covering dividends and will not for a while, as far as I can see.
Northland Power Inc. indirectly owns interests in power projects. Northland's assets comprise facilities that produce electricity from "clean" natural gas and "green" renewable sources such as wind and biomass. Electricity generation is sold under long-term PPAs with creditworthy customers, and any fuel for natural-gas-fired projects, where required, is purchased under long-term contracts to assure stability of operating margins. This company operates in Canada, US and Germany. Its web site is here Northland Power. See my spreadsheet at npi.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, October 3, 2012
Northland Power Inc
On my other blog I am today writing about My Own Advisor blog Part 2. My Own Advisor has been blogging for a couple of years and has a lot to share with novice investors. This is a second part for this blogger as in my original post on My Owner Advisor Blog I just noted the investment books he was recommending. The following are posts on this blog for novice investors...
continue...
I do not own this stock of Northland Power Inc. (TSX-NPI). This company is into generating electric power. I have a lot invested in pipelines and I would like to have more invested in electric power as my utilities investment. I read a report on this stock last year that said it was a good defensive stock to buy and this is why I started to follow this stock. This is another stock that used to be an income trust, It was called Northland Power Income Fund (TSX=NPI.UN). This company is labeled an Alternative Energy company.
The first thing to talk about is dividends. The yield is quite good at 5.64%. They basically did not lower the dividends when the company changed from an income trust. However, the 5 year median Dividend Payout Ratios are far too high. The DPR for earnings is 229% (ignoring the years with negative income). The 5 year median DPR for cash flow is 112%. The DPRs for 2012 are expected to be 771% for Earnings and 101% for cash flow.
The DPRs are not expected to improve anytime soon. No one is talking about Distributable Income or AFFO in comparison with the dividend distribution this year. DI or AFFOs figures were given for this company up to last year to compare with the distributions.
According to my calculations, outstanding shares have increased at the rate of around 14% per year over the past 5 and 10 years. Wherever you look, different sites show different numbers of outstanding shares. I have included the convertible shares as they can collect distributions in starting in 2012. The other thing is the most of the convertible shares are owned by the previous Chairman of the Board. Because of the convertible and common shares he owns, I calculate that he owns around 70% of the outstanding shares. The number of outstanding shares becomes important when you look at values per shares (like revenue per shares).
The recent increase in outstanding shares has to do with the merger of Northland Power Inc. and Northland Power Income Fund to form the new Northland Power Inc. company.
I find that revenues have increased by 14% and 16% per year over the past 5 and 10 years. However, Revenue per Share has grown by 0% and 2% per year over the past 5 and 10 years. The difference in these two growth rates is due to growth in outstanding shares.
I cannot get a growth for earnings per share as the EPS was negative for 2012. Analysts expect that EPS will be positive for 2012 and 2013. The EPS for the first quarter was positive. However, the EPS for the 2nd quarter was negative and was a surprise for the market.
Although there are no years with a negative cash flow per share, cash flow per shares has not grown much either. Growth of cash flow per share over the past 5 and 10 years is at 0.5% and 1.7% per year, respectively.
There has been no growth in book value per share over the past 5 and 10 years. Book value per share has declined by 8% and 3% per year over the past 5 and 10 years.
Return on Equity is non-existent for the financial year of 2011 as the company had a loss. The 5 year median ROE is just 0.2%. The ROE based on comprehensive income also has a 5 year median value of 0.2%.
The current Liquidity Ratio is quite good at 2.10 and a lot higher than the Liquidity Ratio for the 2011 financial year of 1.06. The current Debt Ratio of 1.64 is also better than the ratio of 1.52 for the 2011 financial year. The current Leverage and Debt/Equity Ratios are a bit high at 3.70 and 2.26. The comparable 5 year median ratios are much better at 1.59 and 0.59.
It would be nice to make money from alternative energy and perhaps the environment at the same time. However, even though this company can usually make a profit, I would not buy one where the profit cannot cover the dividend distributions.
Northland Power Inc. indirectly owns interests in power projects. Northland's assets comprise facilities that produce electricity from "clean" natural gas and "green" renewable sources such as wind and biomass. Electricity generation is sold under long-term PPAs with creditworthy customers, and any fuel for natural-gas-fired projects, where required, is purchased under long-term contracts to assure stability of operating margins. This company operates in Canada, US and Germany. Its web site is here Northland Power. See my spreadsheet at npi.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 Northland Power Inc. (TSX-NPI). This company is into generating electric power. I have a lot invested in pipelines and I would like to have more invested in electric power as my utilities investment. I read a report on this stock last year that said it was a good defensive stock to buy and this is why I started to follow this stock. This is another stock that used to be an income trust, It was called Northland Power Income Fund (TSX=NPI.UN). This company is labeled an Alternative Energy company.
The first thing to talk about is dividends. The yield is quite good at 5.64%. They basically did not lower the dividends when the company changed from an income trust. However, the 5 year median Dividend Payout Ratios are far too high. The DPR for earnings is 229% (ignoring the years with negative income). The 5 year median DPR for cash flow is 112%. The DPRs for 2012 are expected to be 771% for Earnings and 101% for cash flow.
The DPRs are not expected to improve anytime soon. No one is talking about Distributable Income or AFFO in comparison with the dividend distribution this year. DI or AFFOs figures were given for this company up to last year to compare with the distributions.
According to my calculations, outstanding shares have increased at the rate of around 14% per year over the past 5 and 10 years. Wherever you look, different sites show different numbers of outstanding shares. I have included the convertible shares as they can collect distributions in starting in 2012. The other thing is the most of the convertible shares are owned by the previous Chairman of the Board. Because of the convertible and common shares he owns, I calculate that he owns around 70% of the outstanding shares. The number of outstanding shares becomes important when you look at values per shares (like revenue per shares).
The recent increase in outstanding shares has to do with the merger of Northland Power Inc. and Northland Power Income Fund to form the new Northland Power Inc. company.
I find that revenues have increased by 14% and 16% per year over the past 5 and 10 years. However, Revenue per Share has grown by 0% and 2% per year over the past 5 and 10 years. The difference in these two growth rates is due to growth in outstanding shares.
I cannot get a growth for earnings per share as the EPS was negative for 2012. Analysts expect that EPS will be positive for 2012 and 2013. The EPS for the first quarter was positive. However, the EPS for the 2nd quarter was negative and was a surprise for the market.
Although there are no years with a negative cash flow per share, cash flow per shares has not grown much either. Growth of cash flow per share over the past 5 and 10 years is at 0.5% and 1.7% per year, respectively.
There has been no growth in book value per share over the past 5 and 10 years. Book value per share has declined by 8% and 3% per year over the past 5 and 10 years.
Return on Equity is non-existent for the financial year of 2011 as the company had a loss. The 5 year median ROE is just 0.2%. The ROE based on comprehensive income also has a 5 year median value of 0.2%.
The current Liquidity Ratio is quite good at 2.10 and a lot higher than the Liquidity Ratio for the 2011 financial year of 1.06. The current Debt Ratio of 1.64 is also better than the ratio of 1.52 for the 2011 financial year. The current Leverage and Debt/Equity Ratios are a bit high at 3.70 and 2.26. The comparable 5 year median ratios are much better at 1.59 and 0.59.
It would be nice to make money from alternative energy and perhaps the environment at the same time. However, even though this company can usually make a profit, I would not buy one where the profit cannot cover the dividend distributions.
Northland Power Inc. indirectly owns interests in power projects. Northland's assets comprise facilities that produce electricity from "clean" natural gas and "green" renewable sources such as wind and biomass. Electricity generation is sold under long-term PPAs with creditworthy customers, and any fuel for natural-gas-fired projects, where required, is purchased under long-term contracts to assure stability of operating margins. This company operates in Canada, US and Germany. Its web site is here Northland Power. See my spreadsheet at npi.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, October 2, 2012
Organic Resource Management 2
I own this stock (TSXV-ORI). I made several purchases of the stock over a few months between July and December of 1997. My purchase prices ranged from $.86 to $2.00. My total return since then is a loss of 16.2 per year or a 93% capital loss.
Looking at the insider trading report, I find no insider buying and no insider selling over the past year. Insiders do have lots of shares in this company. The Chairman and CEO, when I looked at his holdings in my review in 2010 had 44.6% of the outstanding shares. When I looked at his holdings in 2011, he had 41.6% of the outstanding shares. When I look at his holdings today, he has 31.4% of the outstanding shares. The CFO and the officers have more options than shares; however, this is not true of the CEO or the directors.
I cannot do any Price/Earnings test because this company had too many years of negative earnings. The problem of negative earnings also hampers a Graham Price test.
The Price/Book Value per Share test can be done. The 10 years P/B Ratio is 0.91 and the current P/B Ratio is 1.58. This would suggest a relatively high current stock price. However, there are problems. First the 10 year P/B Ratio is quite low. When it is below 1.00 it implies that the stock price is lower than the book value. When the stock price is lower than the book value, it generally means that the stock price is very low. Also, the book value has been declining over the last over the last 5 and 10 years. Lastly, the P/B Ratio of 1.58 is a reasonable ratio on an absolute basis.
There are other tests that can be done besides my standard tests. One is the Price/Sales Ratio test. Using the last Revenue per Share value, I get a P/S Ratio of 0.61. The 10 year low, median and high median P/S Ratios are 0.20, 0.39, and 0.63. The 0.61 current ratio would suggest that the stock price is relatively high. However, a P/S Ratio is 0.61 on an absolute basis is a low one.
There is also the Price/Cash Flow per Share Ratio test. The 10 year low, median and high median P/CF Ratios are 2.70, 5.69, and 9.49. Using the latest Cash Flow per Share, I get a P/CF Ratio of 5.68. This P/CF Ratio suggests that the stock price is reasonable.
My stock price tests give rather mixed results. The price is probably reasonable.
I cannot find any analysts that follow this stock. Still, the most positive thing that I see is that more than 34% of the company is owned by insiders. (Although insider used to own more shares just a couple of years ago.) I did not sell this because of the low value. It is also interesting to track such a company and see how it ends up. You do have a tendency to keep track of companies you invest in. I will retain the shares I have for now and see what happens.
There is an interesting article on Stock Guru about this company possibly wanting to sell itself.
A number of sites list this stock as a great one to buy in 2012. They talk about what the company does, but none says why to buy. For an example of this see Kandy Daily. I think that saying a stock is a good one to buy without saying why is a rather useless report for investors.
I think you have to review both the good and the bad investments. The main reason I liked this company was because it was "green". It would seem I could invest in a "green" company and make money. It did not turn out that way.
So, I originally bought this company because I was impressed with what they we doing. It sounded great for the environment and look where it got me. The real question is "Can they make any money?" I do not think they have proven this.
The Company's core business is the regularly scheduled collection of non-hazardous liquid organic residuals. It collects, processes and recycles these wastes. Its web site is here Organic Resource. See my spreadsheet at ori.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.
Looking at the insider trading report, I find no insider buying and no insider selling over the past year. Insiders do have lots of shares in this company. The Chairman and CEO, when I looked at his holdings in my review in 2010 had 44.6% of the outstanding shares. When I looked at his holdings in 2011, he had 41.6% of the outstanding shares. When I look at his holdings today, he has 31.4% of the outstanding shares. The CFO and the officers have more options than shares; however, this is not true of the CEO or the directors.
I cannot do any Price/Earnings test because this company had too many years of negative earnings. The problem of negative earnings also hampers a Graham Price test.
The Price/Book Value per Share test can be done. The 10 years P/B Ratio is 0.91 and the current P/B Ratio is 1.58. This would suggest a relatively high current stock price. However, there are problems. First the 10 year P/B Ratio is quite low. When it is below 1.00 it implies that the stock price is lower than the book value. When the stock price is lower than the book value, it generally means that the stock price is very low. Also, the book value has been declining over the last over the last 5 and 10 years. Lastly, the P/B Ratio of 1.58 is a reasonable ratio on an absolute basis.
There are other tests that can be done besides my standard tests. One is the Price/Sales Ratio test. Using the last Revenue per Share value, I get a P/S Ratio of 0.61. The 10 year low, median and high median P/S Ratios are 0.20, 0.39, and 0.63. The 0.61 current ratio would suggest that the stock price is relatively high. However, a P/S Ratio is 0.61 on an absolute basis is a low one.
There is also the Price/Cash Flow per Share Ratio test. The 10 year low, median and high median P/CF Ratios are 2.70, 5.69, and 9.49. Using the latest Cash Flow per Share, I get a P/CF Ratio of 5.68. This P/CF Ratio suggests that the stock price is reasonable.
My stock price tests give rather mixed results. The price is probably reasonable.
I cannot find any analysts that follow this stock. Still, the most positive thing that I see is that more than 34% of the company is owned by insiders. (Although insider used to own more shares just a couple of years ago.) I did not sell this because of the low value. It is also interesting to track such a company and see how it ends up. You do have a tendency to keep track of companies you invest in. I will retain the shares I have for now and see what happens.
There is an interesting article on Stock Guru about this company possibly wanting to sell itself.
A number of sites list this stock as a great one to buy in 2012. They talk about what the company does, but none says why to buy. For an example of this see Kandy Daily. I think that saying a stock is a good one to buy without saying why is a rather useless report for investors.
I think you have to review both the good and the bad investments. The main reason I liked this company was because it was "green". It would seem I could invest in a "green" company and make money. It did not turn out that way.
So, I originally bought this company because I was impressed with what they we doing. It sounded great for the environment and look where it got me. The real question is "Can they make any money?" I do not think they have proven this.
The Company's core business is the regularly scheduled collection of non-hazardous liquid organic residuals. It collects, processes and recycles these wastes. Its web site is here Organic Resource. See my spreadsheet at ori.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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