First Capital Realty 2

I do not own this stock (TSX-FCR, OTC-FCRGF). Last year a reader asked me to review this real estate stock. Also, The site Canadian Dividend Stock site mentions this company as a top Canadian REIT.

When I look at insider trading, I see that there is minimal insider buying and $4.85M insider selling with net insider selling at $4.8M. Insiders not only have options, but Deferred Share Units and Units Restricted Share Units. Insiders also have some Warrants. (See definition of Warrants at Investopedia.)

There are a lot of options outstanding and insiders have more options than shares. For example, the CEO has $20M of common shares and $39M of options. The CFO has 1.1M of common shares and $10M of options. An officer has $0.8M of common shares and $3.8M of options. A Director has $0.4M of common shares and $1M of options.

There are 102 institutions that hold 22% of the outstanding shares. Over the past 3 months they have increased their ownership by 2.8%. This is a positive.

Analysts are using AFFO and FFO in place of earnings for a P/E Ratio. This is true REITs in general. I have a 5 year low, median and high median Price/FFO Ratio 9.92, 13.92 and 16.26. I get a current P/FFO Ratio of 18.45. This ratio is based on a stock price of $18.45 and a 2012 FFO of $1.00. This rather high ratio suggests that the stock price is relatively high.

I have a 5 year low, median and high median Price/AFFO Ratio 11.27, 14.68 and 18.31. I get a current P/FFO Ratio of 21.96. This ratio is based on a stock price of $18.45 and a 2012 FFO of $0.84. This rather high ratio also suggests that the stock price is relatively high.

When calculating the Graham Price, I use the FFO rather than the EPS. This is because the recent high increase in the EPS due to the new Account Rules invalidates the Graham Price using the EPS. I get a current Graham Price of $18.73. The 10 year low, median and high median Price/Graham Price Ratios are 0.73, 0.92 and 1.11. The current P/GP Ratio at 0.99 is relatively higher than the median, but suggests that the current stock price is reasonable.

The recent big increase in the Book Value per share because of the change in accounting rules rather invalidates the Price/Book Value per share Ratio test.

The 5 year median dividend yield is 5.99% and the current dividend yield is at 4.55% , which is some 24% lower. This test suggests that the current stock price is relatively high.

The results of my tests may be slightly mixed, but do generally point to a current stock price that is relatively high.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus recommendation would be a Buy. The 12 month stock price consensus is $21.00. This implies a total return of 18.37%, with 4.55% from distributions and 13.82% from capital gains.

If you use the 2014 AFFO of $0.97 and a 12 months stock price of $21 you get a P/AFFO of 21.65. One analyst thinks that a forward P/E of 22 is a good one for this stock. I think, historically, this is a rather high P/AFFO ratio.

Gazit Canada (or Gazit Globe) owns some 46% of the common shares in this company. (It is confusing as some places it says that these shares are owned by Gazit Canada and some by Gazit Globe. However, these Gazit companies and Gazit America seem to be interconnected. Certainly, the Chairman of the Board of both First Capital and Gazit Globe is the same (Chaim Katzman).

Gazit America was taken private and the minority shareholders thought they should have gotten a better deal. See Financial Post article.

Another Israeli company, Alony-Hetz Properties And Investments Ltd. owns just over 10% of the outstanding common shares. Web site is here.

According to Forbes, this stock was named in the top 25 Canadian Stocks by Canadian Stock Channel. The top 25 stocks named by Canadian Stock Channel are here fcr.htm.

I cannot find much in the way of comments on this stock. However, it seems a number of analysts' think highly of the company. I think that its stock price is relatively high, although there seems to be a number of analysts think otherwise.

First Capital Realty is Canada's leading owner, developer and operator of supermarket and drugstore anchored neighbourhood and community shopping centers, located predominantly in growing metropolitan areas. Its web site is here First Capital. See my spreadsheet at fcr.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.