Mullen Group Ltd

I do not own this stock of Mullen Group Ltd (TSX-MTL, OTC-MLLGF). This is a small stock that I saw recommended in 2010. I have not invested in this stock, but I like to look at recommended small cap dividend paying stock to see if they would be a possibly good investment now or in the future. The other thing to mention about this stock is that it has converted from an income trust and has decreased it dividends.

In 2009, dividends were decreased some 83%. Since then they have increased the dividends every year and they are up some 233%. Their last increase was in 2011 and it was a 100% increase in dividends. There was no increase in 2012. Dividends are still some 45% lower in 2012 than at the top dividend of 2008.

It was felt that old income trusts companies would end up with dividend yields between 4 and 5%. This company is in that range with a current dividend yield of 4.2%. Dividend Payout Ratios are good with the 5 year median DPR for EPS at 61%, the 5 year median DPR for CFPS at 42% and the 5 year median DPR for adjusted CFPS at 27%.

The total return over the past 5 and 10 years is 4.12% and 13.92% per year, respectively. The dividend portion of the 5 year return is 6.06% per year and there is a capital loss of 1.94% per year. The dividend portion of the 10 year return is 6.56% per year and the capital gain portion is 7.36% per year. They have made money for their shareholders, especially over the longer term.

The outstanding shares have decreased by 0.2% per year over the past 5 years and increased by 6.42% per year over the past 10 years. Shares have increased because of acquisitions and stock options being exercised. They have decreased because of stock repurchases.

Revenue and revenue per share growth is generally good, with revenue growth at 68% per year over the past 5 years and 15% per year over the past 10 years. Revenue per share has grown at the rate of 68% per year over the past 5 years and 7.8% over the past 10 years.

Earnings per Share is down over the past 5 years by 5% per year and up by 7.6% per year over the past 10 years. This is an industrial stock, so looking at EPS on a 5 year running average, the stock does better with EPS up by 4.3% per year over the past 5 years and up by 11% per year over the past 10 years. Why I am looking at the 5 year running average is because for industrial stocks, EPS does tend to fluctuate.

Cash Flow per Share will also fluctuate. The Adjusted CFPS is up by 6% and 12% per year, over the past 5 and 10 years. The 5 year running average Adjusted CFPS is up by 8.7% and 13% per year over the past 5 and 10 years.

Book Value has not fared well over the past 5 years and BVPS is down some 13% per year. However, it is up by 7.8% per year over the past 10 years. Book value went down some 42% with the change in Accounting Rules to IFRS. If the IFRS accounting rules were used in 2010, Book Value would have increased.

For the financial year of 2011, the ROE was 17.1%. However, the 5 year median ROE was much lower at 7.8%. The financial year of 2011 was a good year and it is expected that the financial year of 2012 will be better. The ROE based on comprehensive income was the same as that for net income.

The current Liquidity Ratio is very good at 2.33 and the current debt ratio is also very good at 2.11. I like to see good debt ratios on industrial stocks because it shows they have a good chance of surviving in the bad times. The current Leverage and Debt/Equity Ratios are also good at 1.91 and 0.90.

You would buy this stock for diversification purposes. Because it is an industrial stock, earnings and cash flow will fluctuate. Most companies will try not to have fluctuating dividends. I like the strong balance sheet this company has. They are making a profit and shareholders are earning money.

Mullen Group Ltd. is a corporation that owns a network of independently operated businesses. Mullen is recognized as the largest provider of specialized transportation and related services to the oil and natural gas industry in western Canada and is one of the leading suppliers of trucking and logistics services in Canada - two sectors of the economy in which Mullen has strong business relationships and industry leadership. Its web site is here Mullen. See my spreadsheet at mtl.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.