Monday, February 4, 2013

Transcontinental Inc 2

On my other blog I am today writing about the Respect for Democracy Rally...continue...

I do not own this stock of Transcontinental Inc. (TSX-TCL.A, OTC-TCLAF). I have tracked this stock for some time as it is on the dividend lists that I follow of Dividend Achievers (see resources) and Dividend Aristocrats (see indices).

When I look at the insiders' trading report, I find $1.1M of insider selling and a net insider selling of $0.9M. Insiders not only have options, but Deferred Share Units of Participation, Restricted Share Units of Participation, and Participation Units of Deferred Shares. (This is the best I can translate as options like vehicles are denoted in French.)

The CEO has very few shares, but his options are worth $10M. The CFO has very few shares and options worth $1M. An officer has very few shares and options worth $1.4M. A director has shares worth $2.2M and has options worth 0.5M. This is just to give you an idea on insider share ownership and option values. Rémi Marcoux owns most of the Class B multiple voting shares worth around $155.8M.

According to Reuters, there are 61 institutions that own some 87% of this company. Over the past 3 months they have increased their shares by some 11.5%. See their information on this company.

The 5 year low, median and high median Price/Earnings ratios are 5.20, 6.89 and 7.88. These are very low P/E Ratios. The 10 year low, median and high median P/E Ratios are 8.06, 10.45 and 12.81. The current P/E Ratio of 6.48 is quite low. This P/E Ratio is based on 2013 EPS of 1.84 and a stock price of $11.93.

I get a Graham Price of $20.51. The10 year low, median and high median Price/Graham Price Ratios are 0.65, 0.80 and 0.93. The current P/GP Ratio is 0.58. Also, a stock price is considered to be a good one when the stock price is at or below the Graham Price (that is a P/GP Ratio of 1.00 or below.)

The 10 year median Price/Book Value per Share Ratio is 1.37 and the current P/B Ratio is 1.17 a value 85% of the 10 year ratio. The 5 year median dividend yield is 3.56% and the current yield is 4.86%. The current yield is some 37% above the 5 year dividend yield. Both these tests say that the current stock price is good.

When I look at analysts' recommendations, I find Buy, Hold and Underperform recommendations. The consensus recommendation would be a Hold. The 12 months consensus stock price is $11.60. This implies a 2.09% gain with 4.86% coming from dividends and a capital loss of 2.77%.

Old industries can hang on a lot longer than you can image. This company is still basically a printing company and it is having a tough time, but it does generally make money. They print magazines and newspapers and magazines and newspapers are still surviving, but none are really thriving. Another negative is that goodwill and intangible assets make up some 80% of the market cap of this company.

On the other hand the stock price is from quite good to cheap. They have a nice 4.9% dividend yield. They have positive cash flow. They have very good dividend growth and a very low Dividend Payout Ratios. However, personally, I rather move on to tech stocks than purchase a company making money in an old industry. I also like companies that I can shove into my portfolio for the very long term. It is hard to know if this company will survive in the longer term.

Transcontinental, one of Canada's top media groups, is the largest printer in Canada and Mexico and the fourth-largest in North America. In addition to commercial printing, it operates 150 websites and is a leading publisher of consumer magazines, French-language educational resources and community newspapers in Quebec and the Atlantic provinces. Its web site is here Transcontinental. See my spreadsheet at tcl.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.

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