Tuesday, May 14, 2013

Progressive Waste Solutions Ltd 2

I own this stock of Progressive Waste Solutions Ltd. (TSX-BIN, NYSE-BIN). I first bought this stock in 2007 and then bought some more in 2010. I haven't done well in this stock, but neither has it been a disaster. My total return is 0.29% per year, with a capital loss of 2.72% per year and dividends of 3.01% per year.

When I look at insider trading I find $5M of insider selling and $0.5 of insider buying with $4.5M net insider selling. Selling is by CEO and officers. There seems to be only one officer with options and he seems to have done most of the insider selling at $3.3M. He is the Chief Operating Officer (COO).

The CEO has shares worth $4.3M and has options are worth $18.3M. The CFO has shares worth $0.3M and has options worth $0.4M. An officer has shares worth $2M and has options worth $0.6M. A director has shares worth $0.3M and no options. This is just to give you an idea on insider share ownership and option values.

The 5 year low, median and high median Price/Earnings Ratios are 10.51, 21.35 and 27.80. The current P/E Ratio is 21.00 based on stock price of $23.91 and 2013 earnings of $1.14 CND$ ($1.12 US$). On a relative basis, this is a reasonable P/E Ratio. However, an analyst pointed out that it is rather a high P/E Ratio for this company and I think that he is right. It is not a growth company and it has not grown much latterly.

I get a Graham Price of $16.96 and the 10 year low, median and high median Price/Graham Price Ratios are 1.27, 1.52 and 1.78. The current P/GP Ratio is 1.41 and this would show a relatively reasonable price. For value orientated a P/GP of 1.00 is the appropriate time to buy a stock. For growth companies, this is often unattainable. I do not consider this to be a growth company, so really, a P/GP of 1.41 shows that the company is a bit pricey.

The 10 Year Price/Book Value per Share Ratio is 1.81 and the current P/B Ratio at 2.13 is some 18% higher. On a relative basis this test shows that the stock price is rather high, but perhaps still reasonable. However, it does show that this stock price is in the high part of the reasonable range.

The 3 year median dividend yield is 2.47%. I am using the last 3 years because this is during the time of the lower dividend payments. The current yield is lower by 5% at 2.34%. Generally, you would want to the dividend yield to be higher than the median dividend yield, but this is close so suggests a relatively reasonable stock price that is a bit higher than the median.

For this stock I also took a look at the Price/Cash Flow per Share Ratio. The 10 year median P/CF Ratio is 6.99 and the current P/CF Ratio is some 19% higher at 8.34. (It is even worse if you look at the 5 year median P/CF Ratio. The 5 year median P/CF Ratio is 5.48 and the current one is some 52% higher at 8.34.) This shows that the stock is towards the top of the reasonable range or high on a relative basis.

When I look at the analysts' recommendations I find Strong Buy, Buy and Hold recommendations. The consensus recommendation would be a Buy. The 12 months consensus stock price is $25.11. This implies a total return of 7.36% with 2.34% from dividends and 5.02% from capital gains.

Some analysts feel that the company is being harmed by the economic environment. It certainly is not a good one for a lot of companies. Todd Bunton of Zacks.com gives a negative report on this stock because of the week 4th quarter of 2012. (The first quarter of 2013 was much better.) He also says that the stock valuation is not cheap. On a relative basis, the stock price is reasonable, but at a current 21.00, the P/E is rather high considering the low recent growth in this stock.

Jack Bass of Apprentice Millionaire Portfolio blog. He talks about a better performance for this company in the first quarter of 2013. In the short term, he does not expect great things from the stock. However, over the longer term, starting in 2014, he expects a much stronger performance on this stock. The Octagon blog talks about recent stock price rises for this company.

The analysts' recommendations configuration is the most common and most stocks have this configuration. I think that the price is rather high for this company. I expect it to be a solid performer, but I do not think it is a growth stock. However, its P/E and P/GP Ratios are what you would generally see as reasonable for growth stocks.

In hindsight I also probably paid too much for this stock. However, I think that it could be a solid performer in the future and so, I am holding on to my current stock. A lot has changed since I bought this stock, especially the dividend yield. I bought at a dividend yield of over 7% and it is now around 2.3%. See my spreadsheet at bin.htm.

They are a full-service waste management company providing non-hazardous solid waste collection and landfill disposal services for municipal, commercial, industrial and residential customers in five provinces and ten US states. Two-thirds of their business is in US. The fund operates through its subsidiaries. Five companies control almost 53% of this company. There are also 11M special shares outstanding. Its web site is here Progressive Waste.

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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