Monday, May 13, 2013

Progressive Waste Solutions Ltd

On my other blog I am today writing about how Money is Freedom...continue...

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 bought the company, it was an income trust. It converted to a corporation in 2009 and dropped the dividends some 72%. This moved the Dividend Payout Ratios to good values, with the DPR for earnings around 68% and the DPR for cash flow to around 19%. (See my site for information on Dividend Payout Ratios).

The company raised its dividend in 2011 by some 13%. There were no increases in 2012. Some analysts feel that this company will start raising dividends again and feel it is possible this year, but more likely in 2014 and 2015. I have seen no sign of an increase as they have declared the third dividend for this year and it is the same as the current dividend.

The decrease in dividends moved the median dividend yield from a 6 to 7% to a 2 to 3% range. This is a much lower dividend yield range and with this lower range you would expect the company to growth more. However, we are in difficult economic times for a lot of companies.

The company really has not gone anywhere over the past 5 years as far as total returns go. The total returns are a negative 0.83% and positive 15.10% over the past 5 and 10 years. The dividend portion of these returns is 3.42% and 8.96% per year over the past 5 and 10 years. There is a capital loss of 4.25% per year over the past 5 years and a capital gain of 6.14% per year over the past 10 years. As you can see most of the past great returns were dividends rather than capital gains.

The company's 2013 guidance is 5.4% to 6.5% growth. With the current dividend yield at 2.3%, that would be an equal to a total return of 7.7% to 8.8%, which is acceptable for a dividend paying stock. The first quarterly statements for 2013 are in and the company has increased the EPS, revenue and CF when comparing the last 12 months values with the value for the 12 months ending in 2012.

Over the past 5 and 10 years shares have increased by 14.8% and 15.8% per year. Shares have increased due to stock options and issuance of shares (for acquisitions) and have decreased due to buy backs. This company reports in US dollars. Because of currency exchange rate changes, this company has done better in US$ terms than in CDN$ terms.

Revenues have increased by 16 and 29% per year in CDN$ over the past 5 and 10 years. Revenues per share have increased by 1% and 11% per year over the past 5 and 10 years. Revenues per share sort of plateaued 5 years ago and if you look at the 5 year running average Revenue per Share over the past 5 years, this has increased by 6%.

Earnings per Share have increased by 3.7% and 9.6% per year in CDN$ over the past 5 and 10 years. Here again, this company has done better in US$ terms and CDN$ Terms. Cash Flow per Share has decreased by 1.5% per year over the past 5 years and increased by 11.8% per year over the past 10 years. CFPS has not gained much over the past 5 years. If you look at the 5 year running averages for CFPS, there is an increase of 4.5% per year.

The Return on Equity is rather low on this company and it has always been rather low. The ROE is 7.4% for the 2012 financial year. It is not much better for the last 12 months at 8%. The 5 year median ROEs are 5.3% and 7.4%, respectively. A good point is that the ROE on comprehensive income is higher than that for the ROE on net income. For the 2012 year, the ROE on comprehensive income is 8.5% with the one for the past 12 months at 8.5% also.

The debt ratios are fine on for this company. The current Liquidity Ratio is a little low 1.11. However it has often been lower with a 5 year median value of just 0.83. If you include cash flow after dividends, the Liquidity Ratio is much better with a current one at 2.03. The Debt Ratio is good with a current one of 1.59. This ratio has always been good.

The current Leverage and Debt/Equity Ratio are fine at 2.70 and 1.70. These ratios have, in the past, been higher. (With these ratios, you want low ratios.)

Over the last 5 years, stock has not been doing well. However, I still think that it does have long term potential. This company is into waste disposal, so it is never going to be a high flyer, however I do not expect the stock to be a solid long term performer. 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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