Tuesday, June 4, 2013

Genivar Inc 2

I own this stock of Genivar Inc. (TSX-GNV, OTC- GNVUF). I bought some of this stock a couple of times in 2011. I do not have many shares, but I have made a return of 9.94% per on this stock. Of that total return, 3.51% per year is capital gains and 6.43% per year is dividends.

When I look at insider trading, I find no insider selling and some insider buying ($0.5M). It occurred recently at around $24.00. Insiders own quite a bit of stock in this company. There seems to be no options given out at all.

The CEO has shares worth $20M. The CFO has shares worth $.03M. An officer has shares worth $14M and another officer owns shares worth $13M. Directors seem to have little in the way of shares. This is just to give you an idea on insider share ownership. Both Caisse de dépôt et placement du Québec and Canada Pension Plan Investment Board seem to own around 15% of the outstanding shares each.

The 5 year low, median and high median Price/Earnings per Share Ratios are 10.61, 14.35 and 17.90. The current P/E Ratio 16.16 based on a stock price of $24.88 and 2013 EPS estimates of $1.54. I get a Graham Price of $25.07. The 10 year low, median and high median Price/Graham Price Ratios are 0.79, 1.07 and 1.27. The current P/GP is 0.99. Both these tests show that the stock price is reasonable, with one test showing the stock price above the median and one below.

I get a 10 year Price/Book Value per Share Ratio of 1.77 and the current P/BV Ratio is 1.37, a value only 78% of the 10 year median Ratio. The current dividend yield is 6.03% and the 5 year median dividend yield is 5.41% a value some 11% lower. The P/BV test shows that the current stock price is relatively cheap. The second dividend yield test shows that the stock price is reasonable to cheap.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. Most of the recommendations are a Buy and the consensus recommendation would be a Buy. The 12 month consensus stock price is $25.70. This implies a total return of 9.32%, with 6.03% from dividends and 3.3% from capital gains.

Genivar plans to reorganize the company and change the name to WSP Global. Some analysts see this reorganization in a positive light and think that Genivar will deliver on its growth targets. This stock is being talked about at Canadian Money Forum. Some analysts also like it on Stock Chase.

Watch List News talks about analysts recently raising the 12 months stock price for this stock. This engineering company has also confirmed allegations that it "engaged in "inappropriate conduct" several years ago in the financing of political parties in Quebec and the awarding of municipal contracts as outlined in recent allegations to the province's corruption inquiry". See news item on Tonight Newspaper.

So my stock price testing shows that this stock is reasonable to cheap. See my spreadsheet at gnv.htm.

This is the second of two parts. The first part was posted on Monday and is available here.

Genivar Inc. is an engineering services firm providing private and public-sector clients with a complete range of professional consulting services throughout all project phases, including planning, design, construction and maintenance. Mainly in Ontario and Quebec, but has some international exposure. Its web site is here Genivar.

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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