Alliance Grain Traders Inc

On my other blog I am today writing about diversification ...continue...

I do not own this stock Alliance Grain Traders Inc. (TSX-AGT, OTC-AGXXF). I wanted to review all the income trust stocks touted in the 2009 Money Show. There was a lot of talk at this show about some of the Unit Trust being currently good buys with very good yield. This stock has already converted to a corporation in 2009.

As an income trust the yield was around 7% and then it declined to 2% with the change to a corporation. The 5 year median dividend yield is 2.84%. However, the current dividend yield is 4.39% as the stock price has been on the decline.

There was some initial dividend growth and this stock has 5 and 10 year dividend growth at 3.3% and 6.4% per year. The last dividend increase was for 11.1% and was in 2011. There was no dividend increased in 2012 and no so far in 2013. Analysts do not expect any increases in 2013. (Note that this stock went on the stock exchange in 2005, so there are no 10 year statistics for this stock.)

Earnings have not been good over the past few years and so the Dividend Payout Ratios for Earnings has been high. The DPR for earnings for 2012 was 176%. The DPR for earnings 2013 is expected to be 57% and for 2014 at 43%. The 5 year median DPR for cash flow is 42% and is expected to be 30% in 2013.

Shareholders have made some money on this stock. The total return over the past 5 and 8 years is at 10.67% and 19.86% per year. The dividend portion of these returns is at 5.08% and 7.11% per year over the past 5 and 8 years. The capital gains portion of these returns is at 5.59% and 12.75% per year over the past 5 and 8 years.

The outstanding shares have increased by 25.6% and 1880% over the past 5 and 7 years. Most of the increase is for issuance of units and shares. There has been some increase due to stock options. Revenue growth has been quite good, cash flow growth has been ok and there has not been much in the way of earnings growth over the past 5 years.

The growth in revenue is at 28% and 27% per year over the past 5 and 10 years. The cash flow growth is at 9.8% and 0% per year over the past 5 and 7 years. (The 5 year running growth over the past 3 years is at 4.5% per year.) EPS growth has been at a negative 18% per year over the past 5 year and at 8.7% per year over the past 7 years. (The 5 year running growth for earnings is at a negative 3% per year over the past 3 years.)

The Return on Equity was good until 2010. The 5 year median is at 6.1% and the ROE for the financial year of 2012 is at just 2.5%. The 12 month ROE at the first quarter of March 2013 is even lower at 1.5%. The ROE on comprehensive income has been inconsistent with the ROE on net income. Sometimes it was better and sometimes it was worse.

The Liquidity Ratio has often been low and as only 1.19 for the financial year of 2012. However, the current ratio is much better at 1.73. The Debt Ratio has been good and the one for 2012 was 1.61 and the current one is 1.57. The current Leverage and Debt/Equity Ratios are fine at 2.75 and 1.75.

A lot of x-income trust stocks are having a rough time switching to stock companies. This company is in agriculture and this is not a common type of stock for the TSX. I feel that this company has been in business too short of time to really get a good idea how it will perform over the longer term. See my spreadsheet at agt.htm.

This is the first of two parts. Second part will be posted on Wednesday, July 10, 2013 and will be here.

Alliance Grain Traders Inc through its subsidiaries, Alliance Pulse Processors Inc. ("Alliance") and Arbel Group ("Arbel"), is engaged in the business of sourcing and processing (cleaning, splitting, sorting and bagging) specialty crops, primarily for export markets. Alliance and its subsidiaries in Canada, U.S., Australia and Turkey handle the full range of pulses and specialty crops including lentils, peas, chickpeas, beans and canary seed through six processing plants. The company recent bought the Arbel Group of Mersin, Turkey. Its web site is here Alliance Grain Traders.

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.