Thursday, July 4, 2013

CI Financial

On my other blog I am today writing about Dividend Companies and Diversification ...continue...

I do not own this stock CI Financial (TSX-CIX, OTC- CIFAF). I started to follow this stock because it was a Mutual Fund company. People talked about it being easier to make money from buying a Mutual Fund company than buying Mutual Funds. In 2009, it lost its listing on my dividend lists because of a dividend cut.

CI Financial became a public company in June 1994. They because an Income Trust in 2006 and effective January 1, 2009, CI converted back to a corporation. When the company converted from an income trust they dropped the dividends by over 70%. They have been raising the dividends since then and they are up by 6.3% per year. The last increase was in made in 2013 and it was for 6.3%.

For the 2012 financial year, the Dividend Payout Ratios were around 77% for earnings and 49% for cash flow. They have a good record of paying dividends and their DPRs are reasonable.

As far as debt ratios goes, the Liquidity Ratio is rather very low at a current one of 1.04. The Liquidity Ratio for the last financial year of 2012 was just 0.90. They current depend on cash flow to help with their Liquidity Ratio. The Debt Ratio is much better with a current ratio 2.29. The Debt Ratios has always been good. The current Leverage and Debt/Equity Ratios are good at 1.77 and 0.77.

When you look at growth, the 10 year growth is a lot better than the 5 year growth figures. Also, the 5 year running averages growth rates are better than the 5 year growth rates. For example, the earnings declined by 10.9% per year over the past 5 years. Earnings increased by 16.7% per year over the past 10 years. If you look at the growth of the 5 year running averages, you get a growth rate of 3.1% per year.

Shareholders have made money on this stock, although that has been at a low level over the past 5 years. The total return over the past 5 and 10 years is at 3.31% and 14.04% per year. The dividend portion of these returns was at 5.56% and 6.63% per year, respectively. There was a capital loss of 2.34% per year over the past 5 years, but a capital gain of 7.72% per year over the past 10 years.

When I look at analysts' recommendations, I find Strong Buy, Buy, Hold and Underperform. The consensus recommendation would be a Hold. The consensus 12 month stock price is close to that of today at $30.50. This implies a 4.3% total return with 1% from capital gain and 3.3% from dividends.

The 5 year low, median and high median Price/Earnings Ratios are 14.52, 16.49 and 19.74. The current P/E Ratio is 19.74 based on a stock price of $30.20 and a 2013 earnings estimate of $1.53. If you use the 12 month earnings based on first quarterly results the earnings rise only 1.6% from that of the financial year of 2012. Earnings estimates suggest a 23% increase in earnings for 2013.

I get a Graham price of $14.41. The 10 year low, median and high median Price/Graham Price Ratios are 1.47, 1.67 and 1.92. The current P/GP Ratio is 2.10. Both these stock price tests suggest that the stock price is a bit high.

According to an article in Daily Political, some analysts have recently upped the rating on this stock from underperform to hold. A couple of analysts are pointing out the fact that this company is 10% owned by BNS. This company seems well respected.

The price is rather high, but not wildly so. It would also seem that mutual fund companies are given strong competition from ETF market. See my spreadsheet at cix.htm.

CI Financial Corp. is a diversified wealth management firm and one of Canada's largest investment fund companies. CI is an Independent and Canadian-owned company. This company promotes and manages mutual funds and other investment products through its wholly-owned subsidiaries of CI Investments Inc., and Assante Wealth Management. CI became a public company in June 1994. It was then listed on the Toronto Stock Exchange. Its web site is here CI Financial.

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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