Friday, July 5, 2013

Home Capital Group

On my other blog I am today writing about Air Canada and airplane stocks ...continue...

I do not own this stock Home Capital Group (TSX-HCG, OTC-HMCBF). I started reviewing this company in September 2009. It is a dividend paying company and was coming up on lists of good dividend paying stocks. It is on some dividend paying companies lists that I look at.

The company has a good history of increasing dividends. The 5 and 10 year growth in dividends is 15% and 31% per year. The last increased occurred in 2012 and the increased was for 18%. The Dividend Payout Ratios are also good, with 5 year medians at 14% for earnings and 16% for cash flow.

One thing though, the yield is low. The 5 year median is 1.8%. However, the dividend yield on this stock has also spent time with a yield under 1%. The current dividend yield is also 1.8%.

Shareholders have done well, especially over the past 10 years. The 5 and 10 year total returns are at 8.5% and 25.22%. The dividend portion of this return was 1.39% and 1.88%, respectively. The capital gains portion of this return was 7.11% and 23.34%, respectively.

The number of shares outstanding has barely changed over the past 5 and 10 years. The shares have increased due to Stock Options and decreased due to buy backs. All the growth figures are very good.

Revenue per Share has increased by 10% and 17.8% per year over the past 5 and 10 years. Earnings per Share have increased by 19.8% and 16.8% per year over the past 5 and 10 years. Cash Flow per Share has increased by 29% and 29.7% per year over the past 5 and 10 years.

The Return on Equity is at 22.9% for the financial year ending in 2012. The 5 year median ROE is at 24.1%. The ROE based on comprehensive income is close at 23.5% for the financial year ending in 2012.

The Liquidity Ratio has not much importance for financial stocks as it does for other types of stocks and it is fine for this stock. The Debt Ratios are rather typical for financial stocks with the current ratio at 1.06. The current Leverage and Debt/Equity Ratios are rather high at 18.95 and 17.95, but these are rather typical for financial stocks.

This stock seems to have done amazingly well for its shareholders. There is an interesting report I found called Donville Kent ROE Reporter. It has good things to say about this stock. See the pdf report. It is rather a long report, so you should do a find on "Home Capital" to find out what they say about this company.

However, I must admit that in putting together information from the financial statements for my spreadsheet was not easy. I could not find all that I was looking for. I viewed G&M and Google looked at values they got. They did not agree on items and I could not figure out how they got the values that they got in some instances. See my spreadsheet at hcg.htm.

This is the first of two parts. Second part will be posted on Monday, July 8th 2013 and will be here.

Home Capital Group Inc. operates through one subsidiary, Home Trust Company, to provide mortgage lending, deposit, retail credit and credit card issuing services. They have subprime mortgages. Its stock is widely held. Its web site is here Home Capital.

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.

3 comments:

  1. I own HCG shares. The P/E is very compelling at around 8.5, with continuing revenue and earnings growth. I just bought a few months ago but I'm already up about 8%. Great company.

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  2. Seems like a great company. I will look at the price on Monday.

    Susan

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