Badger Daylighting Ltd

On my other blog I am today writing about investing in a few good companies...continue...

I do not own this stock Badger Daylighting Ltd (TSX-BAD, OTC-BADFF). I started to follow this stock after reading a couple of articles in February 2012 in the G&M that talked about the company. The first article looked at what the pros who manage small-cap funds are buying. Badger was one of 10 stocks mentioned and it looked like an interesting stock. It is a dividend paying small cap. The second article looked at what stocks might appeal to a conservative investor looking for income.

This company used to be an income trust. It changed to a corporation in 2010 and reduced the dividends by some 19%. This was after the dividends had been held flat since 2008. In 2012 they raised the dividend by 5.9%. This is a very good sign that they have started to raise dividends again. The dividend raise was at the end of 2012 and so far there has been no raise of dividends in 2013.

The Dividend Payout Ratios, after peaking in 2010 have been declining. The 5 year median DPR for earnings is 69% and for cash flow is 35%. For 2012 these ratios were at 43% for earnings and at 25% for cash flow.

The dividend yield has been fall dramatically. The company has a 5 year median dividend yield of 6.67%. The current dividend yield is 1.94%. This is because the stock price is up some 80% this year.

The total return over the past 5 and 10 years is at 12.11% and 50.48% per year. The capital gains portion of this return is 7.32% and 33.47% per year and the dividend portion of this return is 4.08% and 17.01% per year, respectively. Going forward it would appear that there would be far less return from dividends and more from capital gains.

The outstanding shares have increased by 2.8% and 2.1% per year over the past 5 and 10 years. The increase in outstanding shares has occurred because of stock options and shares issues. This company has had good growth over the past 5 and 10 years.

Revenues have grown at 15% and 17% per year over the past 5 and 10 years. Revenue per Share has grown at 12% and 15% per year over the past 5 and 10 years. Earnings are up by 9% and 44% per year over the past 5 and 10 years. However, if you look at 5 year running averages, the growth over the past 5 and 10 years is at 10% and 29% per year for earnings.

For cash flow per share, using the 5 year running averages, the growth is at 10% and 15% per year over the past 5 and 10 years. Book Value has also grown well with growth at 16% and 13% per year over the past 5 and 10 years.

The Return on Equity for this company is at 20.1% for the financial year ending in 2012. The ROE on comprehensive income is not far behind, with the ROE at 19.2%. If you look at ROE for the last 12 months ending at June 2013, the ROE is 20.4% for both net income and comprehensive income.

The debt ratios are currently very good on this stock. The current Liquidity Ratio is 2.68 and the current Debt Ratio is 2.42. The current Leverage and Debt/Equity Ratios are also very good at 1.70 and 0.70.

This company is doing very well. They have very good growth and they have started to raise their dividends again. See my spreadsheet at bad.htm.

This is the first of two parts. Second part will be posted on Tuesday, August 27th, 2013 and will be here.

Badger is North America's largest provider of non-destructive excavating services. Badger traditionally works for contractors and facility owners in the utility and petroleum industries. Badger's business model involves the provision of excavating services through two distinct entities: the Operating Partners (franchisees in the United States and agents in Canada), and Badger Corporate. Its web site is here Badger Daylighting.

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.