Teck Resources Ltd

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I do not own this stock Teck Resources Ltd (TSX-TCK.B, NYSE-TCK), but I have in the past. In 2008, I wanted to cover some resource stocks and this is one that I decided to take a look at. I bought this stock in 2008 and sold in 2009. I bought this stock because the company purchased Fording Canadian Coal Trust at exactly the wrong time and got into financial difficulties and the stock price dropped off a cliff as they had to cut dividends. When the stock recovered somewhat in 2009, I sold for a profit.

The first thing to discuss is dividends. I have information from 1993 and from then to 2004 the dividends were level. Between 2004 and 2006 dividends increased 900% (from $0 .10 to $1.00 per share, annually). Dividends were then level until they stopped in 2008. Since dividends were restarted in 2004, they have increased by 350% ($0.20 to $0.90 per share, annually).

The current dividend yield is 3.23% based on a stock price of $27.84. The last dividend increases was 12.5% and was made in 2013. The 5 year median dividend yield is 1.29%. This is a resource stock so dividend volatility does not surprise me.

The Dividend Payout Ratios are fine. The DPR for Earnings per Share for 2012 was 58% and for Cash Flow per Share for 2012 was at 14.6%.

Have shareholder made any money on this stock? If you look at this stock to the end of 2012, the total return over the past 5 and 10 years is at 2.11% and 24.02% per year with 1.46% and 4.03% per year from dividends and 0.65% and 20.00% from capital gains.

If you look at this stock to date with a current stock price of $27.84, shareholders have made 39.29% and 13.34% per year, with 3.45% and 3.66% from dividends and 35.84% and 9.68% per year from capital gains. It would seem that perhaps the long term holding of this stock might be profitable.

Shares outstanding have increased by 5.6% and 4.7% per year over the past 5 and 10 years. Shares have increased due to stock options and share issues. They have decreased due to buy backs. There are two classes of shares. Class A shares have 100 votes per share and Class B shares have one vote per share. Norman Bell Keevil, Caisse de dépôt et placement du Québec, Sumitomo Metal Mining Co. Ltd. and Temagami Mining Company own around 85% of Class A shares.

Revenues and Revenues per share have grown nicely, with Revenues up by 10% and 17% per year over the past 5 and 10 years and Revenues per Share up 4% and 12% per year over these periods. Over the past 5 years, using 5 year running averages and Revenues per Share is up almost 8%.

Earnings per share have not done as well, especially over the past 5 years. There is a big difference between the 5 year running averages increase and 5 year increase so I will talk about the 5 year running average growth over the past 5 years and it is 0%. The EPS have grown by 11% over the past 10 years.

Cash Flow has grown by 4% and 26% per year over the past 5 and 10 years. If you look at the growth in 5 year running averages, growth is at 10% and 22% per year over these periods, respectively.

Return on Equity has varied a lot over the years. The 5 year median ROE is at 12.2%. However, 2012 was not a good year and that year's ROE is just 4.8%. If you look at ROE for the last year ending in June 2013, ROE is even lower at 3.8%.

There has been some variance between the ROE on net income and on comprehensive income. The ROE on comprehensive income for 2012 is 4.1%, some 15% lower. This is not far off. The difference between ROE on net income and comprehensive income for the year ending in June 2013 is 1.6%.

The last thing to look at is debt ratios and these are very good. The Liquidity Ratio is currently at 3.61. The Debt Ratio is at 2.11. The current Leverage (A/BK) and Debt/Equity Ratios are low and good at 1.90 and 0.90, respectively. These debt ratios will allow the company to ride out most economic problem times.

What I see in this stock is good debt ratios, good dividends and volatility. See my spreadsheet at tck.htm.

This is the first of two parts. Second part will be posted on Wednesday, September 11, 2013 and will be here.

Teck is a diversified resource company involved in mining and mineral development with major business units focused on copper, metallurgical coal, zinc, gold and energy. This company has interests in several oil sands developments. The company explores for resources in the Americas, the Asia Pacific Region, Europe and Africa. Its web site is here Teck.

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.