Monday, October 28, 2013

IGM Financial Inc 2

I am today putting up on my other blog my notes from the World Money Show 2013 in Toronto. I will put up these notes as I transcribe them here. The first notes will be from the opening ceremonies, which are some of the best speakers of this convention. The first one will be by Charles Githler continue...

I do not own this stock IGM Financial Inc. (TSX-IGM, OTC-IGIFF). I am following this stock because I used to own this stock. The stock was on Mike Higgs' list of dividend growth stocks and on the other Dividend lists at that time.

When I look at insider trading, I find $3.5M of insider selling and net insider selling at $3.5M. There is a minimal amount of insider buying. Most of the selling has been since May 2013 and it has been above $44.00. The company has also been busy buying back shares for cancellation. This company is part of Power Financial Corp (TSX-PWF) and Power Corp (TSX-POW). So the Desmarais Family own lots of this stock at around $7.8B.

The 5 year low, median and high median Price/Earnings per Share Ratios are 11.87, 14.23 and 16.30. The current P/E is 15.30 based on a stock price of $49.61 and 2013 earnings estimate of $3.07. This put the current P/E ratio between the median and high median 5 year P/E Ratios and suggests that the price is still reasonable.

I get a Graham price of $34.70 and the 10 year low, median and high median Price/Graham Price Ratios are 1.20, 1.32 and 1.58. The current P/GP Ratio is 1.43 based on a stock price of $49.61. This current ratio is between the median and high median 10 year P/GP Ratios and suggests that the stock price is reasonable.

The 10 year Price/Book Value per Share Ratio is 2.85. The current P/B Ratio is also 2.85 and this suggests that the current price is a median price and therefore reasonable.

The last stock price test I have is the dividend yield test. The current dividend yield is 4.3% based on a stock price of $49.61. The 5 year median dividend is 5.1% a value some 14% higher. The current yield is not that much higher than the 5 year median and suggests perhaps a reasonable price. It has to be 20% higher to suggest a high current stock price.

However, if you look at historical yields, the high and average is 6.99% and 4.12%. The current dividend yield is better than the historical average and this suggests that the stock price is good. For more information about this test see my recent blog about dividend growth.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The most recommendation is the Hold recommendation and the consensus recommendation would be a Hold. The average target price is $52.00. This implies a total return of 12.10% with 4.33% from dividends and 7.77% from capital gains.

The web site Zolmax says that CIBC just raised their stock rating for this stock to Section Perform. This is basically a Buy recommendation. (See my blog for information on analyst ratings .) There is an article in the Star Phoenix that talks about Paul Desmarais building an empire.

There is an article in the Financial Post that talks about why IFM might be a winner as investors transfer money from bonds to equities. The Dividend Guy talks about IGM Financial on the Seeking Alpha blog. In May of last year, the Dividend Ninja talks about the differences between this company, IGM Financial, and CIX and AGF.

This is a good company at a reasonable price. You probably should not buy if you have Power Financial (TSX-PWF) or Power Corp (TSX-POW) as both these companies have a large stake in IFM Financial. See my spreadsheet at igm.htm.

This is the second of two parts. The first part was posted on Wednesday, October 23, 2013 and is available here.

This is a premier mutual fund, managed asset and personal financial services company. The company has three operating units, Investors Group, Mackenzie Financial Corporation and Investment Planning Counsel Inc. IGM Financial Inc. is a member of the Power Financial Corporation group of companies. Its web site is here IGM 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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