IBI Group Inc

I am 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.

I do not own this stock IBI Group Inc. (TSX-IBG, OTC- IBIBF). I have had this stock on my list to investigate for some time. What finally prompted me set up a spreadsheet on this stock was an investment report I read in March of 2011. I cannot find the report of March 2011.

In my last review of this stock in September 2012, I pointed out the risk of too high Dividend Payout Ratio. The risk here is cutting of dividends. I seemed to have missed the risk of the Goodwill being a high percentage of the market cap. It was a 106% in the second quarter of 2012. When the Goodwill is this high a percentage of the market cap there is a risk of the company writing off Goodwill values.

In May of 2013, the company announced the suspension of its dividend. In the 2nd quarterly report released in August 2013, the company announced impairment charges on their carrying value of their goodwill and intangible assets. Since the write off is against goodwill and intangible values, I am recording on my spreadsheet both goodwill and intangibles against market cap.

The stock has been dropping sharply with a 52% loss in 2012 and to date in 2013 a 71% loss. In total, it is down some 84% since 2011. Because of the sharp drop in stock price, Goodwill and Intangible assets are some 330% of the market cap. This is not good.

Currently, the Liquidity Ratio is quite good at 3.54. However, the Debt Ratio is at 1.38 and this is low. The current Leverage Debt/Equity Ratios are too high at 3.63 and 2.63. This is not good. The positive thing I can say is that their revenue seems to be holding up.

When I look at insider trading, I find minimal insider buying and no insider selling. All the buying was around $6 and before April. There were also some buys by Subsidiary Executives for around $92,620 between April and June and some in September.

The Aperobot site talks about why IBI Group is in trouble and the suspension of the dividend.

When I look at analysts' recommendations, I find some Buy and Hold recommendations. Most the recommendations are a Hold, so the consensus recommendation would be a Hold. The 12 month target price is $3.36. This would be a total return of 79.68%. Dividends have been suspended and there is no indication on when they may resume.

The 5 year low, median and high median Price/Earnings Ratios are 11.26, 13.61 and 15.95. The current P/E Ratio is negative as this company is not expected to earning anything in 2013. The P/E for 2014 is 3.74 and this is quite a low P/E.

I get a current Graham Price of $6.92. The 10 year low, median and high median Price/Graham Price Ratios are 0.67, 0.90 and 1.11. These are low P/GP Ratios. On an absolute basis a P/GP Ratio of 1.00 or below shows that the stock price is good.

The 10 year Price/Book Value per Share Ratio is 1.32. The current P/B Ratio is 0.44 a value that is just 33% of the 10 year P/B Ratio. This says that the stock is cheap. A P/B Ratio of less than 1.00 on an absolute basis says that the stock is cheap.

I think that the stock is cheap, but I do not care for the debt ratios, or for the discounted value of the goodwill and intangible assets. See my spreadsheet at ibg.htm.

IBI Group Inc. is an international, multi-disciplinary provider of a range of professional services focused on the physical development of cities. The Company through IBI Group provides professional services, including planning, design, implementation, analysis of operations and other consulting services in relation to four main areas of development (urban land, building facilities, transportation networks and systems technology.) IBI Group Inc. holds an indirect 77% interest in IBI Group, a partnership (of a subsidiary of IBI Group Inc. and IBI Group Management Partnership). Its web site is here IBI Group.

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.