Methanex Corp.

First of all, I am writing this on December 23, 2013, but I do not know when I will be able to post it because my internet is down and had it has been down for a while. Rogers said that they should be able to restore it by later on tonight, but who knows.

On my other blog I am today writing about The Next Bear Market...continue...

I do not own this stock of Methanex Corp. (TSX-MX, NASDAQ-MEOH). I started a spreadsheet in November 2010 as I had read some good reports on the stock at that time. It is also got a solid "C" grade in a 2009 money sense review of stocks. Money Sense rated the top 100 Canadian Dividend Paying stocks. Money Sense was looking for stocks that provided generous income at reasonable prices.

Part of the problem with this stock for Canadian investors is that the dividend is paid in US$ so it will vary depending on the US$ to CDN$ currency exchange rate. The stock used to have a decent dividend with a decent growth rate. The 5 year median dividend yield is 2.9% and the 10 year median dividend yield is 2.4%. The 10 year growth in dividends is 10.9% per year in CDN$ and 14.2% per year US$.

Currently the dividend yield is rather low and the dividend growth rate is mediocre. The current dividend yield is just 1.4% and the 5 year dividend growth is 4% per year in CDN$ and 5.9% in US$. This is because of low or no growth in dividends in 2009 and 2010. The most recent dividend increase is not bad at 8.1% in 2013.

As far as total return goes, shareholders have done well over the past 5 and 10 years to date. The stock has increase by some 89% this year. The 5 and 10 year total return is at 37.45% and 17.49% per year with 34.34% and 15.22% per year from capital gains and 3.12% and 2.27% per year from dividends.

Outstanding shares have decreased by 1% and 2.8% per year over the past 5 and 10 years. Shares have increased due to stock options and decreased due to buy backs.

Revenue growth is not bad with the 5 and 10 years growth in Revenue per Share up by 4.2% and 13.4% per year over the past 5 and 10 years in US$. The 5 and 10 years growth in Revenue per Share is not as good in CDN$ with the growth at 4.6% per year and 8.3% per year over the past 5 and 10 years.

Earnings per Share is not as good as revenue, with EPS declining over the last 5 year by some 18% per year in CDN$. EPS is better over the past 10 years and is up by some 26.5% per year in CDN$. Here I am using the 5 year running averages as there was an EPS loss in 2012. The Cash Flow per Share is somewhat better than EPS with CFPS down by 1.5% per year over the past 5 years and up by 4% per year over the past 10 years in CDN$.

To the end of the Quarter 3 in 2013, Revenue, EPS and Cash Flow are all up. The best is Cash Flow which is up by 14% in US$ and then Revenue up by 6.2% in US$. EPS is positive and but is down by 70% over EPS in 2011.

The Return on Equity is negative in 2012 because of negative earnings in 2012. ROE based on the last 12 months to the end of Quarter 3 in 2013 is just 5.9%. However, analysts still expect it to be around 20% for 2013.

This company has a strong balance sheet with a current Liquidity Ratio of 2.39 and a current Debt Ratio of 1.80. This is important as companies with strong balance sheet can survive recessions better than companies with weak balance sheets. I wish the current Leverage and Debt/Equity Ratios were a bit lower, but they are ok at 2.25 and 1.25.

The 10 year low, median and high median Price/Earnings Ratios are 10.23, 12.76 and 15.29. The current P/E Ratio is 12.31 and this test suggests that the current stock price is reasonable. The current P/E is based on a current stock price of $59.94 and 2013 earnings estimate of $4.87. These are in CDN$.

I get a Graham Price of $42.58 CDN$. The 10 year low, median and high median Price/Graham Price Ratios are 0.84, 1.03 and 1.23. Based on a current stock price $59.94, the current P/GP Ratio is 1.41. This stock test suggests that the current stock price is rather high. The Graham price for 2014 is $45.66 and this give a P/GP of 1.31 and this still suggests that the stock price is rather high.

The 10 year Price/Book Value per Share Ratio is 2.15 and the current P/B Ratio is 3.62 a value some 70% higher. This stock price test suggests that the stock price is rather high.

The 5 year median dividend yield is 2.53% and the current dividend yield is just 1.42, a value some 44% lower. This test suggests that the stock price is rather high. I get the same results if I look at the historical high and low dividend yields which are 4.72% and 1.58%.

I think that this dividend growth stock is overpriced at this point in time. See my spreadsheet at mx.htm.

In order to get through all my stock reviews by the end of the year, I have to do 3 a week with one review having only one entry. For this week, I am doing only one entry on this stock.

Methanex is the world's largest supplier of methanol to major international markets in North America, Asia Pacific, Europe and Latin America. Methanol is an important ingredient in many of the essential industrial and consumer products. Head Office is in Vancouver, B. C. Canada. Its web site is here Methanex.

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.