Friday, December 27, 2013

Mullen Group Ltd. 2

On my other blog I am today writing about My Portfolio Index spreadsheet...continue...

I do not own this stock of Mullen Group Ltd. (TSX-MTL, OTC-MLLGF). I like to look at recommended small cap dividend paying stock to see if they would be a possible good investment now or in the future. The other thing to mention about this stock is that it recently converted from an income trust and has decreased it dividends. The reduction in dividend brought the Dividend Payout Ratios down to a place that would allow for the company to begin growing again.

When I look at insider trading, I find a very small amount of insider buying last May and no insider selling. There are not many outstanding options currently. There is insider ownership. For example, the Chairman of the Board has shares worth some $77.4M, the CEO has shares worth some $13.5M and the CFO has shares worth some $1M.

The 5 year low, median and high median Price/Earnings per Share Ratios are 11.82, 13.77 and 15.73. The current P/E Ratio is 16.69 based on a stock price of $28.20 and 2013 earnings estimate of $1.69. The P/E Ratio for 2014 is at 15.24, based on 2014 earnings estimates of $1.85 and stock price of $28.20. We are almost to 2014. Both the P/E Ratios for 2013 and 2014 suggest that the current stock price is rather high. On an absolute basis, the P/E Ratios are not that high.

I get a current Graham price of $19.77 and 10 year low, median and high median Price/Graham Price Ratios of 0.89, 1.09 and 1.33. The current P/GP Ratio is 1.43. The P/GP Ratio for 2014 is 1.36, based on a stock price of $28.20 and a Graham Price of $20.69. Both the P/GP Ratio for 2013 and 2014 suggest that the stock price is rather high.

The 10 year Price/Book Value per Share Ratio is 1.61 and the current P/B Ratio is 2.74, a value some 70% higher. This stock test suggests that the current stock price is rather high.

The 5 year median dividend yield is 4.44% and the current dividend yield is 4.26%. It is best if the current yield is above the 10 year median yield, but since the difference is just 4%, this test suggests that the stock price is rather reasonable.

The analysts' recommendations are Buy and Hold. There are a lot more Hold recommendations than Buy recommendations and the consensus recommendation would be a Hold. The 12 month stock price is $28.90 and this suggests a total return of 6.74% with 4.26% from dividends and 2.48% from capital gains.

An article in Proactive Investors talk about the good third quarter that the company had and the fact that the stock price is up by more than 30% this year. The Million Dollar Journey blogger has this stock in his portfolio.

I still like this company. They are doing well. The stock is up almost 35% so far this year. On some measures the stock is relatively overpriced. However, on my favourite measure, which is the dividend yield measure it is not. It is rather considered to be at a reasonable level. See my spreadsheet at mtl.htm.

This is the second of two parts. The first part was posted on Tuesday, December 24, 2013 and is available here.

Mullen Group Ltd. is a corporation that owns a network of independently operated businesses. Mullen is recognized as the largest provider of specialized transportation and related services to the oil and natural gas industry in western Canada and is one of the leading suppliers of trucking and logistics services in Canada - two sectors of the economy in which Mullen has strong business relationships and industry leadership. Its web site is here Mullen.

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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