BCE Inc. 2

I own this stock of BCE Inc. (TSX-BCE, NYSE-BCE). This is one of first stocks I bought, which was in 1982. At that time is was called an orphan and widow stock. It is not easy to figure out what I have earned on this stock because it has spun off shares for Nortel and Bell Aliant. The annoying thing with their spin offs is you always end up with an odd number of shares.

When I look at insider trading report, I find $21.5M of insider selling and $20.4M of net insider selling with $1.2M of insider buying. Insiders not only have stock options, but also other stock option type vehicles called Performance-based Restricted Share Units, Restricted Share Units and Deferred Share Units.

There is some insider ownership with the CEO having shares worth around $2.3M, the CFO having shares worth around $0.3M and a director having shares worth around $1M. In 2013 outstanding shares were increase by 421,000 shares with a book value of $14M and this number of shares being worth $19.4M at the end of 2013. In 2012 outstanding shares were increased by 1.3M with a book value of $43M and this number of shares being worth some $55.3M at the end of 2012.

Although I must admit that taken together the increase in outstanding shares for 2013 and 2012 total less than one quarter of one percent of the company's market cap, however, the value of these shares do total up to some serious money.

The 5 year low, median and high median Price/Earnings per Share Ratios are 11.64, 12.47 and 13.74. The current P/E Ratio is 15.20 based on a stock price of $47.89 and 2014 earnings estimate of $3.15. This stock price test suggests that the stock price is high.

I get a Graham Price of $32.57. The 10 year low, median and high median Price/Graham Price Ratios are 1.04, 1.21 and 1.32. The current P/GP Ratio is 1.47 based on a stock price $47.89. This stock price test suggests that the stock price is high.

I get a 10 year Price/Book Value per Share Ratio of 2.03 and a current P/B Ratio of 3.20. The current P/B Ratio is based on a stock price of $47.89 and a BVPS of $14.97. The current P/B Ratio is some 58% higher than the 10 year P/B Ratios. This stock price test suggests that the stock price is high.

I get a 5 year median dividend yield of 5.31%. The current dividend yield is 5.16%, a higher value but only higher by 3%. This stock price test suggests that the stock price is reasonable. I get an historical median dividend yield of 5.38% and the current dividend yield is only 4% higher. This stock price test suggests that the stock price is reasonable.

When I look at analysts' recommendations, I find Buy and Hold recommendations. The consensus recommendation would be a Buy. The 12 month stock price target is $48.40. This implies a total return of 6.22% with 5.16% from dividends and 1.06% from capital gains. For a Buy recommendation, the 12 month stock price consensus does not give much in the way of a total return, especially from capital gains.

A Motley Fool article by Benjamin Sinclair talks about the telecoms being a good investment currently, but things could change. The blogger called The Dividend Engineer gives his view of this stock. The blogger Sunny does not like BCE and she explains why. Sunny always has a unique way to view investing. The blogger at How to Invest Online also has a unique point of view on stocks.

By a number of standard tests the stock price is rather high. However, using the 5 year median dividend yield and an historical median dividend yield, the stock price is in the reasonable range for price. I think that there might be volatility in the telecoms market because the government is pushing for better pricing. It is hard to see how this will end. Therefore you have to wonder if cost and rewards are lining up for this stock. See my spreadsheet at bce.htm.

This is the second of two parts. The first part was posted on Wednesday, April 02, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

BCE is Canada's largest communications company, providing the most comprehensive and innovative suite of communication services to residential and business customers in Canada. Operating under the Bell and Bell Aliant brands, the Company's services include Bell Home phone local and long distance services, Bell Mobility, Virgin Mobile and Solo Mobile wireless, high-speed Bell Internet, Bell TV direct-to-home satellite and VDSL television, IP-broadband services and information and communications technology (ICT) services. Its web site is here BCE.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.