Monday, April 28, 2014

Manulife Financial Corp.

On my other blog I am today talking about the Stock Price Targets continue...

I own this stock of Manulife Financial Corp. (TSX-MFC, NYSE-MFC). In May 2005, I was look for good companies to buy at a reasonable price. This stock met my criteria. I bought some more stock in Oct 2005. I had some more money to spend and wanted to buy stock of dividend paying company I owned, for which I did not own too much. In April 2009, I was looking for something else to buy and Manulife was at a good price. In April 2013, I need to buy higher dividend stocks for my RRIF account. There was some money after RRSP sells, so I bought more MFC.

When this company ran into trouble in 2008, the new CEO decided to cut the dividends by 50% in 2009. Until that time this stock was considered a dividend growth company. Since the cut in 2009, the dividends have remained stable. However, some analysts believe that this company will start to raise the dividends in 2014 or in 2015.

When this company was a dividend growth company, the dividend yield was rather low at a median of 1.9% and with a median increase of around 21%. Since then the median dividend yield has been around 3.5% because of the drop in the stock's price.

The 5 year median Dividend Payout Ratios for EPS is at 95% and for CFPS is at 9.9%. The DPR for 2013 was at 32% for EPS and at 9.9% for CFPS. The current DPR for earnings is in line with what the DPR for EPS used to be before 2008.

My total return is quite lousy at a negative 0.26% per year. The portion of the total return attributable to dividends is 2.48% per year and the total return attributable to capital loss is at 2.74% per year.

The 5 and 10 year total return is at 3.96% per year and a negative 0.2% per year. The portion of this total return attributable to dividends is at 2.62% and 2.69% per year. The portion of this total return attributable to capital gains over the past 5 years is at 1.34% per year and the portion of this total return attributable to capital loss over the past 10 years is at 2.89% per year.

The outstanding shares have increased by 2.8% and 7.2% per year over the past 5 and 10 years. Shares have increased due to Stock Options, DRIP and Share Issues. Shares have decreased due to Buy Backs.

Revenue has grown but not the Revenue per Share. The Net Income and EPS, especially over the past 5 years appear to have grown, but if you look at 5 year running averages over the past 5 and 10 years you get a very different story with no growth. For Cash Flow and Cash Flow per Share there is growth, especially for Cash Flow.

Revenue is up by 1.9% and 8.2% per year over the past 5 and 10 years. Revenue per Share is down by just under 1% and up by 1% per year over the past 5 and 10 years. Revenue has been fluctuating but not really growing lately. Analysts only expect some slight increases going forward.

EPS is up by 38% per year over the past 5 years, but over the past 5 year, the 5 year running averages for EPS is down by 20.15% per year. This is because earnings were very low 5 years ago. There is not so much discrepancy with 10 year EPS, but EPS is 0% for last 10 years, but on a 5 year running average EPS is down by 7% per year. The EPS have been recovering over the past few years.

Cash Flow is up by 8.6% and 18% per year over the past 5 and 10 years. The CFPS is up by 5.7% and 10% per year over the past 5 and 10 years.

In 2013 the Return on Equity is 10.9%. This is the first year since 2008 that the ROE has been at 10% or above. The ROE on comprehensive income is even better for 2013 at 17%. This is a good sign.

The Liquidity Ratio is of low importance on financial stocks; however, there seems no doubt that current assets will cover current liabilities. The Debt Ratio at 1.06 is rather normal for a financial stock. The Leverage and Debt/Equity Ratios are rather high at 17.69 and 16.69, but this is rather normal for a financial stock.

This life insurance company is recovering, but we still have the problem of very low interest rates. Many people believe that very low interest rates are going to be with us for a while longer. See my spreadsheet at mfc.htm.

This is the first of two parts. The second part will be posted on Tuesday, April 29, 2014 and will be available here. The first part talks about the stock and the second part talks about the stock price.

This is a life insurance company in the financial services business. It offers financial protection products (e.g. Life Insurance) and wealth management services (i.e. segregated funds, mutual funds and pension products). They sell products to individuals and business. Its web site is here Manulife.

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.

1 comment:

  1. a stock price target cna be helpful but isn't really that indicative of how well or poor a stock will perform. Though it's nice to know a potential upside