Progressive Waste Solutions Ltd. 2

On my other blog I am today writing about testing a stock price using the 5 year median dividend yield continue...

I own this stock of Progressive Waste Solutions Ltd. (TSX-BIN, NYSE-BIN). I first bought this stock in 2007 because TD Securities had a very favorable report on this stock and had it on it action buy lists. I had money because I had recently sold RIM. At that time it was an income fund. In 2010, I needed to buy something for Pension Acct. I have this already and it is on TD Action Buy List.

The outstanding shares were increased due to stock options and restricted shares by 77,000 shares. Restricted Shares are share based compensation. The Book Value of these shares is $348,000 and these shares were worth $2,022,790 at the end of 2013.

When I look at insider trading, I find $2.1M of insider selling and $1.5M of insider buying with net selling at $0.6M. Net selling is very low. There is some insider ownership with the CEO having shares worth around $4.6M, the CFO have shares worth around $0.7M and officer having shares worth around $1.5M and the Chairman having shares worth around $1.7M.

There is also two 10% holder with IESI Corporation owning $239M worth of shares or 9.7% of the outstanding shares and Progressive Waste Solutions Ltd. owing shares worth $125M or 5.1% of the outstanding shares. (IESI Corporation is what this corporation is known as in the US.)

The 5 year low, median and high median Price/Earnings per Share Ratios are 19.08, 22.58 and 26.08. These P/E Ratios are lower than the 10 year low, median and high median P/E Ratios. The current P/E Ratio is 23.72 based on a stock price of $28.41 and 2014 EPS estimates of $1.20. This stock price test suggests that the stock price is reasonable.

I get a Graham Price of $11.15. The 10 year low, median and high Price/Graham Price Ratios are 1.29, 1.53 and 1.79. The current P/GP Ratio is 1.56 based on a stock price of $28.41. This stock price test suggests that the stock price is reasonable.

I get a 10 year Price/Book Value per Share ratio of 1.92. The current P/B Ratio is 2.32 based on a stock price $28.41 and BVPS of $12.23. The current P/B Ratio is some 21% higher than the 10 year P/B Ratio and this stock price test suggests that the stock price is high.

The current dividend yield is 2.11% and the 5 year median dividend yield at 2.47% is some 14.4% higher. This stock price test suggests that the stock price is still reasonable, but towards to high end of the reasonableness range. Because this stock was previously an income trust, historical dividend yields do not enlighten us on the reasonableness of the current stock price.

When I look at analysts' recommendations I find Strong Buy, Buy, Hold and Underperform Recommendations. The consensus recommendation would be a Buy recommendation. The 12 month consensus stock price target is $30.75. This implies a total return of 10.35% with 2.11% from dividends and 8.24% from capital gains.

Barry Schwartz, Chief Investment Officer and Portfolio Manager, Baskin Financial Services picks this stock as one has his top picks. He thinks it might be a takeover target. I hope not as I would rather continue to hold this stock rather than have it taken out of the market. According to market watch, RBC Capital raised their target price on this stock from $29 to $31.

The stock price is reasonable to expensive. I will continue to hold on to the shares I have but I have no plans at present to buy any more. See my spreadsheet at bin.htm.

This is the second of two parts. The first part was posted on Tuesday, May 27, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

They are a full-service waste management company providing non-hazardous solid waste collection and landfill disposal services for municipal, commercial, industrial and residential customers in five provinces and ten US states. Two-thirds of their business is in US. Its web site is here Progressive Waste.

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.

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