Wednesday, June 4, 2014

Ag Growth International

On my other blog I am today writing about possible cheap dividend stocks to buy continue...

I own this stock of Ag Growth International (TSX-AFN, OTC-AGGZF). I wanted to review all the income trust stocks touted in the Money Show of 2009. There was a lot of talk at this show about some of the Unit Trust being currently good buys with very good yield. Its median yield in 2009 was 7.9%. It is on the Canadian Dividend Aristocrats and this is why I first investigated this company. By 2011 when I bought this stock, I have been interested in AFN for some time. It has a high dividends but probably riskier than average.

The current dividend yield is still quite high at 5.27%. Like a lot of old income trust companies, this company is having a hard time paying for the dividends that it could afford as an income trust. The dividends have not increased since 2012. I am hoping that this stock will again be a dividend growth stocks once it brings it DPR under control.

The Dividend Payout Ratios are too high. The DPR for EPS for 2013 was 137%. This is better than for 2012 when it was 175%. Analysts expect that DPR for EPS will fall to 83% in 2014. However, the first quarterly earnings were a disappointment.

The other thing about old income trusts was that the people at the money shows were right. There was good money to be made in old income trust stock. My total return on my investment in 2011 in this stock is at 17.8% per year with 10.96% per year from capital gains and 6.84% per year from dividends.

The total return from this stock over the past 5 and 10 years is at 11.56% and 24.02% per year. The portion of the total return attributable to capital gains is at 5.52% and 13.89% per year over these periods. The portion of the total return attributable to dividends is at 6.04% and 10.13% per year over these periods.

The outstanding shares have not increased over the past 5 years, but have increased by 3% per year over the past 9 years. Shares have increased due to Debenture Conversions, Stock Options and Share Issues. They have decreased due to Buy Backs.

Growth in Revenues, Earnings and Cash Flow is ok to good. Revenue has grown at 19.5% and 15.2% per year over the past 5 and 10 years using 5 year running averages. Since this company became a stock company in 2004, I just have a maximum 9 year in data except for revenue.

Over the past 5 years, EPS is up by 8.86% per year over the past 5 year using 5 year running averages. EPS is up by 4.58% over the past 10 years. CFPS is up by 11.9% per year over the past 5 years using 5 year running averages. CFPS is up by 15.5% per year over the past 9 years. For both EPS and CFPS the exact 5 year growth is lower and at 1.3% per year and 4.3% per year respectively.

Over the past 10 years Return on Equity was below 10% in two years. The ROE for 2013 was at 11.5% and the 5 year median ROE is at 16.1%. The ROE on comprehensive income is higher for 2013 at 15.1% and its 5 year ROE is at 15.1%.

The Liquidity Ratio has varied but it usually is quite good. Not so in 2013 when it was just 1.32. This was because convertible unsecured subordinated debentures issued in 2009 had come due. The Liquidity Ratio was back to being higher in the first quarter of 2014 at 2.43. The Debt Ratio has always been good was at 1.68 in 2013, but this is also lower than normal. It was 2.03 in the first quarter of 2014.

Leverage and Debt/Equity Ratio are unusually high 2013 also at 2.47 and 1.47 in 2013. These were also back to normal in the first quarter of 2014at1.97 and 0.97.

This stock is in agriculture, so it will be cyclical which means it has a higher than average risk level. Although some analysts rate it was a median risk. All depends on your point of view. Although I do not have a lot invested in this company, I intend to hold on to my shares. See my spreadsheet at afn.htm.

This is the first of two parts. The second part will be posted on Thursday, June 5, 2014 and will be available here. The first part talks about the stock and the second part talks about the stock price.

Ag Growth is a leading North American manufacturer of portable grain handling equipment, consisting of augers, belt conveyors, grain drying, fencing, post-hole augers, and other ancillary grain handling accessories. This company has 1,400 dealers and distributors in Canada and the United States. Its web site is here Ag Growth.

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.

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