Wednesday, June 25, 2014

CI Financial 2

On my other blog I am today writing about the fight about Canadian Pipelines continue...

I do not own this stock of CI Financial (TSX-CIX, OTC-CIFAF). I started to follow this stock originally because it was a Mutual Fund company. People talked about it being easier to make money from buying a Mutual Fund company than buying Mutual Funds. In June 2014, MPL communications called this stock a Buy and advised that they were adding it to their list of Key Stock for the Investment reporter.

When I look at insider trading, I find some $30.3M of insider selling and no insider buying. Although $30.3M sounds like a lot, it is only 0.31% (that is a way less than 1%) of the outstanding stock. In 2013 the outstanding shares were increase by 1.123M shares in connection with sock options. These shares had a book value of $10.2M. These numbers of shares were worth $39.7M at the end of 2013. Also, this numbers of shares are only 0.39% of the outstanding shares of this company.

Insiders not only have stock options, but they have other stock option like vehicles called Deferred Equity Units. There is also insider ownership with the CEO having shares worth around $32.8M, an officer having shares worth around $18.2M, a director having shares worth around $164.2M and the Chairman having shares worth around $42.7M.

The 5 year low, median and high median Price/Earnings per Share Ratios are 15.75, 17.83 and 20.10. These are similar to the 10 year P/E Ratios. The current stock price has a P/E Ratio of 18.29 based on a stock price of $34.56 and 2014 EPS estimate of $1.89. This stock price test suggests that the stock price is reasonable.

I get a Graham price of $16.67. The 10 year low, median and high median Price/Graham Price Ratios are 1.48, 1.67 and 1.92. The current P/GP Ratio is 2.07 based on a stock price of $34.56. This stock price test suggests that the stock is expensive.

The 10 year Price/Book Value per Share Ratio is 3.69. The current P/B Ratio is 5.29 based on a stock price of $34.56 and current BVPS of $6.53. This stock price test suggests that the stock is expensive.

The 5 year median dividend yield is 4.11% and the current dividend yield is 3.47% based on a stock price of $34.56 and a dividend of $1.20. The current dividend yield is some 15% lower than the 5 year median dividend yield and this stock price test suggests that the stock price is still within the reasonable range, however it is in the high end of this range.

The historical average dividend yield is 2.97% a value some 17% below the current dividend yield. The historical median dividend yield is lower still at 2.92% a value some 19% below the current dividend yield. This stock price testing suggests that the stock price is reasonable and almost cheap.

Well, we have a rather mixed bag when it comes to judging the current stock price. I looked at the Price/Sales Ratio and the Price/CFPS ratios and they show that the stock is expensive. However, my favourite test is the historical dividend yield tests and they show reasonable. I will go with that.

When I look at analysts' recommendations, I find Strong Buy, Buy and Holder Ratings. Most of the recommendations are a Buy and this is the consensus recommendation. The consensus 12 month stock price is $40.00 and this implies a total return of 19.21% with 3.47% from dividends and 15.74% from capital gains.

This company's had its 12 month stock price raised from 40 to $41 by, RBC while they kept the rating of outperform (or Buy) rating on this stock. There are other analysts' ratings in this article. An article in the Financial Post talks about how CI Financial gains from BNS selling their holding in this company. The Dividend Blogger talks about this stock in a recent post.

I am inclined to look at the current stock price as reasonable as per my note above. See my spreadsheet at cix.htm.

This is the second of two parts. The first part was posted on Tuesday, June 245, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

CI Financial Corp. is a diversified wealth management firm and one of Canada's largest investment fund companies. CI is an Independent and Canadian-owned company. This company promotes and manages mutual funds and other investment products through its wholly-owned subsidiaries of CI Investments Inc., and Assante Wealth Management. Its web site is here CI Financial.

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.

No comments:

Post a Comment