Parkland Fuel Corp.

I do not own this stock of Parkland Fuel Corp. (TSX-PKI, OTC- PKIUF). I decided to do a spreadsheet on this stock as it was a stock recommended by Roger Conrad in Money Show 2013.

This stock was a Limited Partnership which converted to a corporation in 2010 and in 2011 they cut their dividend by 19%. 2013 was the first year that dividends were raised after the dividend cut and the increase was for 2%.

Prior to 2011, the 5 year median Dividend Payout Ratio for EPS was 142%. In 2012 DPR for EPS was at 84% and in 2013 it was 82%. However, analysts do expect the DPR for EPS to be just above 100% for 2014. The Dividend Payout Ratios for Cash Flow per Share was lower with a 5 year median of 62%. The DPR for CFPS for 2012 was at 50% and for 2013 was at 48%.

The current dividend yield is quite good at 5.00% currently. The dividend yield dropped to just above 5% in 2011. A drop in dividend yield is typical for old Limited Partnerships that convert to corporations. Dividend yields did and were expected to drop.

Shareholders have done quite well over the past 5 and 10 years with total return at 16.18% and 22.32% per year. The portion of the total return attributable to capital gain was at 6.21% and 11.1% and the portion of the total return attributable to dividends was at 6.97% and 11.22%. Note that on a go forward basis, dividend yields or return will be lower.

The outstanding shares have increased by 7.7% and 7% per year over the past 5 and 10 years. Outstanding shares were increased because of DRIP, Stock Options, Share Issues and Debenture Conversion. Outstanding shares were decreased due to Buy Backs.

The growth in revenue, earnings and cash flow has been decent. Revenue per Share has grown at 10.8% and 17.6% per year over the past 5 and 10 years. EPS has grown at 7.4% and 8.6% per year over the past 5 and 10 years. CFPS has grown at 6.4% and 11.0% per year over the past 5 and 10 years.

Return on Equity has been above 10% each year for the past 10 years. The ROE for 2013 was 21% and the 5 year median ROE was at 21%. The ROE on comprehensive income is basically the same.

The debt ratios are fine. The Liquidity Ratio for 2013 is 1.56. The Debt Ratio for 2013 is 1.53. The Leverage and Debt/Equity Ratios for 2013 are 2.89 and 1.89.

The 5 year low, median and high median Price/Earnings Ratios are 11.48, 14.29 and 16.02. These are slightly higher than the same 10 year P/E Ratios. The current P/E Ratio is 20.51 based on a stock price of $20.82 and 2014 EPS estimate of $1.03. This stock price test suggests that the stock is relatively expensive. On an absolute basis, a P/E of 20.51 is in a reasonable range. (A P/E of 10 or below says a stock is cheap and a P/E of 30 and above says that the stock is expensive, basically, but this can depend on the type of company we are looking at.)

I get a Graham Price of $12.24. The 10 year low, median and high median Price/Graham Price Ratios are 1.03, 1.29 and 1.59. The current P/GP Ratio is 1.70. This stock price test suggests that the stock is relatively expensive. On an absolute basis, a P/GP Ratio of 1.70 says that the stock price is expensive.

The 10 year Price/Book Value per Share is 3.16. The current P/B Ratio is 3.22 a value just 2% higher and this stock price test suggests that the stock is relatively reasonable. On an absolute basis a P/B Ratio is 3.22 shows a stock price that is a little expensive. A good P/B Ratio is 1.50.

I cannot do any test on the dividend yield as yields have come down significantly since the company became a corporation. This was an expected result of a change to a corporation. When I briefly checked the P/S Ratio that stock price test shows that the stock price is relatively cheap. When I briefly checked the P/CF Ratio that stock price test shows that the stock price is relatively expensive.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus recommendation would be a Buy. The 12 month consensus stock price is $21.90. This implies a total return of 10.18% with 5.19% from capital gains and 5% from dividends.

The stock price could be reasonable, but testing shows a mixed bag. This stock would be considered to be a dividend growth stocks. There is nothing to suggest they plan anything else. See my spreadsheet at pki.htm.

I will have only one entry for this stock as I must do on some stock because I cover too many stocks to do double entries on all that I follow.

Parkland Fuel Corporation is a marketer and distributor of fuels, managing a nationwide network of sales channels for retail, commercial, wholesale and home heating fuel customers. Its web site is here Parkland Fuel Corp.

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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