Monday, June 9, 2014

WSP Global Inc. 2

On my other blog I am today writing about using analysts' estimates continue...

I own this stock of WSP Global Inc. (TSX-WSP, OTC-WSPOF). In Sept 2011 I rationalized my portfolio. I sold stocks that did not make it into my core and bought stocks that could of the same type. In this case selling Stantec and buying Genivar. In October 2011 I wanted to sell Enerflex because it is not a company I bought but a distribution from Toromont. I bought more Genivar, now called WSP Global.

When I look at insider trading, I find a bit of insider buying and no insider selling over the past 6 months. Insiders not only have stock options, but have option like vehicles called Performance Share Unit and Restricted Shares Units. There is some insider ownership with the CEO owning shares worth around $26.7M.

Both the Caisse de dépôt et placement du Québec and Canada Pension Plan Investment Board both own shares worth around $180B and about 19% of the outstanding shares.

The 5 year low, median and high median Price/Earnings Ratios are 14.32, 16.30 and 18.09. The current P/E Ratio is 21.99 based on a stock price of $38.92 and 2014 EPS estimate of $1.77. By this stock price test the stock price is relatively expensive. P/E Ratios seem to be moving higher on this stock.

I get a Graham price of $27.47. The 10 year low, median and high median Price/Graham price Ratios are 0.80, 1.07 and 1.29. The current P/GP Ratio is 1.42 based on a stock price of $38.92. By this stock price test the stock price is relatively very expensive.

The 7 year median Price/Book Value per Share Ratio is 1.68. The current P/B Ratio is 2.05 based on a stock price of $38.92 and current BVPS of $18.95. The current P/B Ratio is some 22% higher than the 7 year median P/B Ratio. By this stock price test the stock price is relatively expensive.

This stock is an old income company and therefore dividend yield would be lower as dividend yields tend to be lower when companies changed from an income trust to a corporation. Dividend yields on these stocks were expected to be between 4 and 5%. This company has a lower one at 3.85%.

The 7 year Price/Cash Flow per Share Ratio is 7.05. The current P/CF Ratio is 14.47 a values some 104% higher. This is based on CFPS 2014 estimate of $2.49 and a stock price of $38.92. By this stock price test the stock price is relatively very expensive.

The 7 year Price/Sales Ratio is 0.94. The current P/S Ratio is 1.02 a value just 9% higher. The P/S Ratio is based on Revenue per Share of $38.16 (Revenue of $2010.6M dividend current outstanding shares). By this stock price test the stock price is relatively reasonable, but towards the higher end of the reasonable range.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The 12 month stock price target consensus is $40.40. This implies a total return of 7.66% with 3.80% from capital gains and 3.85% from dividends. This is rather a low expected total return.

This article in the Montreal Gazette talks about WSP Global stock price hitting a high point in April of this year because analysts put out some positive reviews of this company. An article in Stock House News on WSP Global talks about the good fourth quarter that this company has had. An article in Building talks about another acquisition in Australia by WSP Global.

My stock price testing shows mostly that the stock price is relatively expensive. I still think that this is a good company and will hopefully be a dividend growth company again. However, it would seem that now is not the time to buy more shares in this company. See my spreadsheet at wsp.htm.

This is the second of two parts. The first part was posted on Friday, June 6, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

WSP Global Inc. is an engineering services firm providing private and public-sector clients with a complete range of professional consulting services throughout all project phases, including planning, design, construction and maintenance. Mainly in Ontario and Quebec, but has some international exposure. Its web site is here WSP Global.

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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