Intact Financial Corp. 2

I do not own this stock of Intact Financial Corp. (TSX-IFC, OTC-IFCZF). In November 2011, the TD Bank put out a special report on the merits of dividend investing. At the end of the report they listed a number of Canadian stocks as Equity Yield ideas. This was one stock listed that I did not follow. This report is still available here.

When I look at insider trading, I find $2.0M of insider selling and net insider selling at $2.0M. There is a small amount of insider buying. There are some outstanding stock options, but shares have not been increased due to stock option in the last two years. They do not seem to have stock options but rather Stock Incentives.

The 5 year low, median, and high median Price/Earnings per Share Ratios are 12.90, 13.95 and 15.00. These are up slightly from the corresponding 10 year P/E Ratios. The current P/E Ratio is 13.16 based on a stock price of $73.18 and 2014 EPS estimate of $5.56. This stock price test suggests that the stock price is relatively reasonable.

I get a Graham Price of $65.98. The 10 year low, median and high median Price/Graham Price Ratios are 0.93, 1.04 and 1.15. The current P/GP Ratio is 1.11. This stock price test suggests that the stock price is relatively reasonable.

I get a 10 year median Price/Book Value per Share Ratio of 1.76. The current P/B Ratio is 2.10 a value some 19.4% higher. This stock price test suggests that the stock price is relatively reasonable, but it is to the high end of the reasonable range. A stock is considered pricey when the current P/B Ratio is 20% higher than the 10 year median P/B Ratio.

The 5 year median dividend yield is 2.79%. The current one is some 6% higher at 2.62%. This stock price test suggests that the stock price is relatively reasonable. The historical dividend yield testing is similar. However, there is not a long history as dividends have been paid for only 9 years.

Looking at the historical average dividend yield it is higher at 3.20% and some 18% higher than the current dividend yield. This stock price test suggests that the stock price is relatively reasonable, but it is to the high end of the reasonable range. This historical median dividend yield is close to the 5 year median at 2.77% and the current dividend is some 5% higher. This stock price test suggests that the stock price is relatively reasonable.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus recommendation would be a Buy, but just barely into the Buy category. The 12 month stock price consensus is $76.80. This implies a total return of .57% with 2.62% from dividends and 4.95% from capital gains. It is rather a low total return for a buy consensus.

The site of WKRB News and Analysis says that Barclays Bank recently assumed coverage of this company and issued an Overweight or Buy recommendation on this company. They commented on a number of other analysts in this article. The company is also involved in a number of projects to stop flooding. This makes sense for a general insurance company.

Shareholders have done quite well over the years from this stock. The stock price is not yet in the expensive category, but it is getting there. See my spreadsheet at ifc.htm.

This is the second of two parts. The first part was posted on Wednesday, July 2, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

Intact Financial Corporation is the largest provider of property and casualty insurance in Canada. Intact offers home, auto and business insurance through Intact Insurance, Novex Group Insurance, Belair Direct, GP Car and Home and Broker Link. Its web site is here Intact 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.

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