Thursday, September 4, 2014

ATCO Ltd. 2

I do not own this stock of ATCO Ltd. (TSX-ACO.X, OTC-ACLLF). I started to look at this stock because it was a dividend paying stock that was on everyone's list. This stock is on the Dividend Achievers list, the Dividend Aristocrats list and also was on Mike Higgs' list.

When I look at insider trading I find insider selling at $8.9M and insider buying at $0.9M and net insider selling at $8M. It may seem like a lot of insider selling but net insider selling is at just 0.15% of the market cap of this stock.

This stock has two classes of share, one voting and one non-voting. The voting shares are mostly owned by the Southern family and they therefore control the company. They do have a lot invested in the company with Ronald D. Southern owning shares worth over $1.7B in Class I and Class II shares.

The 5 year low, median and high median Price/Earnings per Share Ratios are 9.04, 10.74 and 12.05. The corresponding 10 year figures are slightly higher. The current P/E Ratio is 13.55 based on a stock price $46.88 and 2014 earnings estimate of $3.46. This stock price test suggests that this stock is relatively expensive.

I get a Graham Price of $44.84 and the 10 year low, median and high median Price/Graham Price Ratios are 0.77, 0.89 and 1.00. The current P/GP Ratio is 1.05 based on a stock price of $46.88. This stock price test suggests that this stock is relatively expensive.

The 10 year Price/Book Value per Share Ratio is 1.61. The current P/B ratio is 1.82 a value some 13% higher and based on a stock price of $46.88 and current BVPS of $25.82. This stock price test suggests that this stock is relatively reasonable although a bit on the high side.

The 5 year dividend yield is 1.88% and the current dividend yield of 1.83% is just 2.5% lower. This stock price test suggests that this stock is relatively reasonable. The historical average dividend yield is 2.27% a value some 19% higher and the historical median dividend yield is 2.08% a value some 12% higher. These stock price tests suggest that this stock is relatively reasonable although a bit on the high side.

When I look at analysts' recommendations, I find Buy, Hold and Underperform recommendations. The consensus recommendation is a Hold. Most of the recommendations are a Hold. The 12 month stock price is $52.80. This implies total return of 14.46% with 12.63% from capital gains and 1.83% from dividends.

A recent article in Forbes says that this stock is oversold because the current RSI reading is 29.3. The stock price has been falling since its peak in April of 2014. (The meaning of "oversold" is that people having been doing too much selling of this stock. It suggests that it may be time to buy this stock.)

Sound bit for Twitter and StockTwits is: Stock price seems a bit high. I think that the stock price seems a big high as it is for a lot of utility stocks. See my spreadsheet at aco.htm.

This is the second of two parts. The first part was posted on Wednesday, September 03, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

ATCO LTD. is a management holding company with operating subsidiaries in electric and natural gas utility operations, independent power operations, production, storage, processing, gathering, delivery of natural gas, technical facilities management for the industrial, defense and transportation sectors, the manufacture, sale and leasing of industrial shelters and industrial noise abatement technologies. ATCO has just over 50% stake in Canadian Utilities Ltd. The company utilizes a dual share structure of voting and non-voting shares. Its web site is here ATCO.

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