Wednesday, September 24, 2014

Canyon Services Group

On my other blog I am today writing about Canadian Dividend Growth Stock lists continue...

I do not own this stock of Canyon Services Group (TSX-FRC, OTC-CYSVF). I get a newsletter weekly from MPL Communications called Advice Hotline. They wrote up this stock on July 19, 2012 and I was impressed with it so I did a spreadsheet. You can sign up for this newsletter at their site.

The financial year of 2013 was not a good one for this company. Revenue, earnings and cash flow were all down. The earnings turn negative in 2013. However, this is a rather young company having just been started in 2004 and on the stock exchange since 2006. It is not uncommon for companies to have negative earnings in their early years.

The stock price is up substantially from the lows of 2008 with total return since 2008 at 195% per year. However, the gains were mostly made in 2010 and not much progress has been made since then except for 2014 and so far the stock is up some 16.5%.

The 5 and 8 year total returns to date is at 48.46% per year and 15.92% per year. The dividend portion of this total return is at 5.57% and 2.04% per year over these periods. The capital gains portion of this total return is at 42.89% and 13.88% per year over these periods.

Note that dividends were only started in 2010. The dividends have risen quite fast from then as they were up by 156% in 2012 and by 17% in 2013. There has been no increase in 2014 and analysts do not expect any in the near term. This was probably because this company has an earnings loss in 2013. Even the CFPS could not cover the dividend in 2013.

Over the past 9 years, this company had 4 years of earnings losses. Over the past 5 years they had two years of earning losses, 2009 and 2013. When there was a positive Return on Equity, it was above 10%. Debt Ratios are quite good.

Because of earning losses, I can get no fix on any historical Price/Earnings Ratios. However, the current one is 22.22 based on a stock price of $14.00 and 2014 EPS estimate of $0.63. This is not a particularly high one, nor is it particularly low.

I get a Graham Price of $7.99. The 9 year Price/Graham Price Ratios are 0.63, 0.96 and 1.31. The current P/BP Ratio is 1.75. This stock price test suggests that the stock price is relatively expensive.

The 3 year median dividend yield is 4.29% and the current dividend yield is 4.29%. This stock price test suggests that the stock price is relatively reasonable.

The 10 year median Price/Book Value per Share Ratio is 1.61 and the current one of 3.11 is some 94% higher. The current P/B Ratio is based on a stock price of $14.00 and BVPS of $4.50. This stock price test suggests that the stock price is relatively expensive.

The 8 year Price/Cash Flow per Share Ratio is 6.74 and the current one is 9.93 which is some 47% higher. The 8 year Price/Sales Ratio is 1.97 and the current P/S Ratio at 1.64 is some 17% lower. The P/CF Ratio test suggests that the stock is relatively expensive and the P/S Ratio test suggests that the stock price is relatively reasonable (and getting towards cheap.)

On a relatively basis, this stock had some rather low ratios in the past, however, none of the current ratios are particularly high, so it would seem that the stock price is probably still reasonable.

When I look at analyst's recommendations, I find Strong Buy, Buy and Hold recommendations. Most of the recommendations are a Buy recommendation and the consensus recommendation would a Buy recommendation. The 12 month stock price consensus is $21.40. This implies a total return of 57.14% with 4.29% from dividends and 52.86% from capital gains.

There is a recent positive report on this company at Seeking Alpha. An article in the Cooper Mirror starts off with talking about this company missing its second quarterly estimates, but ends up talking positively about this company's future. A June 2014 article in the Calgary Herald talks about this company buying Fraction Energy Services Ltd.

Sound bit for Twitter and StockTwits is: Dividend Paying Resource Service Stock. This stock could become a dividend growth stock, but it is too early to tell. I would think that the current price could be reasonable. See my spreadsheet at frc.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.

Canyon Services Group Inc. is a fast-growing company providing hydraulic fracturing and other well-stimulation services, including coiled tubing, acidizing, cementing, nitrogen and CO², to oil and natural gas producers developing a variety of play types across Western Canada. Its web site is here Canyon Services.

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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