Methanex Corp.

On my other blog I am today writing Investors and Traders continue...

I do not own this stock of Methanex Corp. (TSX-MX, NASDAQ-MEOH). I started a spreadsheet in November 2010 as I had read some good reports on the stock at that time. It is also got a solid "C" grade in a 2009 money sense review of stocks. Money Sense rated the top 100 Canadian Dividend Paying stocks. Money Sense was looking for stocks that provided generous income at reasonable prices.

This is a dividend growth stock. It pays its dividends in US currency, so for Canadian Investors, they will see the dividend fluctuate all the time according to the fluctuation in currency exchange rates. Dividend growth is fairly good in both US and CDN currencies, but the 10 year growth is much better than the 5 year growth.

The growth in dividends over the past 5 and 10 years is at 5.4% and 12.1% per year in US$. The growth in dividends over the past 5 and 10 years is at 2.4% and 10.6% per year in CDN$. However, there is problems with these figures in CDN$ as they assume a constant dividend during each year. The most recent dividend increase was in 2014 and it was for 25% in US$. This increase would be better in CDN$ terms as the US$ to CDN$ exchange rate has gone up. This dividend is higher than recent ones and shows that the company is positive about the future.

First, the outstanding shares have increased by 0.9% and decreased by 2.2% per year over the past 5 and 10 years. Because shares have decreased over the past 10 years, the per share values look better. That is the Revenue per Share growth looks better than the Revenue growth. Because of this the Revenue growth would be more important than the Revenue per Share growth. All the values quoted are in US$ terms.

Also, for this company the Revenue, Earnings and Cash Flow tend to be a bit volatile. Because of this we should also be paying more attention to 5 year running average growth than just 5 and 10 years growth. Also, for this company the 5 year growth figures are lower than the 10 years growth figures.

Let me give you some examples. The Revenue growth is at 5.5% and 7.9% per year over the past 5 and 10 years. The 5 year running average growth over these periods is at 2.6% and 8% per year. The 5 year running averages over the past 5 years is lower because of volatility. The growth in Revenue per Share is at 4.6% and 10.3% per year. The per share values for 5 years is lower because outstanding shares went up and for 10 years is higher as the number of outstanding shares went down.

For EPS the 5 and 10 year growth is at 13.95 and 7.2% per year. However for this company exactly 5 and 10 years ago were not great years. If you look at 5 year running averages the EPS is down by 15% and up by 24.8% per year. Part of the reason the 5 year running averages is down is there was an earnings loss year in 2012.

For cash flow, the growth over the past 5 and 10 years is at 22.8% and 7% per year. The cash flow for exactly 5 years ago was rather lower. If you look at the 5 year running averages, the growth is down by 2.2% and up by 4.5% per year over the past 5 and 10 years. This is some volatility in cash flow also.

The other thing to mention is that Revenue, Earnings and Cash Flow hit highs in 2007 or 2008 and the company is back to these highs or past then in 2013. For example, Revenue was at $2314 in 2008 and at $3024 in 2013. Revenue is expected to be up more than 7.5% in 2014 to around $3253. If you look at the 12 month period to the end of the third quarter, the Revenue reached $3371 a value some 11.5% higher.

Over the past 5 years the Return on Equity was only above 10% twice, in 2011 and 2013. The ROE for 2013 is at 17.3% and the 5 year median ROE is just 7.2%. The ROE on comprehensive income for was 17.9% in 2013. This would suggest that the quality of earnings was good for 2013. The 5 year median ROE on comprehensive income is low at 6.1%.

A good point about this company is their good Liquidity and Debt Ratios. The thing, especially about Liquidity Ratios, is that a good ratio of current assets to current liabilities can see a company though bad periods or period of volatility. The Liquidity Ratio is 2.15 in 2013 and the Debt Ratio is 1.86 in 2013. Basically what analyst's like to see is these ratios at 1.50 or better. So this company's ratios are quite good.

The Leverage and Debt/Equity Ratios are a little higher than I would like which would be below 2.00 and 1.00 respectively, but the ratios at 2.16 and 1.16 are fine, if a little high.

Sound bit for Twitter and StockTwits is: Industrial Dividend growth stock. Shareholders have done well recently. The stock hit a low point in 2009 and has been advancing, until just recently, quite well. Total return to date is at 23.86% and 11.49% per year over the past 5 and 10 years. See my spreadsheet at mx.htm.

This is the first of two parts. The second part will be posted on Tuesday, December 30, 2014 and will be available here. The first part talks about the stock and the second part talks about the stock price.

Methanex is the world's largest supplier of methanol to major international markets in North America, Asia Pacific, Europe and Latin America. Methanol is an important ingredient in many of the essential industrial and consumer products. Head Office is in Vancouver, B. C. Canada. Its web site is here Methanex.

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.