I do not own this stock of Mullen Group Ltd. (TSX-MTL, OTC- MLLGF). I like to look at recommended small cap dividend paying stock to see if they would be a possible good investment now or in the future. The other thing to mention about this stock is that it recently converted from an income trust and has decreased it dividends. The reduction in dividend brought the Dividend Payout Ratios down to a place that would allow for the company to begin growing dividends again.
When I look at insider trading, I find no insider selling and some $154,000 of insider buying. Insider buying is equal to 0.01% of the stock's market cap. There is some insider ownership with the Chairman and Co-CEO owning share worth around 82.6M and the Co-CEO owning shares worth around $13.6M. Between them they own some 3.8% of the company.
The 5 year low, median and high median Price/Earnings Ratios are 12.27, 13.85 and 15.73. The 10 year corresponding ratios are similar at 11.38, 14.06 and 16.54. The current P/E Ratio is 17.73 based on a stock price $21.27 and 2014 EPS estimate of $1.20. This stock price test suggests that the stock price is high.
I get a Graham Price of $16.42. The 10 year low, median and high median Price/Graham Price Ratios are 0.89, 1.09 and 1.33. The current P/GP Ratio is 1.30 based on a stock price of $21.27. This stock price test suggests that the stock price is reasonable but at the top end of the range.
I get a 10 year Price/Book Value per Share Ratio of 1.89. The current P/B Ratio is 2.13 based on a stock price of $21.27 and BVPS of $9.99. The current P/B Ratio is some 12.7% higher than the 10 year median P/B Ratio. This stock price test suggests that the stock price is reasonable but at the higher end of the range.
The current dividend yield is 5.64% and the 5 year median dividend yield at 4.44% is some 27% lower. This stock price test suggests that the stock price is cheap.
The historical average dividend yield is 5.62% a value just 0.4% lower than the current dividend yield of 5.64%. However, the historical median dividend yield is just 3.61% and this yield is lower than the current dividend yield of 5.64% by 56%. Testing of current dividend yield to historical ones, the stock price comes out cheap to reasonable.
When I look at analysts' recommendations I find only Buy and Hold recommendations. There are 4 Buys and 8 Holds, so the consensus would be a Hold. The 12 month stock price consensus is $24.70. This implies a total return of 21.77% with 5.64% from Dividends and 16.13% from capital gains.
The Mullen Group Ltd published their 2015 Business Plan. Dividends for January 2015 will not change. According to The Legacy Raymond James lowered its target price from $25.00 to $22.75, recently. And finally, the Motley Fool asks why Mullen is a screaming buy.
Sound bit for Twitter and StockTwits is: Dividend yield says price is cheap to reasonable. The reason I like using the dividend yield to judge the stock price is because you are not dealing with estimates. See my spreadsheet at mtl.htm.
This is the second of two parts. The first part was posted on Wednesday, December 17, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.
Mullen Group Ltd. is a corporation that owns a network of independently operated businesses. Mullen is recognized as the largest provider of specialized transportation and related services to the oil and natural gas industry in Western Canada and is one of the leading suppliers of trucking and logistics services in Canada - two sectors of the economy in which Mullen has strong business relationships and industry leadership. Its web site is here Mullen Group.
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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