I do not own this stock of AGF Management Ltd. (TSX-AGF.B, OTC-AGFMF), but I used to. I bought it in 2001 and sold half in 2006 and the rest in 2008. It used to be a dividend growth stock, but has not been one for some time now. I sold because I did not see that the stock would improve. It was raising dividends still but at the expense of DPR. In 2008 I was lucky that I sold before it crashed. It has yet to recover.
When I look at insider trading there is a little bit of insider buying and a little bit of insider selling. There are Class A voting shares with the major shareholder being the Goldring family. Controlling shareholder is Charles Warren Golding who has 80% voting control. The Class B shares are non-voting shares.
In 2014 the outstanding shares were increased by some 460,000 for stock option purposes. The book value of these shares was $4.6M and this number of shares was worth $4.8M at the end of 2014. This number of shares is only 0.57% of the outstanding shares. This is rather average relative percentage for increases in shares due to stock options.
However, one has to wonder about a company giving out stock options when they have not done very well for a number of years.
The 5 year low, median and high Price/Earnings Ratios are 13.69, 16.32 and 18.96. The corresponding 10 years ratios are close at 13.35, 15.70 and 20.44. The current P/E Ratio is 11.97 based on a stock price of $8.02 and 2015 EPS estimate of $0.67. This stock price test says that the stock is relatively cheap.
I get a Graham Price of $12.78. The 10 year low, median and high Price/Graham Price Ratios are 0.74, 1.03 and 1.45. The current P/GP Ratio is 0.63 based on a stock price of $8.02. This stock price test says that the stock is relatively cheap.
The 10 year Price/Book Value per Share Ratio is 1.27 and the current P/B Ratio is 0.74 based on a BVPS of $10.84 and a stock price of $8.02. This means that the stock is selling at a price below the theoretical breakup value of the company. This stock price test says that the stock is relatively cheap.
With the dividend cut in 2015 by 70%, they now have a dividend yield of 3.99%. Surprisingly this dividend yield is higher than the historical median dividend yield of 2.87%. This median dividend yield is much lower than the average which is 6.22%. This stock price test says that the stock is relatively good.
When I look at analysts' recommendations, I find Hold, Underperform and Sell recommendations. The consensus recommendations would be an Underperform recommendation. The 12 month consensus stock price is $7.83. This implies a total return of $11.10% with 13.47% from dividends and a capital loss of 2.37%.
The company recently gave notice via newswire that they intend to buy back shares. This would not be my preferred action for this company to take. At least the share price is low. According to Dakota Financial News an analyst lowered their stock target price and another analyst lowered their recommendation level. The company announced a dividend cut of 70% on December 9, 2014.
I must admit I missed the dividend cut announcement. I notice that they talked about the January dividend payment for $0.27 in their press release, but I missed a later part of this press release when they said they were cutting the dividend.
Sound bite for Twitter and StockTwits is: Cheap but momentum trend is down. Lowering the dividend so that they can buy back stock is hardly an improvement. I still expect the company to recover at some point. See my spreadsheet at agf.htm.
This is the second of two parts. The first part was posted on Wednesday, February 04, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.
AGF Management Limited is an integrated, global wealth management company, whose principal subsidiaries provide investment management for mutual funds, institutions and corporations, as well as high-net-worth clients; and trust products and services. They sell their products in Canada. Its web site is here AGF Management.
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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