I do not own this stock of Shaw Communications Inc. (TSX-SJR.B, NYSE-SJR). It was a stock on Investment Reporter's list, a MPL Communications Publication.
When I look at insider trading, I find $2.6M of insider buying and $21.1M of insider selling for net insider selling of $18.5M. There are two classes of shares, Class A shares are voting shares and Class B shares are non-voting shares. The Shaw family owns around 79% of the Class A shares. They also own substantial amount of Class B shares. For example Bradley Shaw owns Class A shares worth around $121.2M and Class B shares worth around $243M.
I looked for a Mission Statement, but could find none. For customers Shaw says it is committed to providing unsurpassed customer service and exceptional customer experiences. For employees Shaw says its culture at Shaw is founded on creating workplaces where our employees want to build their careers. For community, Shaw says it is proud to partner with a number of Canadian organizations focused on protecting and nurturing today's children and youth for a bright, prosperous tomorrow. I could find no statement about Investors.
The 5 year low, median and high median Price/Earnings Ratios are 13, 14.14 and 15.98. The corresponding 10 year median ratios are similar at 13.53, 15.33 and 17.46. The current P/E Ratio is 16.44 based on a stock price of $29.76 and 2015 EPS estimate of $1.81. This stock price test suggests that the stock price is relatively reasonable.
I get a Graham Price of $20.06. The 10 year Price/Graham Price Ratios are 1.33, 1.57 and 1.77. The current P/GP Ratios is 1.48 based on a stock price of $29.76. This stock price test suggests that the stock price is relatively reasonable.
I get a 10 year Price/Book Value per Share Ratio of 3.20. The current P/B Ratio is 3.01 based on a stock price of $29.76 and BVPS of $9.88. The current P/B Ratio is just 1% off the 10 year median P/B Ratios. This stock price test suggests that the stock price is relatively reasonable.
Since the dividend yields have been steadily increasing, I think that the most interesting dividend yield test is testing the current dividend yield against the 5 year median dividend yield. The 5 year median dividend yield is 4.23%. The current dividend yield at 3.98% is some 5.9% lower. Ideally, the time to buy a stock is when the current dividend yield is higher than the 5 year median dividend yield, but 5.9% off is not bad. This stock price test suggests that the stock price is still relatively reasonable.
Note that since the dividend yield has been steadily increasing, the historical average and historical median dividend yields are much lower than the 5 year median dividend yield. They are 2.42% and 0.83%, respectively. By these measures, the stock price test suggests that the stock price is relatively reasonable. I think the stock price is only cheap if the current dividend yield is higher than the historical high dividend yield. For this stock, the current dividend yield is lower than the historical high dividend yield. Note that the historical high dividend yield just occurred in 2013.
When I look at analysts' recommendations, I find Buy, Hold and Underperform recommendations. Most of the recommendations are a Hold and the consensus recommendation is a hold. The one year consensus stock price is $29.70. This implies a gain of 3.78% with 3.98% from dividends and a capital loss of 0.20%.
A recent article by David Friend in the National Post says that Shaw's profits decline due to subscription slips and cost of starting Shomi. Lou Schizas of the Globe and Mail suggests that this company has a solid position in the communications space and a good dividend that makes it worthwhile to hold.
Joseph Solitro of the Motley Fool suggests that now might be the time to buy this stock as it might be a turn-around stock. Nelson Smith of the Motley Fool also likes this stock. The Motley Fool's write-ups are interesting as they give a good stock write up and then want you to buy their newsletter to get an even better stock in the same situation. In the first article it is a stock with a better turnaround situation and in the second article, it is an even better long term hold.
Sound bite for Twitter and StockTwits is: Stock price is reasonable. Buying a stock below the median price is a good price to pay for a stock. For example, for this stock, the 10 year Price/Graham Price Ratios are 1.33, 1.57 and 1.77. The current P/GP Ratios is 1.48. Since the median P/GP Ratio is 1.57, a P/GP Ratio of 1.48 says the stock price is below the median price. If you do not have a telecom stock, this might be one to consider. See my spreadsheet at sjr.htm.
This is the second of two parts. The first part was posted on Monday, February 02, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.
Shaw Communications Inc. is a diversified communications company whose core business is providing broadband cable television, Internet, digital phone and satellite direct-to-home services. Industry: Communications & Media (Cable). SJR.B shares are non-voting and the SJR.A shares are voting shares. J.R. Shaw owns 79%. Its web site is here Shaw Communications.
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.
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