Wednesday, March 4, 2015

Mullen Group Ltd. 2

On my other blog I am today writing about possible cheap dividend stocks for March 2015 continue...

I 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 again.

The insider trading report says there are some $0.3M of insider buying and no insider selling. This is a relatively small amount of insider buying as it is only 0.02% of the market value. Last year the outstanding shares were increased by some 547,000 shares for stock options. These shares have a book value of $12.6M and were worth $11.6M at end of 2014. This is a relatively reasonable about as it is some 0.6% of the outstanding shares.

The CEO has shares worth around $10.2M and the Chairman has shares worth around $62M. Taken together this amounts to just over 3% of the outstanding shares.

The 5 year low, median and high median Price/Earnings per Share Ratios are 12.75, 15.77 and 17.35. The 10 year corresponding ratios are a bit lower at 11.38, 14.18 and 17.11. The current P/E Ratio is 21.74 based on 2015 EPS estimate of $0.95 and a stock price of $20.65. This stock price test suggests that the stock price is expensive.

I get at Graham price of $14.49. 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 1.42 based on a stock price of $20.65. This stock price test suggests that the stock price is expensive.

I get a 10 year median Price/Book Value per Share Ratio of 1.89. The current P/B Ratio is 2.10 a value some 11% higher. The current P/B Ratio is based on a BVPS value $9.83 and a stock price of $20.65. This stock price test suggests that the stock price is reasonable.

I get 5 year median, historical average and historical median dividend yields of 5.30%, 4.75% and 3.99%. These yields are 22%, 9.75 and 45.6% lower than the current dividend yield of 5.81%. This stock price test suggests that the stock price is reasonable.

When I look at analysts' recommendations I find Buy, Hold, Underperform and Sell recommendations. The vast majority of the recommendations are a Hold. The consensus recommendation would be a Hold. The 12 month stock price consensus is $21.20. This implies a total return of 8.47% with 2.66% from capital gains and 5.81% from dividends.

A number of analysts have lowered the stock target price on this stock according to WKRB. Stockhouse talks about the 2014 financial report for the Mullen Group. According to Forbes, Mullen Group is now Over Sold.

Sound bite for Twitter and StockTwits is: Price is good. How you get good companies cheap is to buy them when others are afraid and are selling. The price could be lower, but using the dividend yield, the price is relatively better than the average or the median and this is generally consider to be a good price. See my spreadsheet at mtl.htm.

This is the second of two parts. The first part was posted on Tuesday, March 03, 2015 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.

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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