Mullen Group Ltd.

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.

I know that I just reviewed this stock in December last year. However, the 2014 Annual Report is in and I wanted to check up on this stock as I recently purchase it.

Although this company has a good record of increasing dividends in the past, the current dividend was set in early 2013 and has not changed since. The problem is that this company services the oil and gas industry. The company did not do that well in 2014 and 2015 is not expected to be much better. Analysts seem to think things will pick up in 2016.

Currently this company pays a good dividend which is paid monthly. The current yield is 5.81% and it has a 5 year median dividend yield of 4.75%. I would expect no dividend increases until the price of oil starts to recover. The Dividend Payout Ratio for EPS also needs to go lower.

The last dividend increase was in 2013 and it was for 20%. The 5 and 10 year dividend growth is at 19% and 21.8% per year.

When this company reduced its dividends in 2009 with the change from an income trust to a corporation, it got the Dividend Payout Ratio for earnings under control. However, the DPR for EPS for 2014 was 117% and it is expected to be 126% this year and reducing to 101% in 2016. The DPR for CFPS is better with the one for 2014 at 39%. However this is expected to increase to 56% this year and then drop to 44% in 2016.

The growth in outstanding shares stands at 2.6% and 7.3% per year over the past 5 and 10 years. Shares have been increased for Stock Issues and Stock Options and have decreased due to Buy Backs. This means that you should be paying attention to the per share values.

Revenue growth is moderate to good. The Revenue growth is at 7.9% and 11.7% per year over the past 5 and 10 years. The Revenue per Share is, of course, lower. It is at 5.1% and 4.1% per year over the past 5 and 10 years.

The EPS has been rather volatile and so it is a good idea to look at not only growth but the growth in the 5 year average EPS. EPS has decreased by 1.5% and 0% per year over the past 5 and 10 years. However, when you look at the 5 year running averages over the past 5 and 10 years growth is at 8.1% and 6.1% per year.

The CFPS has also been a bit volatile. The growth over the past 5 and 10 years is at 15.7% and 7.2% per year. If you look at the growth using 5 year running averages, it is at 2.9% and 9.8% per year over the past 5 and 10 years. To get CFPS, I used average weighted number of shares.

The Return on Equity has been below 10% only once in the past 5 years and that was 5 years ago. The ROE for 2014 was 10.5% and the 5 year median is 15.8%. The ROE on comprehensive income is the same and so this is good.

The Liquidity Ratio has varied but is has always been good. The one for 2014 was at 4.58 and the 5 year median is 2.65. The Debt Ratio has is also good at 1.94 for 2014 and has a 5 year median value of 2.13. The Leverage and Debt/Equity Ratios ratio are a little high at 2.07 and 1.07, but these are generally fine and the 5 year median values are good at 1.68 and 0.68.

Sound bite for Twitter and StockTwits is: Oil, gas services, holding its own. This company did not meet any of the estimates for 2014, but it has only fall 3% so far this year. Considering the industry it is in, it is holding up quite well. I am currently happy about my investment in this company. See my spreadsheet at mtl.htm.

This is the first of two parts. The second part will be posted on Wednesday, March 4, 2015 and will be 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.

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