Monday, April 27, 2015

DH Corp 2

On my other blog I am today writing MPL Communication's Little Book of Investment Knowledge continue...

Sound bite for Twitter and StockTwits is: Stock is currently relatively expensive. The current P/E Ratio of 23.77 is not that high, but it is getting pricey for this sort of company. None of my ratios from P/GP of 1.65 or P/B Ratio of 1.75 is pointing to this stock being at a good price. This stock has had a good rise since becoming a corporation.

However it will probably continue to rise while we are in this current bull market. It is becoming basically a tech company and this is going to help rise the stock price also. However, I would like to see dividend increases again. It would be a good sign if they could afford to increase the dividends. See my spreadsheet at dh.htm.

I own this stock of DH Corp (TSX-DH, OTC-DHIFF). This stock has been recommended a number of times by MPL Communications. So I looked into it and bought some. At that time this company was an income trust. Dividend yield was good and they had a history of dividend increases.

The 5 year low, median and high median Price/Earnings per Share Ratios are 13.95, 16.21 and 18.47. These are higher than the 10 year corresponding ratios at 9.80, 11.74 and 13.99. The current P/E Ratio is 23.77 based on a stock price of $41.84 and 2015 EPS estimate of $1.76. This stock price testing suggests that this stock is relatively expensive.

I get a Graham Price of $25.37. This 10 year low, median and high median Price/Graham Price Ratios are 0.79, 0.95 and 1.12. The current P/GP Ratio is 1.65 based on a stock price of $41.84. This stock price testing suggests that this stock is relatively expensive.

The 10 year Price/Book Value per Share Ratio is 1.75. The current P/B Ratio is 2.18 based on BVPS of $16.26 and a stock price of $41.84. The current P/B Ratio is some 24% higher than the 10 year median ratio. This stock price testing suggests that this stock is relatively expensive.

The 5 year median dividend yield is 6.48% and the current dividend yield at 3.06% is some 53% lower. The current dividend yield is much lower than the historical average (10.01%) and historical median dividend (8.18%) yields because this company used to be an income trust. It lowered its dividend by 35% at the change from income trust to corporation. However, the dividend yield is some 19% lower than the historical low dividend yield of 3.77%. This stock price testing suggests that this stock is relatively expensive.

When I look at analysts' recommendations, I find Buy and Hold recommendations. There is more Buy than Hold recommendations and the consensus recommendation is a Buy. The 12 month stock price is $46.60. This implies a total return of 14.44% with 11.38% from capital gains and 3.06% from dividends.

This article in the Financial Post by Barry Critchley talks about DH Corp's recent acquisition of Fundtech. A recent post by The Legacy talks about analysts' recent ratings for this company. This newswire article talks about DH Corp having a good 2014 fourth quarter.

This is the second of two parts. The first part was posted on Friday, April 24, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.

DH Corp is a leading solutions provider to the financial services marketplace. Founded in 1875, the company today provides innovative programs, technology products and technology based business services to customers who offer chequing accounts, credit card accounts and personal, commercial, and other lending and leasing products. Its web site is here DH Corp.

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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