Wednesday, June 3, 2015

Ag Growth International

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

Sound bite for Twitter and StockTwits is: Good Revenue Growth. I am hoping that the acquisition of Westeel will be good for this company. Most analysts seem to feel so. I am counting on this stock returning to a dividend growth stock in the future. In the meantime I am getting a good dividend at 4.6%. See my spreadsheet at afn.htm.

I own this stock of Ag Growth International (TSX-AFN, OTC-AGGZF). I wanted to review all the income trust stocks touted in the Money Show of 2009. There was a lot of talk at this show about some of the Unit Trust being currently good buys with very good yield. Its median yield in 2009 was 7.9%. It was on the Canadian Dividend Aristocrats and this is why I first investigated this company.

This is another income trust that I bought that was a dividend growth stock, but not so much after converting to a corporation. This stock converted to a corporation in 2009 and stopped rising their dividends in 2011. They still pay a good dividend but not as good as when I bought this stock. I originally got a dividend yield of 7.4% and now the current dividend yield is 4.6%. However, most analysts' expected the dividend yields on the old income trust to go to between 4% and 5% when they converted to corporations.

The other thing about the old income trust is that I have made an overall good return on them. My total return is 18.83% per year with 12.32% per year from capital gains and 6.51% per year from dividends. I have had this stock for 3.5 years and I have earned $8.20 in dividends per share and this is some 23% of the original purchase price of this stock. I am just waiting for them to become dividend growth stocks again.

I may have to wait a bit longer for this stock as the EPS cannot cover the dividends. Analysts' keeping expecting this company to earn more in EPS than dividend payments but this has not happened yet. The Dividend Payout Ratios for 2014 was 774% for EPS and 47% for CFPS. For this year the DPR for EPS is expected to be around 141% for EPS and 54% per CFPS.

This stock has come down in the current year and has lost some 7.4% of its value in 2015. The 5 and 10 year total return to date are ok, but the 5 year total return is low. The 5 and 10 year total returns are 5.61% and 20.87% per year with 4.71% and 8.32% per year from dividends and 0.89% and 12.55% per year from capital gains.

Why the 5 year total return is low is because this stock hit a high 5 years ago and then contracted for two years. The 5 year total return to the end of 2015 was better at 15.76% per year with 13.96% per year from capital gains and 5.58% per year from dividends.

Outstanding shares have increased by 0.2% and 3.2% per year over the past 5 and 10 years. Revenue growth has been good over the past 5 and 10 years. Cash Flow growth is moderate to good. However, there has been no earnings growth.

Over the past 5 and 10 years Revenue has grown at 11% and 20.5% per year. Revenue per Share has grown at 10.8% and 16.8% per year over the past 5 and 10 years. Analysts do expect good growth in Revenue for 2015, but if you look at Revenue growth for the first quarter of 2015, it has not grown much.

The EPS is down by 38% and 12.4% per year over the past 5 and 10 years. If you look at EPS using the 5 year running average over the past 5 years, EPS is down by 3.3% per year. EPS do fluctuate. Analysts again expect EPS to grow well in 2014; however for the first quarter of 2015 there is an EPS loss of $0.26.

Cash Flow grew at 5.45 and 20.4% per year over the past 5 and 10 years. CFPS has grown at 5.1% and 16.7% per year over the past 5 and 10 years. Analysts seem to expect some good growth in Cash Flow for 2015, but Cash Flow grew only modestly in the first quarter of 2015.

Return on Equity was below 10% twice in the past 5 years and below 10% twice also in the past 10 years. The ROE for 2014 was very low at 2% and the 5 year median value is 11.2%. The ROE on comprehensive income was better at 7.5% and this has a 5 year median value of 15%.

The Debt Ratios have always been good, but they have gone from and excellent rate to a good rate. The Liquidity Ratio for 2014 was 1.70. The 5 year median value is 2.57. The Debt Ratio for 2015 is 1.88. The Leverage and Debt/Equity Ratios are a little high, but ok at 2.13 and 1.13 in 2014.

This is the first of two parts. The second part will be posted on Thursday, June 4, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.

Ag Growth International (AGI) is a leading manufacturer of portable and stationary grain handling, storage and conditioning equipment, including augers, belt conveyors, storage bins, handling accessories and aeration equipment. AGI has manufacturing facilities in Canada, the United States, the United Kingdom and Finland. Its web site is here AG Growth.

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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