Sound bite for Twitter and StockTwits is: My total return is quite good. Because I expect it to be a dividend growth stock again, I am still holding this stock. A lot of stocks have had trouble with the transition from an Income Trust to a Corporation. This company is growing. See my spreadsheet at wsp.htm.
I own this stock of WSP Global Inc. (TSX-WSP, OTC- WSPOF). In Sept 2011 I rationalized my portfolio. I sold stocks that did not make it into my core and bought stocks that could of the same type. In this case selling Stantec and buying Genivar. In October 2011 I wanted to sell Enerflex because it is not a company I bought but a distribution from Toromont. I bought more Genivar, now called WSP Global.
This is another stock that was an income trust and has since changed to a corporation. Since deciding to change to a corporation, it has not raised the dividend. It has been at $1.50 annually per share since 2009. However, they have made a couple of special dividend payments.
Their problem is that they are paying out a too high a percentage of their earnings. The Dividend Payout Ratio for 2014 is 153% and the 5 year median DPR for EPS is 95%. The DPR for CFPS is better with a DPR for 2014 at 83% with a 5 year median value of 66%. Analysts expect better for 2015 with DPRs for EPS at around 73% and for CFPS at around 45%. Analysts also expected better DPRs for EPS for 2014, but this did not happen.
The dividend yield is still fairly good at 3.47%. I am making a dividend yield of 6.07%, which was the dividend yield I was getting when I bought this stock. I have only held this stock for 3.6 years and I have made $5.38 in dividends per share. This would be 22.7% of the original cost which was $23.64 per share.
My total return to date is 26.53% per year with 18.43% per year from capital gains and 8.10% per year from dividends. I certainly cannot complain about by total return, but I do prefer stocks that raise their dividends. The 5 and 10 year total returns are good with them being at 11.84% and 23.25% per year over these periods. The portion of these returns from capital gains is at 7.29% and 15.78% per year. The portion of these returns from dividends is at 4.54% and 7.47% per year.
Outstanding shares have increased by 37% and 30% per year over the past 5 and 10 years. The increase is mainly due to the issuance of shares, but some are also issued under a DRIP plan. Revenue growth is good, Earnings growth are non-existent to moderate to good and Cash Flow growth is non-existent to low to good. This company only went public in 2006, so I have 8 to 9 years of data rather than 10 years. There is some data from 2005.
Revenue is up by 43% and 41% per year over the past 5 and 9 years. Revenue per Share is up by 4.4% and by 10.8% per year over the past 5 and 9 years. Analysts are expecting revenue to increase by around 86% in 2015 and then have more moderate increases after. Revenue is up by 25% if you compare 12 month Revenue to the end of 2014 and 12 month Revenue to the end of the first quarter.
A number of analysts are using a Net Revenue for this stock. The growth in Net Revenue is similar to Revenue with Net Revenue up by 43% and 43% per year over the past 5 and 9 years. The growth in Net Revenue per Share is at 4% and 11.9% per year over the past 5 and 9 years.
EPS is down by 13.8% and up by 6.8% per year over the past 5 and 8 years. Earnings or Net Income is better with increases of 15% and 235 per year over the past 5 and 8 years. Analysts expect a good increase in EPS for 2015. For this year they expect EPS of $2.05. For 2014 the EPS expected was $1.77 and they came in at $0.98. EPS was down slightly for the first quarter of 2015. So EPS has yet to go in the expected direction.
Cash Flow is up by 17% and 32% per year over the past 5 and 8 years. CFPS is down by 15% and up by 1.8% per year over the past 5 and 8 years. Analysts expect cash flow to increase about 32% in 2015. Cash Flow is up by 23% if you compare 12 month Cash Flow to the end of 2014 and 12 month Cash Flow to the end of the first quarter. This is going in the expected direction.
The Return on Equity was above 10% until the last 3 years. The ROE for 2014 was just 2.9% and it has a 5 year median value of 7.2%. The ROE on comprehensive income for 2014 is even lower at 2.2%, but its 5 year median is 10%.
The debt ratios are fine with the Leverage and Debt/Equity Ratios coming in a bit high and the Liquidity Ratio coming in a bit low in 2014. The Liquidity Ratio for 2014 is 1.30. If I add in cash flow after dividends the ratio is not much better at 1.36. I prefer this ratio to be 1.50. The 5 year median value is 1.55.
The Debt Ratio in 2014 is 1.77. Its 5 year median is 2.10. The ratio has been declining since the stock was issued. In 2016 this ratio was 4.14 and the decline stated in 2010. The Leverage and Debt/Equity Ratios for 2014 was 2.30 and 1.30. The 5 year median values are lower at 1.46 and 0.46. I prefer these ratios to be under 2.00 and under 1.00, respectively.
This is the first of two parts. The second part will be posted on Monday, June 8, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.
WSP Global Inc. is an engineering services firm providing private and public-sector clients with a complete range of professional consulting services throughout all project phases, including planning, design, construction and maintenance. WSP now has global coverage. Its web site is here WSP Group.
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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