Parkland Fuel Corp. 2

Sound bite for Twitter and StockTwits is: Price seems expensive. If they could convert some of the growth in revenue to growth in earnings and cash flow, the price would be relatively reasonable. See my spreadsheet at pki.htm.

I do not own this stock of Parkland Fuel Corp. (TSX-PKI, OTC- PKIUF). I decided to do a spreadsheet on this stock as it was a stock recommended by Roger Conrad in Money Show 2013. Roger Conrad currently writes in the Capitalist Times. He is usually a speaker at Money Shows. Here is a bit of blurb on Roger Conrad.

When I look at insider trading over the past year I find no insider selling and no insider buying. In 2014, outstanding share were increased by some 509,000 shares for stock options. This is 0.62% of the outstanding shares and is a little high. These shares have a book value of $6.4M and this number of shares was worth $11.1M at the end of 2014. I think that stock option issued over 0.50% is of outstanding share is high.

In insider ownership, the CEO owns shares worth some $2.5M, a director owns shares worth around $1.1M and the chairman owns shares worth around $5.9M. All this adds up to less than 1% of the outstanding shares, so are relatively small amounts of this company.

I get 5 year low, median and high median Price/Earnings per Share Ratios of 12.55, 14.55 and 17.62. These ratios are higher than the corresponding 10 year values of 9.44, 12.64 and 15.89. However, the historical median P/E Ratio is 14.55, which is at the same level as the 5 year P/E median ratio. The current P/E Ratio is 31.35. This is based on a stock price of $25.39 and 2015 EPS estimate of 0.81. This stock price testing suggests that the stock is relatively expensive.

I get a Graham price of $11.57. The 10 year Price/Graham Price Ratios are 1.03, 1.59 and 1.29. The P/GP Ratio is 2.19 based on a stock price of $25.39. This stock price testing suggests that the stock is relatively expensive.

I get a 10 year Price/Book Value per Share of 3.02. The current P/B Ratio is 3.46 based on a stock price of $25.39 and BVPS of $7.34. The current P/B Ratio is only some 14.5% higher than the 10 year value and would suggest that the stock price is relatively reasonable. However, I do think that P/B Ratio of 3.02 is a rather high one. It would seem that the P/B Ratio has always been rather high on this stock and the historical median P/B Ratio is 2.78.

I do not think that testing of the stock price using dividend yield would be of any value. The dividend yields on this stock have in the past been quite high with an historical high of 21.95 and an historical median of 9.03%. It was felt that old income trust stocks would end up with a dividend yield between 4 and 5% and this is where this stock is as its dividend yield is 4.25%.

The 10 year median Price/Cash Value per Share Ratio is 6.98. The current P/CF Ratio is 14.51 based on CFPS estimate for 2015 of $1.75 and a stock price of $25.39. The current P/CF Ratio is some 108% higher than the 10 year median P/CF Ratio. This stock price testing suggests that the stock is expensive. I think that the P/CF Ratio of 6.98 is a good one and perhaps a low ratio, but a ratio is 14.51 is a high one.

The 10 year median P/S Ratio is 0.24 and the current P/S Ratio is 0.27 based on 2015 estimate for Revenue per Share of $94.39 and a stock price of $24.39. The current P/S Ratio is some 13% above the 10 year median and so suggests that the stock price, although above the median is still relatively reasonable. Also a P/S Ratio of 0.27 is absolutely low. I think a P/S Ratio of 1.00 or lower is a low ratio.

The better showing on the P/S Ratio fits with the fact that this company has been able to grow revenue much better than it has been above to growth earnings or cash flow. What the company needs to do now is grow earnings and cash flow.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. Most of the recommendations are a Hold and the consensus recommendation is a Hold. (See my blog for information on Analyst Ratings.)

The 12 month target stock price is $24.40. This implies total returns of $4.29% with 4.25% from dividends and 0.04% from capital gains. This stock has done well lately with the stock being up some 16.8% already this year after a 17.7% increase last year.

In a recent press release on Stockhouse this company announced an acquisition, an appointment to their board of directors and Revised 2015 guidance. Recently a couple of analysts raised their 12 month stock price for Parkland Fuel. In September 2014, Cameron Conway of Motley Fool says this company is the best energy stock that you have never heard of.

This is the second of two parts. The first part was posted on Thursday, July 02, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.

Parkland Fuel Corporation is a marketer and distributor of fuels, managing a nationwide network of sales channels for retail, commercial, wholesale and home heating fuel customers. Its web site is here Parkland Fuel.

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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