Canyon Services Group

Sound bite for Twitter and StockTwits is: Cheap and risky. It looks like the stock is currently quite cheap. However, it is in an industry that is currently having problems. Also, this company has had other years of earnings losses and is expected to have earnings losses over the next two years. Liquidity Ratio is not were it should be. An investment would have risk. See my spreadsheet on Canyon Services Group .

I do not own this stock of Canyon Services Group (TSX-FRC, OTC-CYSVF). I get a newsletter weekly from MPL Communications called Advice Hotline. They wrote up this stock on July 19, 2012 and I was impressed with it so I did a spreadsheet. You can sign up for this newsletter at their site.

This stock only started to pay a dividend in 2011. They have been inconsistent on dividend increases. They have both increased dividends and decreased them. Dividends are some 20% higher than they were in 2011, however, most of the increase between 2011 and now are gone. In 2015 dividends were decreased by some 80%. Current dividend yield is moderate at 2.39% based on a stock price of $5.03.

The reason for the dividend decrease is probably that the company is expected to lose money in this year and next. They also have an earnings loss in 2013. This company is connected to the energy industry so this cannot be a surprise.

This stock peaked in 2013. For the 5 year to the end of 2014 total return was 37.74% per year with 30.78% per year from capital gain and 6.96% per year from dividends. If you look at the 5 years to the current date, the total return is a negative 8.53% with 14.25% per year from capital loss and 5.72% per year from dividends.

Shares have increased by 7.8% and 16.9% per year over the past 5 and 10 years. This would make per share values a better indicator of growth. Revenue growth has been very good. Earnings have fluctuated a lot and for 4 years of the last 10 years this company has had earning losses. Problem with Cash Flow is that they had a year of negative cash flow 5 years ago. Generally Cash Flow growth has been good.

Revenue has grown at 66% and 40.8% per year over the past 5 and 9 years. Revenue per Share has grown at 54% and 20.4% per year over the past 5 and 9 years. Revenue is expected to drop this year according to analysts. If you compare the 12 month period to the end of 2014 and to the end of the second quarter, Revenue is flat.

Cash Flow has grown by 12.5% and 31.1% per year over the past 4 and 9 years. CFPS has grown by 95 and 17% per year over the past 4 and 9 years. Analysts expect cash flow to drop around 74% this year. If you compare the 12 month period to the end of 2014 and to the end of the second quarter, cash flow is down by 14%.

The only problem I see with debt ratios is with the Liquidity Ratio. It is only at 1.15 for 2014. It has been better in the past as it has a 5 year median of 1.81. If you add in cash flow after dividends, the Liquidity Ratio becomes 1.42. I would prefer this ratio to be 1.50 for a margin of safety. Low Liquidity Ratios makes a company vulnerable in the bad times.

The other debt ratios are good. The Debt Ratio is at 2.93 in 2014. Leverage and Debt/Equity Ratios for 2014 are 1.52 and 0.52.

Because of earnings losses, the Price/Earnings per Share Ratios are all over the place and so I cannot use the P/E Ratio to look at the current price. I also cannot use dividend yields for testing as I do not have enough data.

The best fix I can get on a Graham Price is one of around $8.41. The current Price/Graham Price Ratio is 0.60 based on a stock price of $5.03. The 9 year low median and high P/GP Ratios are 0.65, 1.06 and 1.38. This stock price testing suggests that the stock is relatively cheap.

The 9 year median Price/Book Value per Share is 2.19. The current P/B Ratios 0.90 based on a stock price of $5.03 and BVPS of $5.62. The current ratio is some 59% lower than the 10 year median P/B Ratio. This stock price testing suggests that the stock is relatively cheap.

The 9 year median P/S Ratio is 1.95. The current P/S Ratio is 0.85 based on 2015 Revenue estimate of $404 ($5.89 Revenue per Share) and a stock price of $5.03. The current P/S Ratio is some 56% lower than the 10 year median P/S Ratio. This stock price testing suggests that the stock is relatively cheap.

When I look at analysts' recommendations, I find Strong Buy, Buy, and Hold recommendations. Most of the recommendations are a Buy and the consensus recommendation is a Buy. The 12 month consensus stock price is $7.38. This implies a total return of 49.11% with 46.72% from capital gains and 2.39% from dividends.

I will have only one entry for this stock as I must do on some stock because I cover too many stocks to do double entries on all that I follow.

This company is one of Canada's largest energy and energy-related companies. The Company's operations include the exploration, development and production of crude oil and natural gas. Husky has operations in Western Canada, Eastern Canada, US, China, Indonesia and Greenland. This company is mostly foreign owned. Industry: Oil and Gas (Integrated Oils). It is listed under TSX Energy Index. Its web site is here Canyon Services 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.

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