Teck Resources Ltd.

Sound bite for Twitter and StockTwits is: The big question is when are resources going to recover. See my spreadsheet on Teck Resources Ltd.

I do not own this stock of Teck Resources Ltd. (TSX-TCK.B, NYSE-TCK), but I have. I bought this stock in 2008 and sold in 2009. I bought this stock because the company purchased Fording Canadian Coal Trust at exactly the wrong time and got into financial difficulties and the stock price dropped off a cliff as they had to cut dividends. When the stock recovered somewhat in 2009, I sold for a profit.

For a dividend paying stock, this stock is all over the place. Dividends were flat from 1993 to 2003. There were some big increases from 2004 to 2006. Dividends were then flat until they were cut in 2009. Dividends were reinstated in 2010 and they were almost back to where they were in 2008 by 2014. However, dividends were cut by 67% this year.

Dividends are volatile as is this stock, but it is a resource stock. Most analysts seem to feel that the current dividend will stay around for a while. The current dividend yield is rather good at 3.71% based on dividend of $0.30 and a stock price of $8.09. They seem to give out dividends as they can.

Outstanding shares have decreased by 0.4% and increased by 3.7% per year over the past 5 and 10 years. Outstanding shares have increased due to Share Issues and Stock Options and decreased due to Buy Backs. Revenue growth is low to good. There has been no earnings growth lately. Cash flow growth is negative to moderate.

Revenue is up by 2.3% and 9.6% per year over the past 5 and 10 years. Revenue per Share is up by 2.8% and 5.8% per year over the past 5 and 10 years. Analysts seem to expect this year to have declining revenues before they revive in 2016.

Last year, 2014, was not a great year for earnings as they fell some 62%. They are expected to fall another 38% this year before reviving again in 2016. If you compare the 12 month period to the end of 2014 and the 12 month period to the end of the second quarter, EPS is down by 4.8%.

Cash Flow is down by 2.5% and up by 5.8% per year over the past 5 and 10 years. CFPS is down by 2.1% and up by 2.1% per year over the past 5 and 10 years. Here again analysts expect Cash Flow to go down in 2015 and have some revival in 2016.

The debt ratios on this stock are very good. The Liquidity Ratio is 2.04. The Debt Ratio is 2.05. The Leverage and Debt/Equity Ratios are 1.96 and 0.96.

There are Class A and Class B shares. The Class A shares has 100 votes per share and Class B shares having 1 vote per share. Insiders and Caisse de dépôt et placement du Québec have Class A shares. For example the chairman has Class A and Class B shares and has shares worth around $7.9M. Caisse de dépôt et placement du Québec has Class A and Class B shares and has shares worth around $84.9M.

The 5 year low, median and high median Price/Earnings per Share Ratios are 12.76, 17.78 and 22.80. The corresponding 10 year values are 7.89, 13.19 and 16.98. The current P/E Ratio is 20.74 based on 2015 earnings estimate of $0.39 and a stock price of $8.09. This stock price testing suggests that the stock price is relatively expensive.

I get a Graham Price of $16.78. The 10 year low, median and high median Price/Graham Price Ratios are 0.64, 0.94 and 1.26. The current P/GP Ratio is 0.48. This stock price testing suggests that the stock price is relatively cheap.

The 10 year median Price/Book Value per Share Ratio is 1.39. The current P/B Ratio at 0.25 is based on BVPS of $32.10 and a stock price of $8.09. The 10 year median P/B Ratio is some 82% higher than the current P/B Ratio. This stock price testing suggests that the stock price is cheap.

Dividend Yield testing may not be appropriate because of the volatility of this stock and its dividends. However, the 5 year median dividend yield is 2.21% and the historical median dividend yield is 1.58%. These values are some 61% and 135% lower than the current dividend yield of 3.71% based on dividends of $0.30 and a stock price of $8.09.

To give a better fourth valuation, I looked the P/S Ratio. The 10 year median P/S Ratio is 2.13. The current P/S Ratio is 0.58 a value some 73% lower. This current P/S Ratio is based on 2015 Revenue estimate of $8.147 (and therefore Revenue per Share of $13.91. This stock price testing suggests that the stock price is cheap.

When I look at analysts' recommendations, they are all over the place. Recommendations are Strong Buy, Buy, Hold and Underperform. The vast majority of the recommendations are a Hold and the consensus recommendation would be a Hold. The 12 month stock price is $12.40. This implies a total return of $56.98% with 3.71% from dividends and 53.28% from capital gains.

There are some recent analysts' comments on Stock Chase about this stock. The site of The Market Business talks about this stock in October 2015.

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.

Teck is a diversified resource company involved in mining and mineral development with major business units focused on copper, metallurgical coal, zinc, gold and energy. This company has interests in several oil sands developments. The company explores for resources in the Americas, the Asia Pacific Region, Europe and Africa. Its web site is here Teck Resources Ltd.

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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