IBI Group Inc.

Sound bite for Twitter and StockTwits is: Turnaround opportunity? This stock is doing better. There are still many things I do not like about it, but it seems to be making progress. See my spreadsheet on IBI Group Inc.

I do not own this stock of IBI Group Inc. (TSX-IBG, OTC-IBIBF). I have had this stock on my list to investigate for some time before I finally did in 2011. What finally prompted me set up a spreadsheet on this stock was an investment report I read in March of 2011.

When I first looked at this company it was a dividend growth company, however, it had not been on the TSX for very long, only since 2004. It decreased its dividend in 2011. They paid only one dividend in 2013 before cancelling the dividend entirely.

This company has had earnings losses for the last 3 years. Analysts expect EPS to be around $0.33 for 2015. The EPS for the first 3 quarters of 2015 was $0.39, so this seems reasonable. The stock has perked up since the lows in 2013, so it looks like the market believes it will do better in 2015. The stock price is up by 250% since the lows of 2013.

One of the problems I see is the increase in outstanding shares, which are up by 6.6% and 13.3% per year over the past 5 and 10 years. This is mainly due to Share Issues. Continuous increases to outstanding shares can really affect a stock's performance for shareholders.

A connecting item is that IBI Group has issued Class B partnership units to IBI Group Management Partnership, the entity that carried on the operations of the Fund prior to its acquisition by the Fund. These shares can be exchanged for shares in the company. When this occurs, outstanding shares will be increased by over 28%. There are also convertible debentures outstanding.

If you look at Revenue, Revenue has grown at 1.7% and 12.5% per year over the past 5 and 10 years. However, the Revenue per Share growth is negative. This is down by 4.6% and 0.7% per year over the past 5 and 10 years. Analysts expect growth of around 8% in 2015. If you compare the 12 month period to the end of 2014 to the 12 month period to the end of the third quarter, Revenue is up by 6.4%.

Growth in Cash Flow is worse. Cash Flow is down by 29% and up by 1.6% per year over the past 5 and 10 years. Cash Flow per Share is down by 33.6% and 10.3% per year over the past 5 and 10 years.

Another problem I have with this company is that it has a negative book value. The liabilities are greater than the assets, so potential breakup value is negative. Also, the Liquidity Ratio has bounced around quite a bit. At the end of 2014 it was 1.88 a good value. However, at the end of the third quarter of 2015 it was just 1.28. I like this ratio to be at least at 1.50 for safety's sake.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus recommendation would be a Buy. The 12 month Stock Price is $3.63. This implies a total return of 55.13%, all from capital gains.

There is a Market Wired press release for the third quarterly's results. There is also a press release on Stock House about IBI Group offering Right (to buy more shares) to existing shareholders. This article by Barry Critchley in the Financial Post talks about the company getting a new credit facility in 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.

IBI Group Inc. is an international, multi-disciplinary provider of a range of professional services focused on the physical development of cities. The Company through IBI Group provides professional services, including planning, design, implementation, analysis of operations and other consulting services in relation to four main areas of development (urban land, building facilities, transportation networks and systems technology.) Its web site is here IBI Group Inc.

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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