Wednesday, December 23, 2015

Colliers International Group Inc.

On my other blog I am today writing about Money Show 2015 and Derek Foster learn more...

Sound bite for Twitter and StockTwits is: Looks expensive. I would not buy this stock because of the very low dividend yield of just 0.18%. The street seems to like this stock as the stock price is up sharply this year. See my spreadsheet on Colliers International Group Inc.

I do not own this stock of Colliers International Group Inc. (TSX-CIG, NASDAQ-CIGI). I am following this stock as it has split off of the FirstService Corp stock I am following.

At the end of May 2015 FirstService Corp became Colliers International (TSX-CIG, NASDAQ-CIGI) and FirstService Corp was spin-off the company. These separate stocks started to trade on June 2, 2015. I split the assets of the company depending on the stock prices as of June 2, 2015. I also use this value to split past stock prices.

What is interesting about both these companies is that the stock price rose strongly after the split. FirstService Corp stock is up 100% so far this year and Collier is up 112% so far this year. In regards to dividends, the company started to pay dividends mid-2013 at $0.10 a quarter. Collier has cut the dividends to $0.04 US$ semi-annually. The current dividend yield is 0.18%. Can you still call this a dividend stock with such a long yield?

Share growth and past growth in Revenue, EPS and Cash Flow will be the same as for FirstService Corp for 2014 as the companies did not split until May 2015. See FirstService Corp (TSX-FSV, NASDAQ-FSV).

There is also a problem knowing how analysts have come up with their estimates for 2015. FirstService Corp never said how they are splitting up the company; that is what percentage of assets, earnings, etc. go with each company. They are inconsistent in the quarterly statements for the percentages assigned to the New FirstService Corp. For Collier, they just are using the FirstService Corp values for comparison in their quarterly statements except for revenue. Market on June 2, 2015 gives a close to even split, but Yahoo says the split is 58.51% to Collier and 41.69% to FSV. I cannot confirm either.

Analysts expect Revenue to grow by 33% in 2015. However, if you look at the 12 month period to the end of the third quarter and the 12 month period to the end of 2014, growth is at just 9.4%. If you assume that Revenue will grow by the same amount per month as averaged over the past 9 months, then growth would be 17.19%. This is still a lot less than 33%. Analysts expect good growth in EPS to $1.01. However, the EPS to the end of third quarter is a loss of $0.34. I guess we will just have to wait until we see what the year brings.

I get 5 year low, median and high median Price/Earnings per Share Ratios of 12.03, 15.38 and 18.72. The corresponding 10 year P/E Ratios are lower at 10.43, 13.04 and 16.47. The current P/E Ratio is 44.37 based on a stock price of $61.93 CDN$ and 2015 EPS estimates of $1.01 US$ or $1.40 CDN$. This stock price test suggests that the stock price is relatively expensive. (You get the same results whether you use US$ values or CDN$ values.)

Because of the spin off, there is not much to compare the current stock price with. The only other viable ratio I think is the P/S Ratio. The 10 year median P/S Ratio is 0.48. The current P/S Ratio is 0.95, a value some 97% higher. This stock price test suggests that the stock price is relatively expensive. The other thing is that a P/S Ratio of 0.95 is a low absolute value for P/S Ratio.

Also of note is I get a Graham Price of $10.85. The Price/Graham Price Ratio would be 5.72. This is a high value. The 10 years P/GP Ratio median high value was 3.05. This is also a rather high value as a good stock price is when this ratio is at 1.00 or lower. This stock price test suggests that the stock price is relatively expensive.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. There are equal numbers for all three. The consensus recommendation would be a Buy. The 12 month stock price is $48.77 US$. This implies a total return of 10.02% with 9.84% from capital gain and $0.18% from dividends. This is based on a current stock price of $44.40 US$ or $61.93 CDN$.

This item by Jennifer Langley on Dakota Financial News talks about what analysts think might be this company's earnings in 2015. In this article by Steve Brown on The Dallas Morning News talks about Collier opening a regional office in Dallas.

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.

Colliers International Group Inc. is a global leader in commercial real estate services. Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include brokerage, global corporate solutions, investment sales and capital markets, project management and workplace solutions, property and asset management, consulting, valuation and appraisal services, and customized research and thought leadership. Its web site is here Colliers International 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.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

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