Wednesday, December 16, 2015

First Capital Realty 2

On my other blog I am today writing about some of the companies I looked at more closely in my recent monthly update, Part 2 learn more...

Sound bite for Twitter and StockTwits is: Probably reasonable, but above median. See my spreadsheet on First Capital Realty.

I do not own this stock of First Capital Realty (TSX-FCR, OTC-FCRGF). In 2011 a reader asked me to review this real estate stock. Also, the site Canadian Dividend Stock site mentions this company as a top Canadian REIT.

It seems only directors have any substantial investment. I consider $1M a substantial investment. One director has shares worth around $2.2M and the Chairman has shares worth around $26.3M. Both these investments are under 1% of outstanding shares. However, the current Chairman was just recently appointed and he used to be the CEO.

The number of stock options that increased the outstanding shares was a bit high this year at 0.66%. For the companies that I follow the median increase is 0.24% and 70% are at 0.50% or less. Also, there is relatively a lot of insider selling. The Net Insider Selling is at 0.38% of market cap in 2014. For the companies that I follow, NIS median is 0.02% and 70% are at 0.10% or less. There was NIS at $15.7M.

In stock price testing, both AFFO and FFO have similar results. I will discuss the AFFO results. The 5 year median Price/AFFO is 18.12 and the 9 year P/AFFO is 18.12. The current P/AFFO Ratio is 20.01. This is based on 2015 AFFO estimate of $0.93 and a stock price of $18.61. The current P/AFFO Ratio is some 10% higher than the 5 year median P/AFFO Ratio. This stock price testing suggests that the stock price is relatively reasonable, but above the relative median.

I do a Graham Price calculation based on FFO rather than EPS. The 10 years low, median and high median Price/Graham Price Ratios are 0.92, 0.98 and 1.11. The current P/GP Ratio is 0.98 based on a stock price of $18.61. This stock price testing suggests that the stock price is relatively reasonable, and at the relative median.

The 10 year median P/S Ratio is 5.53. The current P/S Ratio is 6.29 based on 2015 Revenue estimate of $666M. The current P/S Ratio is based on a stock price of $18.61. This stock price testing suggests that the stock price is relatively reasonable, but above the relative median.

The 5 year median dividend yield is 4.62% and the current dividend yield is 4.62% based on a stock price $18.61 and Dividends of $0.86. However, if you look at historical dividend yield, the median is 5.78% and this is some 20% higher than the current dividend yield. This testing would suggest that the stock price is expensive. Note that the historical low dividend yield is 4.13%.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. Most of the recommendations are a Buy and this is also the consensus recommendation. The 12 month stock price is $21.36. This implies a total return of 19.40% with 4.62% from dividends and 14.78% from capital gains.

Jennifer Langley on Dakota Financial News reports on analysts' recommendations and also that two insider recently sold shares. A newswire release by First Capital Realty talks about the company being reorganized to enhance the effectiveness of its operations. Also see analysts' comments on Stockchase.

This is the second of two parts. The first part was posted on Tuesday, December 15, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.

First Capital Realty is Canada's leading owner, developer and operator of supermarket and drugstore anchored neighbourhood and community shopping centers located predominantly in growing metropolitan areas. Its web site is here First Capital Realty.

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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