Wednesday, January 6, 2016

Bird Construction Inc.

Sound bite for Twitter and StockTwits is: Dividend growth Industrial (Construction). I think this company is still a dividend growth one, even though it is not growing the dividend at present. No company is perfect. A lot of companies are having a hard time in the current economic situation as growth since 2008 has been subpar for the economy. I do not think that this is going to change anytime soon. See my spreadsheet on Bird Construction Inc.

This is the first opportunity I have had for over a year to look at a new stock. I do not own this stock of Bird Construction Inc. (TSX-BDT, OTC-BIRDF). This was listed as a top stock in ETF of iShares S&P TSX Canadian Dividend Aristocrats Index. I had not heard of it before, so I decided to do a spreadsheet on this stock.

The dividend yield is good with moderate dividend increases. The current dividend yield is 6.28 % and the 5 year median dividend yield is 5.69%. The dividend growth over the past 5 and 10 years is at 7% and 8.9% per year.

They have been paying dividends since 2000 and in most years the dividends have gone up except for 2006 when they when down and also there has been no dividend increases in 2014 and 2015. The last dividend increase was for 5.6% and it was in 2013.

The company changed to an income trust in 2006 and then changed back to a corporation in 2011. They gave out a large special dividend when they changed to an income trust and lowered the dividends. The dividend continued to rise after the change to a corporation.

Currently they can afford their dividends but they are a high percentage of EPS and I would think that it may be a while before dividends are increased again. In 2013, dividends paid were 267% of the EPS. In 2014 the Dividend Payout Ratio moderated to 89% and it is expected to be around 95% in 2015. The Dividend Payout Ratio for CFPS was 50% and the 5 year median DPR for CFPS is 53%.

The 5 and 10 years total return to date is at 7.30% and 18.34% per year. The portion of this total return attributable to dividends is 6.35% and 8.82% per year. The portion of this total return attributable to capital gain is 0.95% and 9.35% per year over the past 5 and 10 years. The TSX is not doing well at the moment. This stock is down 7% so far in 2016.

Outstanding shares have increased by 0.2% and 2.3% per year over the past 5 and 10 years. Shares seem only to have been increased by Share Issues although there are outstanding stock options. Revenue growth has been good. EPS is non-existent to moderate, although the 5 year running averages are better than the strictly 5 and 10 year's growth. Cash flow growth is very low to good.

Revenue is up by 9.1% and 11.8% per year over the past 5 and 10 years. Revenue per share is up by 8.9% and 9.3% per year over the past 5 and 10 years. Growth in Revenue has not been good over the past 2 years and is expected to be only 5% in 2015. The year 2016 is expected to be a better year.

EPS is down by 8.8% and up by 7% per year over the past 5 and 10 years. However, if you look at 5 year running averages, EPS is down by only 1.2% and is up by 11.8% per year over the past 9 years. Unfortunately, analysts seem to expect EPS to continue to decline in 2015 and in the next couple of years.

Cash Flow is up by 0.8% and 19% over the past 5 and 10 years. CFPS is up by 0.6% and 16.5% per year over the past 5 and 10 years. Analysts expect cash flow to decline by some 23% in 2015. However, if you compare the 12 month period to the end of the third quarter to the 12 month period to the end of 2014, Cash Flow has gone up.

The Return on Equity has only been less than 10% once in the past 10 years and once in the past 5 years. 2013 was not a good year for the company. The ROE for 2014 was 20% and the 5 year median was 20%. The comprehensive income and the net income are the same for this company, so this is a good sign.

The debt ratios are a bit low and this can be a problem in bad times, but this company has been going since 1949, so it has been through a lot of different economic times. The Liquidity Ratio for is 1.24 for 2014 and its 5 year median ratio is 1.30. The Debt Ratio is 1.40 for 2014 and its 5 year Ratio is 1.38. I prefer both these ratios to be 1.50 for safety's sake.

Also, the Leverage and Debt/Equity Ratios are a little high. For 2014 they are 3.51 and 2.51. Their 5 year median ratios are 3.66 and 2.66. I like these ratios to be less and 2.00 and less than 1.00. However in some industries companies are debt heavy.

There is an interest analysis of this company by a blogger called Dividend Gangster in 2012.

This is the first of two parts. The second part will be posted on Friday, January 8, 2016 and will be available here. The first part talks about the stock and the second part talks about the stock price.

The company operates from 12 offices across Canada serving the heavy industrial market in all provinces as well as serving the industrial, commercial and institutional (ICI) markets in all provinces with the exception of Quebec. The work of the company is split almost evenly between the heavy industrial market and the ICI sector. Its web site is here Bird Construction 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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