Mullen Group Ltd.

Sound bite for Twitter and StockTwits is: Probably stock price is fair. My some measure, like the Graham Price when the P/GP Ratio is 1.31 shows a rather high stock price. However, other testing shows the price to be rather low. For example see my report concerning the P/B Ratio testing. See my spreadsheet on Mullen Group Ltd.

I own this stock of Mullen Group Ltd. (TSX-MTL, OTC- MLLGF). I like to look at recommended small cap dividend paying stock to see if they would be a possible good investment now or in the future. The other thing to mention about this stock is that it recently converted from an income trust and has decreased it dividends. The reduction in dividend brought the Dividend Payout Ratios down to a place that would allow for the company to begin growing again.

I sold a stock called Ensign Energy Services (TSX-ESI, OTC-ESVIF) to buy Mullen. I explained my decision in a blog entry called Ensign and Mullen.

They have, unfortunately, fooled around with dividend payments. Before they became an income trust in 2005, they were paying dividends twice a year. As an Income Trust they paid dividends every month. When they changed to a corporation in 2009 they started to pay dividends quarterly. In 2013 they again switched dividends to monthly.

They cut the dividends in 2009 when they changed to a corporation. They started to again raise the dividends in 2011. However, this company services the oil and gain industry and unfortunately by 2011 they could no longer sustain the dividends they were paying. In 2016 they reduced the dividends by some 20%. Analysts seem to feel that starting in 2017 the company can again afford the dividends it is paying. I was hardly surprised by the dividend cuts considering the problems with the oil and gas industries.

A plus for this company is the strong balance sheet. The Liquidity Ratio for 2015 is 2.13. The Liquidity Ratio has always been good. The Debt Ratio at 1.80 in 2015 is lower than it has been but this is still a very good ratio. The Leverage and Debt/Equity Ratios are a little high but still fine at 2.25 and 1.25 for 2015.

A bit of a negative is the increase in outstanding shares which have increased by 3.1% and 6.9% per year over the past 5 and 10 years. Shares have increased due to Share Issues and Stock Options and have decreased due to Buy Backs. Actually increasing shares is not a bad thing in itself, but the thing is that per share values become the important ones.

You can see the results of increased shares when you look at Revenue and Revenue per Shares. The Revenue has increased by 3.2% and 9.5% per year over the past 5 and 10 years. The Revenue per Share has increase by 0.1% and 2.5% per year over the same time frame.

I get 5 year Price/Earnings per Share Ratios of 12.75, 15.80 and 18.85. The corresponding 10 years ratios are close at 12.04, 14.18 and 17.11. The historical median P/E Ratio is 14.90 and this is between the 5 and 10 year ratios. The current P/E Ratio is 24.00 based on a stock price of $14.16 and 2016 EPS estimate of $0.59. This stock price testing suggests that the stock price is relatively expensive.

When I look at analysts' recommendations, I find only Buy and Hold recommendations for this stock. There are more Hold recommendations than Buy recommendations and the consensus recommendation is a Hold. The 12 month stock price is $16.12. This implies a total return of 20.62% with 6.78% from dividends and 13.84% from capital gains.

I get a 10 year Price/Book Value per Share Ratio of 1.80. The current P/B Ratio is 1.61 a value some 10.5% lower. This stock price testing suggests that the stock price is relatively reasonable and below the median.

It is also interesting that this stock has an historical median dividend yield of 4.22%. The current dividend yield is 6.78%, a value some 60% higher. This testing also suggests that the stock price is good and certainly below the median.

Karen Thomas of Motley Fool talks about why you should own this stock. Samantha Reynolds at Financial Market News talks about some recent analysts' recommendations on this stock. There is an article in the Canadian Business magazine about this company cutting their capital spending and dividends because of hardship in the oil patch. On Market Wired, Mullen Group Ltd announce their business plan and dividend for 2016.

I will have only one entry for this stock this year. However, I did a more complete report on this company in 2015 and you can see these reports here and here

On Friday, February 26, 2016 I wrote about ARC Resources Ltd. (TSX-ARX, OTC-AETUF)... learn more. On my other blog I will write about my Portfolio and SPY ... learn more on March 1, 2016. The next stock I will write about will be Home Capital Group (TSX-HCG, OTC- HMCBF)... learn more on Wednesday, March 2, 2016.

Mullen Group Ltd. is a corporation that owns a network of independently operated businesses. Mullen is recognized as the largest provider of specialized transportation and related services to the oil and natural gas industry in Western Canada and is one of the leading suppliers of trucking and logistics services in Canada - two sectors of the economy in which Mullen has strong business relationships and industry leadership. Its web site is here Mullen Group 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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