Wednesday, February 3, 2016

Shaw Communications Inc.

Sound bite for Twitter and StockTwits is: Cheap to reasonable price. This company is quite reasonable priced and it currently is a dividend growth company. They are making a profit for shareholders, but stock options and insiders selling are rather high. See my spreadsheet on Shaw Communications Inc.

I do not own this stock of Shaw Communications Inc. (TSX-SJR.B, NYSE-SJR). I am following this stock because it was a stock on Investment Reporter's list, a MPL Communications Publication.

This is a dividend growth stock with good dividends and low growth. The current dividend is 4.89% based dividends of $1.19 and a stock price of $24.25. The 5 year median dividend yield is 4.22%. I have dividend information going back to 1994. At first dividends were very low and dividend growth very low. Dividends were under 1% and dividend growth low at around 4%.

Dividends were ramped up between 2004 and 2009. This is why the 10 year dividend growth is at 23.4% per year. However, the dividend increases are again low with a 5 year growth of 5.9% per year. The last dividend increase was moderate at 7.7% in 2015. Since around 2009 the dividends have been in the 3 to5% range.

With the current dividend of 4.89% and assuming that dividend growth averages 5.9% per year, in 5 years' time you could be earning 6.51% on an investment today or in 10 years' time you could be earning 8.67% on an investment today or in 15 years' time you could be earning 11.55% on an investment made today.

I note that this company gives out a lot of stock options. Over the past 3 years outstanding shares have increased by 0.79%, 0.74% and in 2015 by 1.24% due to stock options. This is high by my standards. For the stocks that I cover the median increase in outstanding shares due to stock options is 0.27% and 70% of the companies increased their outstanding shares by 0.54% or less due to stock options.

Also there is a relatively a lot of insiders' selling. Net insider selling in 2015 was at 0.47% of market cap. The median net insider's selling for the stock I follow is at 0.02% and 70% of the companies I follow, insider selling at 0.11% or lower. Lots of insider selling could be due to the high amount of stock options granted.

I follow BCE, Manitoba Telecom and Telus Corp. also and these stocks are not out of line with stock options or net insider selling from my point of view.

The 5 year low, median and high median Price/Earnings per Share Ratios are 13.00, 14.14 and 15.98. The 10 year corresponding values are similar at 13.18, 14.83 and 17.36. The historical median P/E Ratio is 16.02. The current P/E Ratio is 13.62 based on a stock price of $24.25 and 2016 EPS estimate of $1.78. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a Graham Price of 21.02. The 10 year low, median and high median Price/Graham Price Ratios are 1.24, 1.48 and 1.68. The current P/GP Ratio is 1.15 based on a stock price of $24.25. This stock price testing suggests that the stock price is relatively cheap.

The stock looks reasonable to cheap using dividend yields also. I recently put out a report stock prices and dividend yield. See my spreadsheet at dividend growth stocks that I just updated for February 2016.

When I look at analysts' recommendations, I find Buy, Hold and Underperform recommendations. Most of the recommendations are a Hold and the consensus is a Hold. The 12 month stock price is $27.38. This implies a total return of $17.79% with 4.89% from dividends and 12.91% from capital gains. It is a rather high return for a Hold rating.

This article in the Calgary Herald talks about TV mogul JR Shaw being the most generously compensated executive in Calgary in fiscal 2014 at $17.9M. Demetris Afxentiou of Motley Fool likes this company and its long term potential. Christina Pellegrini wrote in the Financial Post how Shaw may become a growth story in the future.

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 those report here and here.

Shaw Communications Inc. is a diversified communications company whose core business is providing broadband cable television, Internet, digital phone and satellite direct-to-home services. Its web site is here Shaw Communications 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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