Monday, June 13, 2016

Canexus Corporation

Sound bite for Twitter and StockTwits is: Takeover Target. Will this company be taken over by Superior Plus? If there is no take over, will the company be able to survive? The CEO seems to think so. See my spreadsheet on Canexus Corporation.

I do not own this stock of Canexus Corporation (TSX-CUS, OTC-CXUSF). I started to follow this stock in 2012 after reading that it was part of Sentry Small/Mid Cap Income Fund. See stocks in this fund on G&M. Sentry home site is here. This stock was also mentioned by Michael Decter in May of 2012. Michael Decter is president and CEO of LDIC Inc.

It would seem that this is another stock I should replace as it is being taken over by Superior Plus and this transaction is expected to complete in the first half of 2016. I do not see another stock from the above Sentry fund that I do not know about and is Canadian that I would like to follow. Dividends paying small cap Canadian stocks are not easy to find.

For the takeover or merger with Superior Plus, the companies still need Federal Trade Commission (FTC) approval. It is believed that Superior Plus will be able to devise a plan to alleviate concentration issues that the FTC is concerned with and that the transaction will ultimately close.

This stock has dropped from a high of $9.60 in of 2013 by some 84% to a current value of around $1.55. Superior Plus Corp. announced it has struck a friendly deal to swap .153 of a share for each share of Canexus Corp., valuing it at about $1.70 per share or $316 million.

The dividends have also been dropping. They have dropped some 93% since 2013. The company expects to only pay the first quarter dividend payment as it expects the takeover the Superior to be completed prior the payment of the second quarterly dividend. The company has not been able to cover the dividends by EPS since 2010.

The 10 year low, median and high median Price/Earnings per Share Ratios are 13.60, 16.58 and 19.56. The current P/E Ratio is 12.92 based on a stock price of $1.55 and 2016 EPS estimate of $0.12. This stock price testing suggests that the stock price is relatively cheap.

The 10 year P/S Ratio is 0.65. The current P/S Ratio is 0.50 a value some 23% lower based on Revenue estimate for 2016 of $580 and Revenue per Share of $3.10 and a stock price of $1.55. This stock price testing suggests that the stock price is relatively cheap.

The 10 year Price/Cash Flow per Share Ratio is 9.10. The current P/CF Ratio is 5.00 a value some 45% lower. The current P/CF Ratio is based on CFPS estimate for 2016 of $0.31 and a stock price of $1.55.

You cannot do testing on dividend yield dividends have recently been cut a lot. You cannot do testing on Price/Book Value per Share or Graham Price as the BVPS is negative.

When I look at analysts' recommendations, I find Buy, Hold and Underperform recommendations. Most are a Hold and the consensus recommendation is a Hold. The 12 month stock price is $1.65. This implies a 9.03% return with 6.45% from capital gains and 2.58% from dividends.

It looks like this company will still be taken over by Superior Plus with the short gap credit arrangement notice via Market Wired press release. Barry Critchley in the Financial Post gives an "astute investor's" view of this takeover of Canexus Corp. In the conference call transcript for Q1 of 2016 on Seeking Alpha, Canexus says that they expect that the Superior takeover will happen. However, there are those on Stockhouse Bull Board that think the takeover will not happen.

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 that report here.

The last stock I wrote about was about was Power Corp of Canada (TSX-POW, OTC-PWCDF)... learn more . Tomorrow on my other blog I will write about not dying broke... learn more on Tuesday, June 14, 2016 around 5 pm.

Canexus Corporation is based in Calgary, Alberta, Canada, and is a chemical manufacturing and handling company serving customers for more than half a century. Canexus produces sodium chlorate and chlor-alkali products largely for the pulp and paper and water treatment industries. Their operations are located in North and South America and organized into three business units. Its web site is here Canexus Corporation.

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. I have three blogs. The first talks only about specific stocks and is called Investment Talk . The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits.

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