Friday, September 2, 2016

Badger Daylighting Ltd.

Sound bite for Twitter and StockTwits is: Good stock. but pricy. The company has been doing quite well with growth and the debt ratios are good. It does seem to be a bit pricy at the moment. See my spreadsheet on Badger Daylighting Ltd.

I do not own this stock of Badger Daylighting Ltd. (TSX-BAD, OTC-BADFF). I started to follow this stock after reading a couple of articles in February 2012 in the G&M that talked about the company. The first article looked at what the pros who manage small-cap funds are buying. Badger was one of 10 stocks mentioned and it looked like an interesting stock. It is a dividend paying small cap. The second article looked at what stocks might appeal to a conservative investor looking for income.

This company started to pay dividends in 2004 some 13 years ago. They did dividend increases at first, but stopped them when new laws on income trust where announced. Then they cut the dividend by almost 19% when changing from an income trust to a corporation in 2011. Since then there have been no dividend increases until this year 2016 when the dividends were increased by 10%.

The dividend yield used to be very good when this stock was an income trust. The historical high dividend yield is over 11% and the historical median is 5.5%. However, currently the dividend, even with the most recent increase is just 1.5%. The current dividend is based on a stock price of $26.25 and dividends of $0.396. They have been inconsistent in dividend increases, so I would not expect this to change in the near future. I still would count them as a dividend growth company.

They can afford their dividends. The Dividend Payout Ratio for 2015 was 35% for EPS and 18% for CFPS. These are good ratios.

Their outstanding shares have grown by 2.7% and 1.4% per year over the past 5 and 10 years. Therefore if I were an investor I would be interested in per share values. For example, the Revenue is up by 23.7% and 17.1% per year over the past 5 and 10 years. The Revenue per Share is up by 20.4% and 15.5% per year over the same time periods.

The growth in EPS and CFPS is also good. The EPS is up by 12.8% and 8.5% per year over the past 5 and 10 years. The CFPS is up by 14.4% and 10.3% per year over the past 5 and 10 years.

The 5 year low, median and high median Price/Earnings per Share Ratios are 9.31, 18.07 and 26.83. The corresponding 10 year values are lower at 8.99, 10.98 and 13.36. The historical values are 8.79, 10.80 and 13.60. The current P/E Ratio is 30.17 based on a stock price of $26.25 and 2016 EPS estimate of $0.87. If we use the 2017 estimate EPS of $1.32 we get a P/E of 19.89. The EPS has always fluctuated quite a bit. However, no matter how you look at this using the P/E Ratios, it looks like the stock price is relatively expensive.

I get a Graham Price of $11.78. The 10 year low, median and high median Price/Graham Price Ratios are 0.93, 1.22 and 1.45. The current P/GP Ratio is 2.23 based on a stock price of $26.25. This stock price testing suggests that the stock price is relatively expensive.

The 10 year median Price/Book Value per Share Ratio is 3.14. The current P/B Ratio is 3.71 based on BVPS of $7.08 and a stock price of $26.25. The current P/B Ratio is some 18% higher than the 10 year median P/B Ratio. This stock price testing suggests that the stock price is reasonable but above the median.

It is not really valid to do a dividend yield test on the stock price because this stock used to be an income trust which had a lot higher dividends. Still the dividends are quite low at the present time.

I get a 10 year P/S Ratio of 1.50. The current P/S Ratio is 2.47 based on a stock price of $26.25 and Revenue estimate of $394M for 2016. The current ratio is some 65% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.

The 10 year median Price/Cash Flow per Share Ratio is 6.91. The current P/CF Ratio is 12.93 based on CFPS estimate for 2016 of $2.03. The current P/CF Ratio is some 87% higher than the 10 year median. This stock price testing suggests that the stock price is relatively expensive.

When I look at analysts' recommendations I find Strong Buy and Buy recommendations. Most of the recommendations are a Buy and the consensus recommendation would be a Buy. The 12 month stock price is $28.96. This implies a total return of 11.83% with 10.32% from capital gains and 1.51% from dividends.

Grant Hamersma in an article on Base Ball News Resource talks about Canaccord Genuity recently changing their rating on this stock from Hold to Buy and increasing target price to $28.00. Karen Thomas of the Motley Fool likes this stock. The company announced a change in the CEO on Stockhouse recently.

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 Andrew Peller Ltd. (TSX-ADW.A, OTC-ADWPF)... learn more. The next stock I will write about will be Chemtrade Logistics Income Fund (TSX-CHE.UN, OTC-CGIFF)... learn more on Tuesday, September 6, 2016 around 5 pm.

Badger is North America's largest provider of non-destructive excavating services. Badger traditionally works for contractors and facility owners in the utility and petroleum industries. Badger's business model involves the provision of excavating services through two distinct entities: the Operating Partners (franchisees in the United States and agents in Canada), and Badger Corporate. Its web site is here Badger Daylighting 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.

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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