Wednesday, September 21, 2016

Telus Corp

Sound bite for Twitter and StockTwits is: Price seems reasonable. See my spreadsheet on Telus Corp.

I do not own this stock of Telus Corp. (TSX-T, NYSE-TU). I started to follow this stock because of a list of stock John Sartz talked about in 2008. At the Toronto Money Shows in 2009 and 2010 Aaron Dunn from KeyStone Financial Publishing Corp talked about having recommended this stock. Aaron Dunn says he likes companies with resilient business models, which are profitable and are growing their earnings. He also like companies with strong management teams, health balance sheets and compelling valuations.

They have been raising their dividends from 2005. Before that there was dividend increases, but between 2001 and 2002 dividends were decreased by some 57% and then they were flat for two years. The dividend yield has always been good, but increases have varied. The current dividend increases are moderate, but they used to be quite good.

The current dividend is 4.38% based on dividends of $1.84 and a stock price of $42.03. The 5 year median dividend yield is 3.91% and the historical median is 3.87%. The 5 and 10 year growth is 11% and 26% per year. The last dividend increase was this year and it was for 4.5%. However, they often increase the dividend twice each year. The total dividend increase for 2016 is 9.8%.

If you had bought this stock 5, 10 or 15 years ago, your current dividend yield on your original price if you paid a median price would be 6.98%, 6.67% and 11.83%. The reason why the 10 year dividend yield is lower than the 5 year one is because the stock price was higher 10 years ago than 5 years ago. If you bought the stock today and annual increases continue to be around 10%, then in 5, 10 or 15 years you could have a yield of 7.05%, 11.35% or 18.29%. Real life can be somewhat different.

They can afford their dividends. The Dividend Payout Ratio for EPS for 2015 was 71.2%. The 5 year median DPR for EPS was 64%. The DPR for CFPS was 27.65 and the 5 year median was 27%.

Shares have been decreasing by 1.6% per year over the past 5 and 10 years. So, I would be looking at such things as Revenue growth instead of Revenue per Share growth. Revenue per Share has grown at 6.76% and 6.11% per year over the past 5 and 10 years. Revenue has grown at 5.04% and 4.385 per year over the past 5 and 10 years.

The debt ratios are low. The Liquidity Ratio is just 0.55. This means current assets cannot cover current liabilities. If you add in cash flow after dividends it rises to only 1.15. The Debt Ratio is 1.41. This is low. I prefer both to be at or above 1.50 for safety’s sake. Low debt ratios make a company vulnerable in bad times. Other telecoms also tend to rely on cash flow to increase Liquidity. The Leverage and Debt/Equity Ratios are a bit too high 3.44 and 2.44 for 2015. These are also a bit higher than other telecoms.

The 5 year low, median and high median Price/Earnings per Share Ratios are 14.84, 16.76 and 18.69. The corresponding 10 year ratios are 13.66, 15.38 and 16.94. The historical ratios are 13.87, 17.05 and 19.64. The current P/E Ratio is 15.12 based on a stock price of $42.03 and 2016 EPS estimate of $2.78. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a Graham Price of $29.15. The 10 year low, median and high median Price/Graham Price Ratios are 1.17, 1.36 and 1.49. The current P/GP Ratio is 1.44 based on a stock price of $42.03. This stock price testing suggests that the stock price is relatively reasonable but above the median.

The 10 year Price/Book Value per Share Ratio is 2.60. The current P/B Ratio is 3.09 a value some 19.1% higher. This is based on BVPS of $13.58 and a stock price of $42.03. This stock price testing suggests that the stock price is relatively reasonable but above the median.

The historical median dividend yield is 3.87%. The current dividend yield at 4.38% is some 13% higher. This dividend yield is based on dividends of $1.84 and a stock price of $42.03. This stock price testing suggests that the stock price is relatively reasonable and below the median.

When I look at analysts’ recommendations, I find Strong Buy, Buy, Hold and Underperform recommendations. Most of the recommendations are a Hold and the consensus is a Hold. The 12 month stock price is $44.20. This implies a total return of 9.54% with 5.16% from capital gains and 4.38% from dividends. This is based on a current stock price of $42.03.

Andrew Walker of Motley Fool likes this stock. He says that the company plans to raise dividends between 7 and 10% from now through 2019. There are several recent articles on this stock for Motley Fool. Emily Jackson at the Financial Post talks about the Broadband war between Telus and Shaw out west. This article by Peter Mitham in Vancouver Business talks about how Telus is trying for exclusive rights to condos. Some people do not like this idea. See what analysts say about this stock on Stock Chase.

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 Just Energy Group Inc. (TSX-JE, NYSE-JE)... learn more . The next stock I will write about will be Wajax Corp. (TSX-WJX, OTC- WJXFF)... learn more on Friday, September 23, 2016 around 5 pm. Tomorrow on my other blog I will write about Bear Market Income... learn more on Thursday, September 22, 2016 around 5 pm.

Telus is a national telecommunications company in Canada. Telus provides a wide range of communications products and services including data, Internet protocol (IP), voice, entertainment and video. Its web site is here Telus Corp.

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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