Friday, December 23, 2016

Colliers International Group Inc.

Sound bite for Twitter and StockTwits is: Reasonable and below median. I must admit I do have concerns because the P/GP Ratio and P/B Ratios are so high and the Liquidity Ratio is so low. It is also not clear where dividends are going yet. See my spreadsheet on Colliers International Group Inc.

I do not own this stock of Colliers International Group Inc. (TSX-CIGI, NASDAQ-CIGI) but I sort of used to as this is a spin off from FirstService Corp. (In actual fact they made FirstService Corp into Colliers International and then spun off FirstService Corp.) Also note that the TSX symbol has recently changed from CIG and some sites still list it under the old symbol.

I would not be much interested in this stock because of the low dividend yields. Since the split with FirstService Corp, they cut their dividend by around 80%. They not only lowered the dividend payments, they also decreased dividend payments from quarterly to semi-annual. They did start to raise the dividends again in 2016 by some 25%.

Their current dividend yield is just 0.27%. I would not invest in stocks with dividends below 1%. Even with high growth rates, it takes a long time with this low of dividend to start to get a really good dividend yield on your original purchase price of a stock. I do not think of stocks with yields below 1% as dividend paying stock. However, on this stock it is currently hard to know exactly where dividends are going to go.

The Dividend Payout Ratios for this stock was 32% in 2015 for EPS and was 5.1% in 2015 for CFPS. These are good rates. It is hard to say where the dividends will go in the future. Analysts seem unsure also as some think dividends will rise next year and others that they will stay level for a while.

Outstanding Shares have increased by 4.9% and 2.5% per year over the past 5 and 10 years. I would think that real growth will be shown in per share values. EPS is up by 63% in the last 5 years. For Collier it is up by 5.6% in 2015. Analysts expect 270% increase in EPS for 2016. This is possible as change in EPS between the first three quarters of 2015 and 2016 is 279%.

With growth for Colliers (and also FirstService) going forward it is hard to judge because each company took different part of the old company. But analysts expect growth in Revenue and Earnings and a drop in cash flow. The third quarterly results seem to support this.

The one thing that stands out is the low Liquidity Ratio. For 2015 it is just 1.04. The Liquidity Ratio for the third quarter is a bit better at 1.12. I prefer this ratio to be at 1.50 or higher for safety's sake. A low Liquidity Ratio gives companies vulnerability in bad times.

The 5 year low, median and high median Price/Earnings per Share Ratios are 12.03, 15.38 and 18.72. The corresponding 10 year values are 16.46, 19.29 and 22.13. The corresponding historical ratios are 12.03, 18.21 and 22.14. The current P/E Ratio is 16.40 based on a stock price of $50.30 and 2016 EPS estimate of $3.07 CDN$ ($2.30 US$). The P/E Ratio is 14.67 if based on a stock price of $50.30 and 2017 EPS estimate of $3.43 CDN$ ($2.57 US$). This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a Graham Price of $20.54 CDN$. The 10 year low, median and high median Price/Graham Price Ratios are 1.98, 2.60 and 3.11. First I have to say that the P/GP Ratios are very high. On an absolute basis a good stock price is when this ratio is at 1.00 or below. The current P/GP Ratio is 2.45 based on a stock price of $50.30 CDN$. This stock price testing suggests that the stock price is relatively reasonable and below the median.

The 10 year Price/Book Value per Share is 8.50. This is also a very high ratio. On an absolute basis, a B/P Ratio of 1.50 or less is considered a good ratio. The current P/B Ratio is 8.23 based on BVPS of $6.11 and a stock price of $50.30 CDN$. This is some 3.2% lower than the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I cannot do any stock price testing using dividend yield. They only just started to pay dividends and the dividends have been going south until very recently.

I can do some testing with Revenue and P/S Ratio. The 10 year median P/S Ratio is 0.47. This is a rather low value. The current P/S Ratio is 0.76 based on Revenue of $2570M CDN$ ($1927M US$). The current P/S Ratio is 0.75 a value some 54.8% higher. This stock price testing suggests that the stock price is relatively expensive.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus recommendation would be a Buy. The 12 months stock price consensus is $41.41 US$ or $55.23 CDN$. This implies a total return of 10.07% with capital gains at 9.81% and dividends at 0.27%.

Looking at technical indicators on Wall Street Confidential I see they give this stock a 14 day ADX of 20.92 indicating a weak trend. Marie Curie on Daily Quint says that the Royal Bank of Canada cut the target price on this stock from $70.00 CDN$ to $67.00 CDN$. Analysts Michael Smedley likes this stock as shown 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 FirstService Corp (TSX-FSV, NASDAQ-FSV)... report learn more . The next stock I will write about will be Stantec Inc. (TSX-STN, NYSE-STN)... learn more on Tuesday, December 27, 2016 around 5 pm.

Colliers International Group Inc. is a global leader in commercial real estate services. Colliers professionals provide a full range of services to real estate occupiers, owners and investors worldwide. Services include brokerage, global corporate solutions, investment sales and capital markets, project management and workplace solutions, property and asset management, consulting, valuation and appraisal services, and customized research and thought leadership. Its web site is here Colliers International Group 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. 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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