First Capital Realty

Sound bite for Twitter and StockTwits is: Possibly expensive. This stock is only showing as expensive with the dividend yield test. I like this test the best as it is using current data and no estimates. The other test that uses no estimate is the P/BV test and this is show the stock as relatively reasonable and below the median. See my spreadsheet on First Capital Realty.

I do not own this stock of First Capital Realty (TSX-FCR, OTC-FCRGF). My Own Advisor asked me to look into this stock. In 2011 a reader asked me to review this real estate stock. Also, the site Canadian Dividend Stock site mentions this company as a top Canadian REIT.

This stock has a good dividend and low growth in dividends. The current dividend yield of 4.25% and has a 5 year median dividend yield of 5.61%. The current dividend is based on dividends of $0.86 and stock price of $20.24.

The dividend growth is at 1.46% and 1.24% per year over the past 5 and 10 years. The 5 year growth is hitting the rate of inflation, but the 10 year growth is not. According to the Bank of Canada, total inflation over the past 5 year is 1.44% per year and over the past 10 years is at 1.67% per year. Ideally, you want Real Estate stock to have, at minimum a rate of growth equal to inflation.

This is a dividend growth stock, but it does not increase its dividend each year. The last dividend increase occurred in 2014 and it was for 2.4%. There were no dividend increases in 2015 and also none so far this year.

The Dividend Payout Ratio in regards to EPS is rather high. The DPR for EPS for 2015 was 94.5% but over the past 5 years, the DPR is at 55% which is fine. Since this is Real Estate, I looked at the DPR in regards to FFO and find it is 86.9% for 2015 and over the past 5 years at 86.7%. This is reasonable. In regards to CFPS, the DPR for 2015 is 43.4% and the over the past 5 years is at 43.6%.

Outstanding shares have increase by 6.7% and 7.2% per year over the past 5 and 10 years. Therefore if I was looking at growth, I would be looking at per share growth. It can make a difference. For example Revenue growth is at 6% and 9.4% per year over the past 5 and 10 years. However, Revenue per Share growth has fallen by 0.6% and grown at 2.1% per year over the past 5 and 10 years. Revenue growth is therefore non-existent to very low.

The Liquidity Ratios are a problem. The reason you look at Liquidity is because if it is low, this can cause problems especially in bad times. This company has a Liquidity Ratio of 0.38. If you add in cash flow after dividends it is just 0.50. If you add back in current portion of long term debt we get to 0.94. We cannot make even a ratio of 1.00. If the ratio is below 1.00 it means that current assets cannot cover current liabilities.

The 5 year low, median and high median Price/Earnings per Share Ratios are 16.38, 18.04 and 19.71. The corresponding 10 year values are 21.18, 30.27 and 33.53. The historical values are 18.73, 20.21 and 22.63. The current P/E Ratio is 18.23 based on EPS estimate for 2016 of $1.11 and a stock price of $20.24. If we use the use the EPS estimate for 2017 of $1.16 we get a P/E Ratio of 17.45. This stock price testing suggests that the stock price is reasonable and just below the median.

The 5 year low, median and high median P/FFO Ratios are 17.26, 18.49 and 19.58. The corresponding 10 year values are 15.30, 16.73 and 18.16. The current P/FFO Ratio is 18.07 based on a stock price of $20.24 and 2016 FFO estimate of 1.12. If we use the 2017 FFO estimates the P/FFO becomes 17.30. This testing suggests that the stock price is relatively reasonable.

The 5 year low, median and high median P/AFFO Ratios are 17.02, 18.13 and 19.66. The corresponding 10 year values are 16.75, 18.12 and 19.44. The current P/FFO Ratio is 20.24 based on a stock price of $20.24 and 2016 AFFO estimate of 1.00. If we use the 2017 AFFO estimate of $1.06 the P/AFFO becomes 19.09. This testing suggests that the stock price is relatively reasonable but above the median.

I get a Graham Price of $20.79. The current P/Graham Price Ratio is 0.97 based on a stock price of $20.24. The 10 year low, median and high median P/GP Ratios are 0.91, 0.98 and 1.07. The stock price testing suggests that the stock price is relatively reasonable and around the median.

I get a 10 year median Price/Book Value per Share Ratio 1.38. The current P/B Ratio is 1.18 a value some 14.8% lower. The current P/B Ratio is based on BVPS of $17.16 and a stock price of $20.24. The stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a current dividend yield of 4.25%. The current dividend yield is based on a stock price of $20.24 and dividends of $0.86. The historical median dividend yield at 5.61% is some 24.3% 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. Most of the recommendations are a Buy and the consensus recommendation is a Buy. The 12 month target stock price is $23.81. This implies a total return of 21.89% with4.25% from dividends and 17.64% from capital gains based on a stock price of $20.24.

Richard Conner on Money Making Articles says that there is 5 Buy and 1 Hold recommendations on this stock. TD Securities rate it a Buy and has a target of $25.00. An article on Highland Digest say that First Capital Realty Inc. has a Gross Margin score of 25where a 1 would be regarded as good, and a 100 would be seen as bad. Joseph Solitro of Motley Fool liked this stock in August 2016. See what analysts are saying on Stock Chase. A couple of analysts think it is a high quality REIT.

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 reports here and here.

The last stock I wrote about was about was DHX Media Ltd. (TSX-DHX.B, OTC- DHXMF)... learn more . The next stock I will write about will be Stella-Jones Inc. (TSX-SJ, OTC- STLJF)... learn more on Friday, December 16, 2016 around 5 pm. Tomorrow I will write about Canadian National Railway (TSX-CNR, NYSE-CNI)... learn more on Thursday, December 15, 2016 around 5 pm. I did a second review on this stock for my Investment Club.

First Capital Realty is Canada's leading owner, developer and operator of supermarket and drugstore anchored neighbourhood and community shopping centers located predominantly in growing metropolitan areas. Its web site is here First Capital Realty.

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.

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