Methanex Corp

Sound bite for Twitter and StockTwits is: Price a bit high. Canadians seem to be doing better than Americans with this stock and this mostly likely is due to the falling CDN$. This is a dividend growth stock and could be a good for diversification and a long term hold if priced a bit lower. See my spreadsheet on Methanex Corp.

I do not own this stock of Methanex Corp. (TSX-MX, NASDAQ-MEOH). I started a spreadsheet in November 2010 as I had read some good reports on the stock at that time. It is also got a solid "C" grade in a 2009 Money Sense review of stocks. Money Sense rated the top 100 Canadian Dividend Paying stocks. Money Sense was looking for stocks that provided generous income at reasonable prices.

You would buy this stock for diversification reasons and because it operates internationally. There may be volatility in this stock, especially concerning Earnings and Cash Flow. I would expect moderate dividend yield and moderate dividend growth over the longer term, but there might also be volatility in dividends. Because dividends are paid in US$, there will be built in volatility in dividends.

The dividend yield is moderate and the dividend growth is moderate. The current dividend yield is 2.49% based on dividends of $1.10 US$ and a stock price of $44.20 US$ or dividends of $1.49 CDN$ and a stock price of 59.78 CDN$. Because of currency exchange rates, dividends will grow at dividend rates in different currencies. The dividends are paid in US$ and dividends grow by 11.6% and 10.1% per year in US$ over the past 5 and 10 years. Dividends grew by 19.3% and 12% CDN$ over the past 5 and 10 years.

They can afford their dividends. In 2015 the Dividend Payout Ratio was 53.5% for EPS in US$. Over the past 5 years the DPR was 37.2% for EPS in US$. Even with the expected loss in EPS for this year, the 5 year DPR for EPS would be 51.8% in US$. For 2015 the DPR for CPFS is just 10.6% in US$. For this stock you have to look at US$ values for dividends. Dividends are paid in US$ and the company reports in US$.

Because the outstanding shares have been decreasing at 0.5% and 2.34% per year over the past 5 and 10 years, I would look at things like Revenue rather than Revenue per Share to get real growth for this company. For a look at the difference I have Revenue growth over the past 5 and 10 years at 2.5% and 3% per year in US$. The Revenue per Share growth over the past 5 and 10 years is 3.2% and 5.5% per year in US$.

Because this is a material sector stock and you would expect volatility in Earnings and Cash Flow, having a good Liquidity Ratio is important. This stock Liquidity Ratio for 2015 was 1.77 and its 5 year median is 2.06. If you add in cash flow after dividends, the ratio is 2.98 for 2015 and its 5 year median is 2.93. (These ratios are the same in US$ and CDN$.)

The 5 year low, median and high median Price/Earnings per Share Ratios are 9.55, 12.81 and 15.35. The corresponding 10 year values are 9.12, 12.59 and 15.27. The historical corresponding values are 7.41, 10.79 and 14.94. The P/E Ratio for 2017 is 51.36 based on a stock price of $59.78 ($44.20 US$) and EPS of $1.16 CDN$ (or 0.86 US$). If we use EPS for 2018 of $3.11 CDN$ ($2.30 US$) then we have a P/E Ratio of 19.20. All this suggests that the stock price is relatively high. However, stock's earnings tend to be volatile and so the P/E Ratio may not be the best one to use to figure out where the stock price stands.

I get a Graham Price of $45.89 based on a formula using the last 3 EPS. The 10 year low, median and high median Price/Graham Price Ratios are 1.05, 1.35 and 1.63. The current P/GP Ratio is 1.30 based on a stock price of $59.78 CDN$. This stock price testing suggests that the stock price is reasonable and below the median.

I get a 10 year median Price/Book Value per Share Ratio of 2.03 CDN$. The current P/B Ratio is 2.49 CDN$. This value is some 22.5% higher than the 10 year value. The current P/B Ratio is based on BVPS of $24.02 CDN$ and a stock price of $59.78 CDN$. This stock price testing suggests that the stock price is relatively expensive.

I get an historical median dividend yield of 2.26%. The current dividend yield is 2.49% a value some 10.2% higher. The current dividend yield is based on dividends of $1.10 US$ and a stock price of $44.20 US$ or dividends of $1.49 CDN$ and a stock price of 59.78 CDN$. Because of currency exchange rates, dividends will grow at dividend rates in different currencies. This stock price testing suggests that the stock price is reasonable and but above the median.

When I look at analysts' recommendations I find Strong Buy, Buy and Hold recommendations. Most are Buy recommendations and the consensus is a Buy recommendation. The 12 month stock consensus is $53.11 US$ or $71.88 CDN$. This implies a total return of 22.74% with 20.25% from capital gains and 2.49% from dividends based on a stock price of $59.78.

James Conley on Baseball News Source talks about analysts at Cowen raising the target price from $48.00 to $51.00. The site Wall Street Confidential show some technical data. They said they Williams Percent Range currently sit at -53.86. A reading between 0 and -20 would point to an overbought situation. A reading from -80 to -100 would signal an oversold situation. So this stock is neither overbought nor oversold (that is neither too high nor very low). Joseph Solitro at Motley Fool likes this dividend stock. See what analysts are saying about this stock at 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 hereand here.

The last stock I wrote about was about was Stantec Inc. (TSX-STN, NYSE-STN)... learn more . The next stock I will write about will be Magna International Inc. (TSX-MG, NYSE-MGA)... learn more on Friday, December 30, 2016 around 5 pm. Tomorrow on my other blog I will write about Budget Items... learn more on Tuesday, December 29, 2016 around 5 pm.

Methanex is the world's largest supplier of methanol to major international markets in North America, Asia Pacific, Europe and Latin America. Methanol is an important ingredient in many of the essential industrial and consumer products. Head Office is in Vancouver, B. C. Canada. Its web site is here Methanex 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.