Newfoundland Capital Corp

Second Quarter results are to be announced August 10. This report is available today. Revenue has declined again as but EPS is up a bit. The 12 month period to the end of the first quarter saw EPS at $1.09 and it is now $1.10 to the end of the second quarter. Cash Flow from operations is also up when compared to the second quarter of 2016.

Sound bite for Twitter and StockTwits is: Dividend growth consumer. This is a rather small cap company with in consistent dividends. It would not be my first choice as an investment. See my spreadsheet on Newfoundland Capital Corp.

I do not own this stock of Newfoundland Capital Corp. (TSX-NCC.A, OTC-none). I started to follow this stock as it was suggested as a decent dividend paying stock for investment purposes in the latter part of 2009. It is not on any dividend lists that I follow so I took a look at it.

This is a small cap stocks that analysts seem to no longer follow. The main question is, would investors be able to make money on this stock over the longer term. I think that the answer to that is yes. The worst showing is over the past 5 years.

The total return over the past 5, 10, 15 and 20 years is 5.96%, 7.10%, 10.34% and 33.68% per year. Why the total return for the 10 years is so high is that there was a big special dividend paid in 1998. Without this dividend the total return would have been 14.28% per year.

The portion of the total return over the past 5, 10, 15 and 20 years to dividends is 1.82%, 1.76%, 1.75% and 21.80%. Without that big special dividend the portion of the 20 year total return to dividends would be 3.94%. The portion of the total return over the past 5, 10, 15 and 10 years to capital gain was 4.14%, 5.34%, 8.60% and 11.88%.

The thing with dividends is that they have been inconsistent. They started to pay dividends in 1997. Since then there were 5 years with no dividends as dividends were suspended. There are lots of years with no dividend increases. Dividend increases tend to be good when made.

Dividends are also paid semi-annually. In lots of years, the second dividend paid is lower than the first one. A shareholder would not know what the dividends are going to be until they are actually declared. I think that a good dividend paying stock has consistency. This stock has none when it comes to dividends.

If you had a portfolio of other stocks with consistency with dividends, it might be fine to have this one that is inconsistent, especially if you are building your portfolio. This stock might also be worth to hold if the dividend yield was very good, but dividend yields on this stock are low with the historical median at just 1.54%.

The 5 year low, median and high median Price/Earnings per Share Ratios are 10.56, 12.69 and 14.81. The corresponding 10 year values are 10.09, 11.84 and 14.06. The historical values are 13.56, 15.86 and 19.07. It is interesting that the historical ratios are the highest, but then the company used to do better in the past. The current P/E Ratio is 10.00 based on a stock price of $11.00 and 12 month EPS to the end of the first quarter of $1.10. This stock price testing suggests that the stock price is relatively cheap.

I get a Graham Price of $12.56. The 10 year low, median and high median Price/Graham Price Ratios are 0.99, 1.15 and 1.33. The current P/GP Ratio is 0.88 based on a stock price of $11.00. This stock price testing suggests that the stock price is relatively cheap.

I get a 10 year median Price/Book Value of 2.02. The current P/B Ratio is 1.82 based on Book Value per Share of $154M, BVPS of $6.03 and a stock price of $11.00. The current P/B Ratio is 9.7% lower than the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.

The historical median dividend yield is 1.54%. The current dividend yield at 1.82% is some 18% higher. The current dividend yield is based on dividend of $.20 and a stock price of $11.00. This stock price testing suggests that the stock price is relatively reasonable and below the median.

One problem with dividends on this stock is that they are semi-annual and are only known when declared. The first dividend was for $0.10, but often the company has put the second one lower. In 2016, the second dividend was higher than the first, but this is unusual for this stock. I do not think, from past history that you can be assured that the September dividend will be $0.10.

Dane Simmons on Simply Wall Street says that EPS has grown by 22.91% over the past year. He says he is using 12 month trailing EPS. I do see how he is getting his figures from. According to their first quarterly report EPS are $0.11 in the first quarter of 2017and this is down from $0.16 in the first quarter of 2016. However, EPS for 2017 is at $1.14 compared to 2016 of $0.81 and this is an increase of 40.9%.

The 12 month trailing EPS to the end of the first quarter of 2016 is $0.99 and the 12 month trailing EPS to the end of the first quarter of 2017 is $1.09 and increase of only 10%. Growth in EPS over past 5 years is indeed lower at 6.55% per year. The change in EPS since 2012 is down 58%, up 157%, down 58%, up 113% and up 41%. This is rather inconsistent and does not to be show a trend that I like.

Highlights from the first quarterly report of 2017 is on Cision.

I cannot find any analyst that is currently following this stock. Some analysts did follow it is the past but they have not for at least the past 2 year.

Newfoundland Capital Corporation Limited also owns and operates Newcap Radio. Newcap Radio is one of Canada's leading radio broadcasters with 79 licenses across Canada. The Company reaches millions of listeners each week through a variety of formats and is a recognized industry leader in radio programming, sales and networking. Its web site is here Newfoundland Capital Corp.

The last stock I wrote about was about was Loblaw Companies Ltd. (TSX-L, OTC-LBLCF)... learn more. The next stock I will write about will be EnerCare Inc. (TSX-ECI, OTC-CSUWF)... learn more on Monday, August 14, 2017 around 5 pm.

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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