Friday, September 29, 2017

Gluskin Sheff + Associates Inc.

Sound bite for Twitter and StockTwits is: Dividend Paying Financial. This stock is still quite cheap under some measurements. I am hoping that it will return to a dividend growth format. At the moment I plan to hold the shares I have of this stock and hope that the future is brighter. See my spreadsheet on Gluskin Sheff + Associates Inc.

I own this stock of Gluskin Sheff + Associates Inc. (TSX-GS, OTC-GLUSF). I started to review some of the stock recommended by Jennifer Dowty from a column she wrote and I reviewed in February 2010 on Dividends and Special Dividends. The title of the article in Investor's Digest was Dividend Stocks: Buy, Hold and Collect.

I did a spreadsheet on this stock in February 2010 and was not impressed with the stock. I chose this stock because I recognized the names of Gluskin and Sheff. I reviewed problems with this list in February 2010. This stock peaked in 2006 and had not recovered by August 2011. This includes Revenues, Earnings and Book Value. The Stock Price and Cash Flow peaked in 2007. I stopped looking at her stock, because of this one but decided to take another look in August 2011. I did pick a good one in Computer Modelling Group (TSX-CMG).

I had money in my TFSA to buy stock. GS's stock was relatively below the median and it gives out special dividends all the time. I also wanted to try out a high yield, low capital gain stock. This stock has been a disappointment so far. Last year my total return was a loss of 1.89% per year and this year the loss is 3.63% per year. Dividends have been good, but not enough to cover the capital loss.

Since the original principals have left and since they started a suit to obtain quite a few millions from GS, the dividend yields has been raising as the stock price has been falling. Because of the feud with the original founders this company has really been under a cloud since 2009. This cloud has now been lifted with the arbitration settlement.

Another disappointment has been that the last dividend increase occurred in the later part of 2015 under the June 2016 financial year. That increase was for 11.1%. There was also no special dividend in the June 2017 financial year. However, they have proclaimed a special dividend for the current financial year end in June 2018. This special dividend has a yield of 4.82% based on the current stock price of $18.89.

I take the extra dividend and the non-increase of the normal dividend to mean that they can afford a good dividend this year, but they are not that sure enough of the future to raise the normal dividend. A raise in a dividend is generally looked upon as management's way to show that they have faith in rising earnings in the near future.

The 5 year low, median and high median Price/Earnings per Share Ratios are 10.53, 12.27 and 14.01. The corresponding 10 year ratios are 10.94, 15.57 and 18.49. This stock has only been on the TSX for 12 years and the 12 yea ratios are the same as the 10 year ones. The current P/E Ratio is 13.49 based on a stock price of $18.89 and 2018 EPS estimate of $1.40. This stock price testing suggests that the stock price is relatively reasonable and around the median.

I get a Graham Price of $11.65. The 10 year low, median and high median Price/Graham Price Ratios are 1.49, 2.07 and 2.55. The current P/GP Ratio is 1.62. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a 10 year median Price/Book Value per Share Ratio of 6.07. This is a very high ratio. The current P/B Ratio is 4.39 a value some 28% lower. The current ratio is still quite high. The current P/B Ratio is based on Book Value of $134M, BVPS of $4.31 and a stock price of $18.89. This stock price testing suggests that the stock price is relatively cheap.

I get an historical dividend yield of 3.16%. The current dividend yield is 5.29% based on dividends of $1.00 and a stock price of $18.89. The current dividend yield is some 68% higher than the historical one. This stock price testing suggests that the stock price is relatively cheap.

The 10 year medina Price/Sales (Revenue) Ratio is 4.52. The current P/S Ratio is 3.66 based on 2018 financial year revenue estimate of $161M. The current P/S Ratio is some 19% lower than the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. To show as a cheap price, the current P/S Ratio would need to be 20% lower than the 10 year median, so it is close.

I get a 10 year Price/Assets under Management per Share of 9.26%. The current P/AUM is 6.34% which is some 31% lower. AUM is important as this can push the revenue, which pushes the earnings. This stock price testing suggests that the stock price is relatively cheap.

When I look at analysts' recommendations, I find Buy (3) and Hold (4) recommendations. The consensus would be a Hold. The 12 month stock price is $19.86. This implies a total return of 15.25% with 5.13% from capital gains and 5.29% from dividends and 4.82% from a special dividend based on a current price of $18.89.

There is a news release dated July 6 2017 on Cision that talks about Gluskin Sheff's litigation by the co-founders and Gluskin Sheff. Mr. Gluskin had sought payment of $75 million, while Mr. Sheff sought payment of $110 million. No one I read thought they would get near those amounts. Settlement was $13.8M. Also the founders' superannuation payments are worth approximately 5.3M.

This article from the Canadian Press on BBN talks about GS getting a new CEO in Jeff Moody. Lisa Durand on Dispatch Tribunal talks about a recent insider selling. See what analysts are saying about this company on Stock Chase. Some think it might be a possible takeover by one of the banks.

Gluskin Sheff is an independent investment firm that manages portfolios for high net-worth individuals and institutional clients. Its web site is here Gluskin Sheff + Associates Inc.

The last stock I wrote about was about was Great-West Lifeco Inc. (TSX-GWO, OTC-GWLIF)... learn more. The next stock I will write about will be Granite REIT (TSX-GRT.UN, NYSE-GRP.U)... learn more on Monday, October 2, 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.

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. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

1 comment:

  1. The special dividend will be paid in October 2017, going ex-div on oct 3, as per

    "07:41 AM EDT, 09/19/2017 (MT Newswires) -- Gluskin Sheff + Associates Inc. (GS.TO) declared Tuesday its regular quarterly dividend of $0.25 per Common Share, for the quarter ended June 30, 2017, payable on October 13, 2017, to shareholders of record at the close of business on October 3, 2017. The company also announced today a special dividend of $0.85 per Common Share payable on October 13, 2017, to shareholders of record on October 3, 2017."