Wednesday, September 20, 2017

Telus Corp

Sound bite for Twitter and StockTwits is: Dividend growth Telecom. Stock price seems relatively reasonable to expensive. It is the Dividend Yield test that gives the best showing for the current stock price. See my spreadsheet on Telus Corp.

I do not own this stock of Telus Corp. (TSX-T, NYSE-TU). I started to follow this stock because of a list of stock John Sartz talked about in 2008. At the Toronto Money Shows in 2009 and 2010 Aaron Dunn from KeyStone Financial Publishing Corp talked about having recommended this stock.

Aaron Dunn says he likes companies with resilient business models, which are profitable and are growing their earnings. He also like companies with strong management teams, health balance sheets and compelling valuations. They look at the P/E and the Price/Cash Flow ratios. Telus Corp (TSX-T) was one of three stocks he recommended in 2009.

Dividend yield is moderate to good. Dividend growth is also moderate to good. The current dividend is good at 4.44% with moderate 5 year median and historical median dividend yields of 3.91% and 3.91% respectively. The 5 year dividend growth is moderate at 10.9% per year and the 10 year dividend growth is good at 22.7% per year.

This company has raised their dividends every year since 2005 some 14 years ago. Before 2005 dividends did not grow much and there was a 57% decline in 2001. Dividend growth is good for the past 10 years because of good growth from 2005 to 2008. The last dividend increase was for 2.6% in 2017, but this is the second increase in 2017. Dividends in 2017 are up by 8.1% from those of 2017.

What I do not like is the very low Liquidity Ratios. For 2016 it was 0.50 with a 5 year median ratio of 0.62. If this ratio is below 1.00 it means that current assets cannot cover current liabilities. If you add in cash flow after dividends then this ratio is 0.94 for 2016 with a 5 year median of 1.32. If you also add in the current portion of the long term debt the ratio is 1.28 for 2016 with a 5 year median of 1.45.

The problem with very low Liquidity Ratios is that the company can be vulnerable in bad times. Also if you have to add in the current portion of the long term debt to get to any sort of a decent ratio you have to read thoroughly the notes on their debt to ensure that the current portion has or will be handled.

The Debt Ratio is also low but it is over 1.00. The Debt Ratio for 2016 was 1.40 with a 5 year median value of 1.47. I prefer this ratio for safety's sake to be at least at 1.50. The Leverage and Debt/Equity Ratios are a little high at 3.49 and 2.49 respectively. The 5 year median values at 2.66 and 1.66 respectively are better.

What is good is the Return on Equity which for 2016 is 15.4% with a 5 year median of 17.1%. This has not been below 10% any time over the past 10 years. The ROE for comprehensive income is similar at 15.2% for 2016 with a 5 year median of 15.2%. This also has not been below 10% over the past 10 years.

The 5 year low, median and high median Price/Earnings per Share Ratios are 15.71, 17.33 and 18.95. The 10 year corresponding ratios are 13.82, 15.38 and 16.94. The historical ratios are 14.35, 17.33 and 19.75. The current P/E Ratio is 17.26 based on a stock price of $44.35 and 2017 EPS estimate of $2.57. This stock price testing suggests that the stock price is relatively reasonable.

I get a Graham Price of $28.57. The 10 year low, median and high median Price/Graham Price Ratios are 1.22, 1.36 and 1.49. The current P/GP Ratio is 1.55. This stock price testing suggests that the stock price is relatively expensive.

I get a 10 year median Price/Book Value per Share Ratio of 2.60. The current P/B Ratio is 3.14 a value some 21% higher. The current P/B Ratio is based on Book Value of $8,373M, BVPS of $14.12 and a stock price of $44.35. This stock price testing suggests that the stock price is relatively expensive.

I get a current dividend yield of 4.44% based on a stock price of $44.35 and dividends of $1.97. The historical median dividend yield is 3.91%. The current dividend yield is some 13.6% higher than the historical median yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.

The 10 year median Price/Sales (Revenue) Ratio is 1.83. The current P/S Ratio is 1.98 based on 2017 Revenue estimate of $13,288M, Revenue per Share of $22.41 and a stock price of $44.35. The current P/S Ratio is some 8% higher than the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.

When I look at analysts' ratings I find Strong Buy, Buy and Hold recommendations. The consensus would be a Buy recommendation. The current 12 month price consensus is 49.08. This implies a total return of 15.11% with 10.67% from capital gains and 4.44% from dividends based on a current stock price of $44.35.

Joseph Solitro of Motley Fool compares Telus and BCE to see which is the current better buy. He thinks Telus is. Interestingly Jacob Donnelly also of Motley Fool took a recent look at this stock and feels alarmed by its increasing debt. Emily Jackson on the Financial Post talks about PCMag ranking Telus Corp's wireless network the fastest in Canada. A Staff Writer on Rives Journal says that Telus' Williams Percent Range is -34.33 which means it is neither overbought or oversold. See what analysts are saying about this stock on Stock Chase. Views of this company are rather mixed. The blogger Dividend Earner recently talked about this stock.

Telus is a national telecommunications company in Canada. Telus provides a wide range of communications products and services including data, Internet protocol (IP), voice, entertainment and video. Its web site is here Telus Corp.

The last stock I wrote about was about was Accord Financial Corp (TSX-ACD, OTC- ACCFF)... learn more. The next stock I will write about will Wajax Corp. (TSX-WJX, OTC- WJXFF)... learn more on Friday, September 22, 2017 around 5 pm. Tomorrow on my other blog I will write about Money Show 2017 - Benjamin Tal... learn more on Thursday, September 21, 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. I never read this type of blog before. I appreciate you for the blog you have written. Thanks.