Friday, October 13, 2017

HNZ Group Inc.

Sound bite for Twitter and StockTwits is: Cheap Industrial Stock. The stock is probably cheap but there is risk here. A fact in their favour is their good debt position. See my spreadsheet on HNZ Group Inc.

I do not own this stock of HNZ Group Inc. (TSX-HNZ, OTC-CDHPF). Canadian Helicopters Group Inc. has come up in Daily Buy and Sell Advisor of MPL Communications. Dividend Ninja Blogger also mentioned this stock in a blog entry talking about High Yield Canadian Stocks on his Blog. Richard Morrison wrote about small caps in the Financial Post in February 2011. He was screening financially healthy, profitable, reasonably valued small companies. He got 18 of them, many were former income trusts. One of the 18 stocks was this stock.

Dividends have been suspended by the company. However, the company gives as its aim to provide shareholders with growth and dividends. So I expect dividends to be reintroduced at some point in the future. They probably cannot afford them at this time.

They are well situated with debt. They have no long term debt. The Liquidity Ratio for 2016 is 2.44 and it has a 5 year median of 2.15. The current ratio is 1.98. The Debt Ratio for 2016 is 4.48 with a 5 year median of 4.46 and a current one of 3.87. Leverage and Debt/Equity Ratios for 2016 are 1.29 and 0.29 with a 5 year median of 1.35 and 0.35 and current ones of $1.35 and 0.35. Good debt ratios can carry companies through the bad times.

The 5 year low, median and high median Price/Earnings per Share Ratios are 13.23, 14.60 and 15.96. The 10 year ratios are 4.45, 6.46 and 8.70. The current P/E Ratio is 116.36 based on a stock price of $12.80 and 2017 EPS estimate of $1.11. It is obvious that you cannot judge this stock price by this test. However, if you look at 2019 the EPS estimate is $0.99 and the P/E for a price of $12.80 is 12.93. This says the current price is relatively cheap.

I get a current Graham Price of $6.63. The 10 year low, median and high median Price/Graham Price Ratios are 0.48, 0.64 and 0.83. The current P/GP Ratio is 1.93 based on a stock price of $12.80. However, by 2019 the Graham Price is expected to be around $19.90 and that puts the current ratio at 0.64. By 2019 reckoning the stock price becomes reasonable and around the median.

The 10 year median Price/Book Value per Share Ratio is 1.01. The current P/B Ratio is 0.72 based on a Book Value of 430M, BVPS of $17.78 and a stock price of $12.80. This stock price testing suggests that the stock price is relatively cheap. This is probably the best way to judge this stock's price. Also, when the P/B Ratio is below 1.00 it means that the stock is selling below is theoretical breakup price.

The 10 year median Price/Sales (Revenue) Ratio is 1.02. The current P/S Ratio is 0.74 based on 2017 Revenue of $225M, Revenue per Share of $17.36 and a stock price of $12.80. The current P/S Ratio is some 28% lower than the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

Looking at estimates and ratios a few years in the future, like in 2019 as I have done is fraught with danger. The further in the future you use estimates the more likely they are to be wrong. However, the company is going through a tough time and the future should be better. We just do not know how much better.

When I look at analysts' recommendations, I find Buy (2) and Hold (2) recommendations. The consensus would be a Buy. The 12 month stock price is $15.63. This implies a total return of 22.11% all from capital gain as dividends have been suspended. This is based on a current stock price of $12.80.

Financial News Staff at Financial News Review says that the ROE is low, but the Liquidity Ratio is good. PR staff at Piedmont Register give some technical information on this stock. The RSI is at 45.01 which show it is neither overbought nor oversold. Last year Gary Lamphier wrote in the Edmonton Journal a good article about this company and its CEO Don Wall. This company is not well followed so there is limited analyst information on it.

HNZ Group Inc. is an international provider of helicopter transportation and related support services with fixed primary operations in Canada, Australia, New Zealand and regions of Southeast Asia. The group also delivers contracted on demand support in Afghanistan and Antarctica. Its web site is here HNZ Group Inc.

The last stock I wrote about was about was Enbridge Income Fund Holdings Inc. (TSX-ENF, OTC-EBGUF)... learn more. The next stock I will write about will be Teck Resources Ltd. (TSX-TCK.B, NYSE-TCK)... learn more on Monday, October 16, 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.

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