Wednesday, January 31, 2018

Shaw Communications Inc.

Sound bite for Twitter and StockTwits is: Dividend Growth Telecom. There are risk because the company is reorganizing, however, the relatively price seems reasonable. See my spreadsheet on Shaw Communications Inc.

I do not own this stock of Shaw Communications Inc. (TSX-SJR.B, NYSE-SJR). I am following this stock because it was a stock on Investment Reporter's list, a MPL Communications Publication.

Recently this company has stopped dividend increases. The last increase was in 2016. I have dividend information back to 1990. This is not the first time for Shaw to keep dividends flat. They seem to have started out with a flat dividend, they then started to increase them in 1999 and they were flat again from 2001 to 2003. So keeping dividends flat is nothing new for the company.

The Dividend Payout Ratio has recently been higher than usual, but not that high. The DPR for 2017 is 69% with 5 year coverage of 65%. However, everyone seems to expect EPS to fall for 2018. The DPR is expected to be around 97% in 2018 before starting to drop again. However, most analysts think that the company will start to raise dividends again and some think this might happen as early as 2018.

Until 2008, the dividend yield on this stock was low. The historical low is around 0.14%. This historical high is around 4.96%. The historical median dividend yield is just 1.23%. This is very different from the current yield. The current yield is high at 4.37%, with 5 and 10 year median dividend yields at 4.23% each.

Lately the dividend growth has been low, but it was much higher in the past. The dividend growth over the past 5 year is 4.63% per year which is low. The dividend growth over the past 10 years is moderate at 9.12% per year. The dividend growth over the past 15 to 25 years is high with 15, 20 and 25 year growth at 29.34%, 23.46% and 18.37% per year.

The best total returns are over the longer terms of 15 to 25 years. The total return over the past 5 years is good with total return at 9.11%. This includes the dividends at 4.44% and capital gain at 4.67% per year. The 10 year total return is the lowest with 10 year total return moderate at 5.69% per year which includes dividends at 3.73% and capital gain at 1.95% per year.

The 15 year total return is at 12.77% including dividends at 3.99% and capital gain at 8.78% per year. The 20 year total return is at 14.92% with dividends at 3.47% and capital gains at 11.45% per year. The 25 year total return is 13.34% with dividends at 2.68% and capital gain at 10.66% per year.

The 5 year low, median and high median Price/Earnings per Share Ratios are 13.00, 14.14 and 15.98. The corresponding 10 year ratios are 13.18, 14.83 and 17.35. The historical ratios are 14.06, 16.38 and 17.69. The current P/E Ratio is 22.23 based on a current price of $27.12 and 2018 EPS estimate of 1.22. Analysts expect the EPS to fall by some 29% from 2017 and 2018. This stock price testing suggests that the stock price is relatively expensive.

I get a Graham Price of $17.99. The 10 year low, median and high median Price/Graham Price Ratios are 1.21, 1.32 and 1.49. The current P/GP Ratio is 1.51 based on a stock price of $27.12. This stock price testing suggests that the stock price is relatively expensive.

The 10 year median Price/Book Value per Share Ratio is 2.70. The current P/B Ratio is 2.30 based on Book Value of $5,891M, Book Value per Share of $11.79 and a stock price of $27.12. The current P/B Ratio is some 15% below the 10 year median. This stock price testing suggests that the stock price is relatively reasonable and below the median. This is always a good test as it does not involve estimates and it is not greatly dependent on temporary problems.

The historical dividend yield is 1.23%. The current dividend yield is 4.37% based on dividends of $1.19 and a stock price of $27.12. The current dividend yield is some 255% below this historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.

Even if you compare the current dividend yield to the 5 and 10 year median yields of 4.23% the current yield is lower by 3.30%. 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 2.38. The current P/S Ratio is 2.66 a values some 12% higher based on 2018 Revenue estimate of $5,090M, Revenue per Share of $10.19 and a stock price of $27.12. This stock price testing suggests that the stock price is relatively reasonable but above the median. However, the company seems to be reorganizing and in such a situation you would expect some volatility in Revenue.

When I look at analysts' recommendations I find the recommendations all over the past. There are Buy (6), Hold (8), Underperform (1) and Sell (1) recommendations. The consensus would be a Hold. The 12 month stock price consensus is $29.20. This implies a total return of 12.04% with 7.67% from capital gains and 4.37% from dividends based on a current stock price $27.12.

This Canadian Press article in Global News talks about Shaw offering employees a buyout program and hopes 10% of the staff will take them up on it. This article via Globe News Wire talks about Shaw's announcement of an enterprise-wide initiative designed to reinvent its operating model. Demetris Afxentiou of Motley Fool thinks that this company is full of potential. See what analysts are saying about this company on Stock Chase. They have rather mixed views.

Shaw Communications Inc. is a communications and media company that offers consumers with broadband cable television, high-speed internet, home phone, telecommunications services, satellite direct-to-home services and engaging programming. Its web site is here Shaw Communications Inc.

The last stock I wrote about was about was Valener Inc. (TSX-VNR, OTC-VNRCF)... learn more. The next stock I will write about will be AGF Management Ltd. (TSX-AGF.B, OTC-AGFMF)... learn more on Friday, February 2, 2018 around 5 pm. Tomorrow on my other blog I will write about Dividends and Inflation.... learn more on Thursday, February 1, 2018 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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