Transcontinental Inc.

Sound bite for Twitter and StockTwits is: Dividend Growth Industrial. I think that the stock price might be relatively reasonable. I also think that there is risk in this stock due to it transitioning away from strictly a printing company. See my spreadsheet on Transcontinental Inc.

I own this stock of Transcontinental Inc. (TSX-TCL, OTC-TCLAF). This is a dividend growth stock. It was on a number of dividend lists. However, it fell on hard times after 2008, but currently seems to be recovering. It is still on the Canadian Dividend Aristocrats Index.

I have done relatively well on this stock because I bought it at a relative low point in 2015. My total return since then is 21.60% per year. My total return consists of 17.41% capital gain per year and 4.19% dividends per year. I have had it for almost 3 years.

It looks like a lot of insider selling as the Net Insider Selling as a percentage of the stock's market cap is 0.21%. However, the problem is that they are selling off their options rather than taking the stock. The other thing is that this stock really took off in 2002 and hit a peak in 2004 ($28.20) that took it until October 2017 to match. At $25.70 it is lower than the 2004 peak.

Dividends used to low with good increases. That is the yields were below 2% and the increases were around 15%. The 5 year growth to 2008 is 17.23% per year. The historical median dividend yield is 1.31%.

However, things changed in 2009 and since then the dividends have been moderate (2 to3% range) and dividend growth has been slowing to a low growth (below 8%). The 5 year growth in dividends is just 6.6%. The 5 and 10 years median dividend yields are 3.84% and 3.72%. The 5 and 10 year dividend growth rates are 6.6% and 11.1% per year.

I have dividend growth rates going back 24 years. The dividend growth is moderate except for the last 5 years when it is low (below 8%). The 5, 10, 15, 20 and 24 year dividend growth is 6.61%, 11.06%, 13.10%, 12.77% and 11.31% per year.

If you had bought this stock 5, 10, 15, 20, 25 or 30 years ago, you would be making a dividend yield on your original purchase price of 6.17%, 5.09%, 4.23%, 11.24%, 16.30% and 27.83%.

The long term total returns are low to good. The 5, 10, 15, 20 and 24 year total return for this stock is 23.82%, 7.85%, 4.15%, 9.78% and 9.38% per year. The total return includes dividends and capital gains and goes from December to December. That means for the 9.38% for 24years, I am using the stock price for December 1992 to December 2017. I am also using all the dividends from 1993 to present. Note that dividends only started in 1993.

I have a longer series of stock price for the financial year ending in October. Here the total return for 25 and 29 years is at 9.93% and 11.29% per year. So for the total return over the past 29 years, I am using data from October 1988 to October 2017.

Note that the stock price climbed starting in 2002 and reached a peak of $28.20 in March of 2004. If you had been unlucky enough to have purchased the stock then you would have had to wait until October 2017 for the stock to reach that peak again. I made money on this stock because I purchased it at a relatively low point in 2015.

The 5 year low, median and high median Price/Earnings per Share Ratios are 6.37, 8.43 and 10.49. The corresponding 10 year P/E Ratios are 6.01, 7.50 and 9.00. The corresponding historical ratios are 10.03, 13.53 and 14.02. The Historical ones are higher because of earning losses in the past 5 and 10 years. The current P/E Ratio is 9.72 based on a stock price $25.08 and 2018 EPS estimate of $2.58. This stock price testing suggests that the stock price is relatively reasonable. On an absolute basis a P/E of 10.00 or lower is consider to be pointing to a relatively cheap price.

I get a Graham Price of $30.20. The 10 year low, median and high median Price/Graham Price Ratios are 0.62, 0.77 and 0.93. The current P/GP Ratio is 0.83 based on a stock price of $25.08. This stock price testing suggests that the stock price is relatively reasonable but above the median. Generally speaking a P/GP Ratio below 1.00 is considered a good one on an absolute basis.

The 10 year median Price/Book Value per Share ratio is 1.25. The current P/B Ratio is 1.60 based on a Book Value of $1,219M, Book Value per Share of $15.71 and a stock price of $25.08. The current P/B Ratio is some 28% higher than the 10 year median P/B Ratio. This stock price testing suggests that the stock price is relatively expensive. However, on an absolute basis a P/B Ratio of 1.50 is considered a good one and a P/B Ratio of 1.25 is considered a low one.

The historical median dividend yield is 1.31%. The current dividend yield is 3.19% based on dividends of $0.80 and a stock price of $25.08. On this basis the current yield is some 143% higher than the historical one. This stock price testing suggests that the stock price is relatively cheap.

If you look at the median dividend yield for the past 5 and 10 years, which are 3.84% and 3.72% respectively. The current dividend yield is some 17% and 14% below 5 and 10 year median yields. This would suggest that the stock price might be relatively reasonable but above the median.

The 10 year median Price/Sales (Revenue) Ratio is 0.53. The current P/S Ratio is 1.04 based on 2018 Revenue estimate of $1,875M, Revenue per Share of $24.18 and a stock price of $25.08. The current P/S Ratio is some 94% above the 10 year ratio. This stock price testing suggests that the stock price is relatively expensive.

When I look at analysts' recommendations I find Strong Buy (1), Buy (3) and Hold (4). The consensus would be a Buy. The 12 months stock price consensus is $28.19. This implies a total return of 15.39% with 12.40% from capital gain and 3.19% from dividends based on a current stock price of $25.08.

Staff Writer on Luxora Leader give some technical analysis and says this company has a Piotroski's F-Score or 8 and this is showing the stock to be strong. Michael Canly on Simply Wall Street says the company has a high chance of being able to pay good dividends for years to come. See what analysts are saying about this stock on Stock Chase. Most like it and some talk about their transition risk. It is still in the printing business.

Transcontinental Inc. provides printing services in Canada and North America. The Company publishes consumer magazines and French-language educational, and community newspapers in Quebec and in the provinces of Atlantic. Its web site is here Transcontinental Inc.

The last stock I wrote about was about was Canadian Imperial Bank of Commerce (TSX-CM, NYSE-CM)... learn more. The next stock I will write about will be Sylogist Ltd (TSX-SYZ, OTC-SYZLF)... learn more on Wednesday, January 24, 2018 around 5 pm. Tomorrow on my other blog I will write about Banks and Ratios.... learn more on Tuesday, January 23, 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.