Home Capital Group

Sound bite for Twitter and StockTwits is: Financial Services Stock. On a number of tests the stock price seems relatively cheap. Analysts think that dividends will be restarted this year. See my spreadsheet on Home Capital Group.

I own this stock of Home Capital Group (TSX-HCG, OTC-HMCBF). I started reviewing this company in September 2009. It is a dividend growth company and was coming up on lists of good dividend paying stocks. It is on some dividend paying companies lists that I look at. Because of the recent problems and cut to dividend I was considering selling this from RSP Account. But perhaps I will not. It is recovering fast and analysts expect dividends to resume in 2018.

The Chairman, CEO and Chief Financial Officer have changed since last year. They have a huge amount of cash on hand. This is equal to some 97% of the stock price.

The dividends where cut after the company paid one dividend in 2017. Most analysts seem to think that dividends will be restarted this year (2018). The company has yet to announce a resumption of dividends.

On a long term basis, this company has done well for shareholders with the 15, 20 and 22 total returns at 14.80%, 21.54% and 40.84% per year. The portion of this total return attributed to capital gains is at 10.99%, 17.19% and 30.44% per year. The portion of this total return attributed to dividends is at 3.81%, 4.35% and 10.40% per year.

Because of the problems in 2017, investors in this stock of the past 5 and 10 years did not do well, with the total loss over 5 years at 7.33% per year and a total return of 0.72% over the past 10 years. The portion of this total return attributed to capital loss over the past 5 and 10 years is 10.13% and 1.89% per year. The portion of the total return attributed to dividends over the past 5 and 10 years is 2.81% and 2.61% per year. Note that investment over 10 year incurred no loss due to dividends.

The 5 year low, median and high median Price/Earnings per Share Ratios are 6.79, 9.26 and 11.89. The corresponding 10 year ratios are 6.69, 9.06 and 11.30. The historical ratios are 6.79, 9.06 and 11.72. The current P/E Ratio is 10.76 based on a stock price of $17.11 and 2018 EPS estimate of $1.59. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get a Graham Price of $28.43. The 10 year low, median and high median Price/Graham Price Ratios are 0.66, 0.91 and 1.11. The current P/GP Ratio is 0.60 based on a stock price of $17.11. This stock price testing suggests that the stock price is cheap.

I get a 10 year Price/Book Value per Share Ratio of $1.94. The current P/B Ratio is 0.76 based on Book Value of $1813M, Book Value per Share of $22.60 and a stock price of $17.11. The current P/B Ratio is some 60% lower than the 10 year ratio. This stock price testing suggests that the stock price is cheap. On an absolute basis a P/B Ratio below 1.00 points to a cheap stock that is possibly selling below its breakup value.

I get a year median Price/Sales (Revenue) Ratio of 5.50. The current P/B Ratio is 3.96 based on 2018 Revenue estimate of $347M, Revenue per Share of 4.32 and a stock price of $17.11. The current ratio is some 28% below the 10 year median. This stock price testing suggests that the stock price is relatively cheap.

When I look at analysts' recommendations I find Buy (4) and Hold (6) recommendations. The consensus would be a Hold. The 12 month stock price consensus is $18.85. This implies a total return of 10.17% all of capital gains based on a stock price of $17.11.

Yausry Bissada talks about Home Capital doing well via The Canadian Press and CBC News. Ryan Goldsman on Motley Fool thinks there are two catalysts for this stock of either Warren Buffet buying the company or the company restarts dividends. The CEO has said that Home Capital Group has turned the corner, but analysts are not so sure. Jesse Mackey on Stock News Times talk about new reports from analysts. See what analysts are saying about this company on Stock Chase. Analysts have various views.

Home Capital Group Inc. is a specialty finance company. The company through its subsidiaries offers residential and commercial mortgage lending, securitization of insured mortgage products, consumer lending, and credit card services. Its web site is here Home Capital Group.

The last stock I wrote about was about was Emera Inc. (TSX-EMA, OTC-EMRA)... learn more. The next stock I will write about will be Canadian Real Estate Investment Trust (TSX-REF.UN, OTC-CRXIF)... learn more on Friday, 23, 2018 around 5 pm. Tomorrow on my other blog I will write about Canadian Bloggers.... learn more on Thursday, February 22, 2018 around 5 pm.

Also, on my book blog I have put a review of the book Age-Proof by Chatzky and Roizen learn more...

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.

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