I own this stock of Ag Growth International (TSX-AFN, OTC-AGGZF). I wanted to review all the income trust stocks touted in the Money Show of 2009. There was a lot of talk at this show about some of the Unit Trust being currently good buys with very good yields. It was on the Canadian Dividend Aristocrats and this is why I first investigated this company. By 2011 when I bought this stock, I have been interested in AFN for some time. This stock is a play on the agricultural sector.
This was am income trust company. They kept their dividends level since 2011. See dividend growth in the chart below. They still cannot cover their dividends with earnings, but they are getting close. The Dividend Payout Ratio for 2017 is 110%. The DPR for 2018 is expected in the range of 54%. Their 5 year coverage is still very high at 323% in 2017.
Yields on income trust companies were very high. This company used to have a median yield of over 7%. It was though with a combination of dividend decreases or level dividends plus stock price raises the yields on old income trust companies would be in a 4 to 5% range. Current this company's yield is at 4.58%. It seems that analysts do not see any dividend increases in the near future.
Currently the company is still comparing the dividend payouts to Funds from Operations (FFO) to prove they can afford their dividends. They also talks about the difference between what they pay in cash and what is declared. They have a Dividend Reinvestment Plan so they are paying in cash less than the declared dividend. In 2017 they paid almost 13% less in cash than the declared dividend.
The Total Return is show below for years of 5 to 14. Shareholders have done well with this stock in total returns. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See charts below.
|Years||Div Gth||Tot Ret||Cap Gain||Div|
The 5 year low, median and high median Price/Earnings per Share Ratios are 19.20, 25.14 and 27.49. The corresponding 10 year ratios are 15.86, 21.36 and 26.57. The historical ones are 13.02, 18.86 and 24.27. It would seem that some capital gains are due to increases in these ratios. The current P/E Ratio is 18.09 based on a stock price of $52.45 and 2018 EPS of $2.90. This stock price testing suggests that the stock price is reasonable and below the median.
I get a Graham Price of $33.76. The 10 year low, median and high median Price/Graham Price Ratios are 1.19, 1.60 and 2.01. The current P/GP Ratio is 1.55 based on a stock price of $52.45. This stock price testing suggests that the stock price is reasonable and below the median.
I get a 10 year median Price/Book Value per Share of $2.65. The current P/B Ratio is 3.00 based on a Book Value of $282.3M, Book Value per Share of $17.47 and stock price of $52.45. The current P/B Ratio is some 13% higher than the 10 year median ratio. This stock price testing suggests that the stock price is reasonable but above the median.
I get an historical median dividend yield of 6.60%. The current dividend yield is 4.58% based on dividends of $2.40 and a stock price of $52.45. The current dividend yield is some 31% below the historical median. This stock price testing suggests that the stock price is expensive. However, this is not a good test for old income trust companies as these companies had much higher yields that corporations will.
The 10 year median Price/Sales (Revenue) Ratio is 1.40. The current P/S Ratio is 0.99 based on 2018 Revenue estimate of $859M, Revenue per Share of $53.15 and a stock price of $52.45. The current P/S Ratio is some 30% lower than the 10 year ratios. This stock price testing suggests that the stock price is cheap.
When I look at analysts' recommendations I find Strong Buy (1) and Buy (7) recommendations. The consensus would be a Buy. The 12 month stock price consensus is $65.75. This implies a total return of 29.93% with 25.36% from capital gains and 4.58% from dividends.
Alexis Guardo on Simple Wall Street in his dividend analysis misses the fact that dividends have been flat for over 5 years. Vernon Prom on The Casual Smart talks about first quarter of 2018 EPS being lower than in 2017. However, the second and third quarters of 2018 are expected to be higher than for 2017. Silas Weatherspoon on Park City Caller talks about some quant stats on this company. Ivanka Thompson on Bangalore Weekly is interesting as article says prices are CDN$, but seem to be in US$. I have seen a number of US sites confuse the two. See what analysts are saying about this stock on Stock Chase . The most recent entries are positive on this company.
Ag Growth International Inc. manufactures portable and stationary grain handling, storage and conditioning equipment, including augers, belt conveyors, grain storage bins, grain handling accessories, grain aeration equipment and grain drying systems. Its web site is here Ag Growth International .
The last stock I wrote about was about was Thomson Reuters Corp. (TSX-TRI, NYSE-TRI)... learn more. The next stock I will write about will be McCoy Global Inc. (TSX-MCB, OTC-MCCRF)... learn more on Wednesday, May 2, 2018 around 5 pm. Tomorrow on my other blog I will write about Dividend Stocks May 2018... learn more on Tuesday, May 1, 2018 around 5 pm.
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