Wednesday, May 30, 2018

Maxar Technologies Ltd

Sound bite for Twitter and StockTwits is: Dividend Paying Tech. The current stock price is showing up in all tests as cheap. Dividends have grown since they were started but increases are insignificant. This stock has a heavy debt problem. See my spreadsheet on Maxar Technologies Ltd .

I do not own this stock of Maxar Technologies Ltd (TSX-MAXR, NYSE-MAXR). This company used to be called MacDonald, Dettwiler & Associates (TSX-MDA, OTC-MDDWF) until October 2017. I read about this stock in MPL Communication's Advice Hotline dated October 10, 2012. CanTech likes it also. It is a Tech stock with dividends.

The EPS estimates for this year and next make no sense to me. Reuters and TD says that the current EPS for 2017 is $4.16 CDN$. This is incorrect. The US$ EPS is $2.43 and I get a CDN$ equivalent of $3.05. They obviously are using a different exchange rate, but it cannot be that far off. Reuter gives EPS as $4.75 and $5.18 for EPS for 2018 and 2019 in CDN$.

4-Traders give EPS in CDN$ at $0.50 and 1.15 for 2018 and 2019. Their $3.15 EPS for 2017 is closer to mine. However, I do not see why it should drop so much. The EPS for the past 12 months is $2.86 US$. The Wall Street Journal gives the same EPS as TD and Reuter, but says it is in US$. I think I will go with them. Are people getting confused because of the change in currency and change in company?

There are a couple of things on the spreadsheet that is concerning. The first thing on the spreadsheet that is concerning is the Debt/Market Cap Ratio which is 1.10. This means that their long term debt is higher than the stocks market cap. Also, the Intangible Goodwill/Market Cap Ratio is also very high at 1.48. This means that the intangible assets and goodwill assets are higher than the stock’s market cap. Both this items should give investors pause.

They started to pay dividends in 2012 and have made one increase in dividends in 2015 of 13.8%. So there is a modest increase in dividends of some 2.6% per year over the past 5 years. Since dividends are paid in CDN$ and the US$ has been gaining against the CDN$, in US$ there has been a modest decrease in dividends of 2% per year in US$.

The Dividend Payout Ratio for 2017 is 49% with 5 year coverage of 47%. This is a good EPS ratio. The DPR for CFPS is also good at 25% for 2017 with 5 year coverage at 17%.

The Total Return per year is show below for years of 5 to 17. 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.

Over the years from this company’s inception, the return seems quite steady. An 8% to 9% per year total return is quite nice.

Years Div. Gth Tot Ret Cap Gain Div.
5 2.63% 9.83% 7.66% 2.17%
10 8.11% 6.84% 1.27%
15 9.81% 8.91% 0.90%
17 8.65% 7.89% 0.76%

The 5 year low, median and high median Price/Earnings per Share Ratios are 18.90, 23.39 and 27.91. The corresponding 10 year ratios are 17.97, 22.94 and 27.00. The historical ratios are 18.25, 22.41 and 26.13. The current P/E Ratio is 9.97 based on a stock price of $61.45 and 2018 EPS estimate of $6.16 CDN$ ($4.75 US$). This stock price testing suggests that the stock price is relatively cheap.

I get a Graham Price of $80.62 CDN$. The low, median and high median Price/Graham Price Ratios are 1.44, 1.79 and 2.19. The current P/GP Ratio is 0.76 based on a stock price of $61.45 CDN$. This stock price testing suggests that the stock price is relatively cheap. When the P/GP Ratio is below 1.00, a stock price is considered cheap on an absolute basis.

I get a 10 year median Price/Book Value per Share of 3.00. The current P/B Rati is 1.31 based on a Book Value of $2,635M, Book Value of $46.87 and a stock price of $61.45. The current P/B Ratio is some 56% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. If the P/B Ratio is below 1.50 a stock is considered cheap. This testing is in CDN$ terms.

I get an historical median dividend yield of 1.87%. The current dividend yield is 2.41% based on dividends of $1.48 CDN$ and a stock price of $61.45 CDN$. The current dividend is some 29% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.

The 10 year median Price/Sales (Revenue) Ratio is 1.47. The current P/S Ratio is 1.24 based on 2018 Revenue estimate of $2,793M CDN$ ($2,154M US$), Revenue per Share of $49.72 and a stock price of $61.45 CDN$. The current ratio is some 20% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

When I look at analysts’ recommendations I find Strong Buy (1), Buy (9) and Hold (1). The consensus would be a Buy. The 12 month stock price is $80.20 CDN$. This implies a total return of 32.92% based on a current stock price of $61.45 CDN$. The total return consists of 30.51% in capital gains and 2.41% in dividends.

The company reported their fourth quarter and year end 2017 results on Cision. They talk about reporting in US$ as most of their revenue, earnings and assets are now in US$. Natalie Wong on Bloomberg says the company expects its Revenue decline to bottom out in 2019. Ted Liu on Private Capital Journal talks about this company’s name change and purchase of Digital Globe Inc. Joseph Solitro on Motley Fool thinks that this stock is currently wildly undervalued. See what analysts are saying about this stock on Stock Chase. They mostly like it but lots mention the problem of debt for Digital Globe Acquisition.

Maxar Technologies Ltd is an integrated space and geospatial intelligence company with a full range of space technology solutions for commercial and government customers including satellites, Earth imagery, geospatial data and analytics. Its web site is here Maxar Technologies Ltd .

The last stock I wrote about was about was Ensign Energy Services (TSX-ESI, OTC-ESVIF)... learn more. The next stock I will write about will be Husky Energy Inc. (TSX-HSE, OTC-HUSKF)... learn more on Friday, June 1, 2018 around 5 pm. Tomorrow on my other blog I will write about Increase in Dividends.... learn more on Thursday, May 31, 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.

1 comment:

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