I own this stock of Mullen Group Ltd (TSX-MTL, OTC-MLLGF). I like to look at recommended small cap dividend paying stock to see if they would be a possible good investment now or in the future. The other thing to mention about this stock is that it recently converted from an income trust and has decreased it dividends. The reduction in dividend brought the Dividend Payout Ratios down to a place that would allow for the company to begin growing again.
They increased their dividends by 66.7% this year. This is a sign from management that they expect their business to do well in the future. However, analysts do not expect any further dividend increases over the next two years.
First the company had to decrease dividends when they changed to a corporation from an income trust. This was in 2009. Then in 2014 and 2016 they had to decrease dividends again because they could not cover them with earnings. So over the past 5 and 10 years dividends have gone down. However, it is interesting that over the past 15 and 17 years dividends are up by 6.85% and 6.02%.
Dividends from the company have been all over the place. Part of the reason is that they changed from a corporation to an Income Trust and then change back to a corporation. Income Trust companies can afford to payout higher dividends than corporations. Dividends were increased going to an income trust and then decreased go back to a corporation.
Currently dividend yields are good, but they have been low in the past. The current dividend yield is 4.06%, but dividends have often been in the 1% range. I would not be surprised if this company’s dividend yield settled into the 2% range.
Currently they can afford their dividends. The Dividend Payout Ratio for 2017 is 57% and with the increase in 2018, it is expected to be around 90% in 2018 and declining to 82% in 2019. The 5 year coverage is 122%. This is because the DPR for 2015 was 800% because of a very low earning year.
The Total Return is show below for years of 5 to 20. 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. This company is connected with the oil and gas industries and it has not done well for shareholders over the past 5 and 10 years.
| Years | Div Gth | Tot Ret | Cap Gain | Div |
|---|---|---|---|---|
| 5 | -18.48% | -0.46% | -5.51% | 5.05% |
| 10 | -14.87% | 4.58% | -1.11% | 5.69% |
| 15 | 6.85% | 10.28% | 2.85% | 7.43% |
| 17-20 | 6.02% | 10.06% | 4.13% | 5.93% |
The 5 year low, median and high median Price/Earnings per Share Ratios are 23.17, 27.50 and 31.83. The 10 year corresponding ratios are 13.46, 15.78 and 18.10. The historical corresponding ratios are 12.27, 15.20 and 18.85. The current P/E Ratio is 23.11 based on a stock price of $14.79 and 2018 EPS estimate of $0.64. This stock price testing suggests that the stock price is relatively expensive.
The 5 year ratios are high because earnings have been low latterly. The EPS is also low for 2018, but you could say the same for 2019 and 2020 estimates. This test is probably not a good one for this stock at present.
I get a Graham Price of $11.64. The 10 year low, median and high median Price/Graham Price Ratios are 1.05, 1.25 and 1.46. The current P/GP Ratio is 1.27 based on a stock price of $14.79. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10 year median Price/Book Value per Share of 1.93. The current P/B Ratio is 1.57 based on Book Value of $975.6M, Book Value per Share of $9.41 and a stock price of $14.79. The current ratio is some 19% below the 10 year median. This stock price testing suggests that the stock price is relatively reasonable and below the median. If it was 10% below the stock would be relatively cheap.
I get an historical median dividend yield of 3.98%. The current dividend yield is 4.06% based on dividends of $0.60 and a stock price of $14.79. The current dividend yield is some 4.3% above the historical dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median. Since this stock used to be an income trust company, the historical yield is probably higher than it would be if the company had always been a corporation.
The 10 year median Price/Sales (Revenue) Ratio is 1.33. The current P/S Ratio is 1.27 based on 2018 Revenue estimate of $1,203M, Revenue per Share of $11.61 and a stock price of $14.97. The current ratio is some 4% lower than the 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
When I look at analysts’ recommendations I find Strong Buy (1), Buy (1) and Hold (10). The consensus recommendation would be a Hold. The 12 month Stock Price is $16.16. This implies a total return of $13.32% with 9.26% from capital gains and 4.06% from dividends.
The company announces business plan and 2018 dividend increase on Globe News Wire. Amber Thompson on Register Journal talks about Zacks Investment down grading second quarterly earnings for this company. Jonathon Baker says on Simply Wall Street that the intrinsic value of this stock is $7.51 based on cash flows so it is currently overvalued. This stock is not well followed on Stock Chase with the last entry dated 2016.
Mullen Group Ltd provides long haul and local transportation services to customers in various industries predominantly within Canada. The Company's business segments are Trucking/Logistics and Oilfield Services. Its web site is here Mullen Group Ltd.
The last stock I wrote about was about was Hammond Power Solutions Inc. (TSX-HPS, OTC-HMDPF)... learn more. The next stock I will write about will be Pizza Pizza Royalty Corp (TSX-PZA, OTC-PZRIF)... learn more on Friday, May 18, 2018 around 5 pm. Tomorrow on my other blog I will write about The Rich and Investing.... learn more on Thursday, May 17, 2018 around 5 pm..
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