Wednesday, June 20, 2018

CI Financial Corp

Sound bite for Twitter and StockTwits is: Dividend Growth Financial. My stock testing is showing this stock as cheap. Mutual Fund companies seem to be having a hard time currently. See my spreadsheet on CI Financial Corp.

I do not own this stock of CI Financial Corp (TSX-CIX, OTC-CIFAF). I started to follow this stock originally because it was a Mutual Fund company. People talked about it being easier to make money from buying a Mutual Fund company than buying Mutual Funds. In June 2014, MPL communications called this stock a Buy and advised that they were adding it to their list of Key Stock for the Investment reporter.

The stock hit a high 10 years ago, so you see that the total return for 10 years is low. This is the reason that you should not over pay for a stock, even a good stock. It greatly affects your long term total return.

When they became a Unit Trust in 2006, dividends were significantly increased, but these dividends proved to be unsustainable. They changed back to a corporation in 2009 and dividends were decreased in 2010. Since that time, they have been increasing their dividends since 2011. It is not surprising that the dividends under the income trust are higher as a company can pay out more than their earnings. However, corporations cannot.

Currently the dividends are moderate to good with low to moderate dividend growth. The current dividend yield is good at 5.69% with 5 year median yield moderate at 3.96, 10 year median yield good at 4.14% and the historical median yield moderate at 3.48%.

Some years they do more than one dividend increase but that did not happen last year where the increase was only one and that one was for 2.2%. There has been no increase so far this year. The dividend grow over the past 5 to 22 years is shown below. For the past 5 and 10 years the dividend growth is 8.03% and 1.98% per year. The 10 year growth is very low.

Currently they can afford their dividends. The Dividend Payout Ratios for 2017 for EPS was 74% with 5 year coverage at 69%. The DPR for CFPS for 2017 was high at 63% with 5 year coverage at 54%. I prefer the CFPS coverage to be at 40% or lower.

The Long Term Debt/Market Cap Ratio is very low and therefore good at 0.11. The Liquidity Ratio is low at 0.87. In this case it means that current assets cannot cover current liabilities. If you add in cash flow after dividends it is still very low at 1.10. However, the current portion of long term debt is $222.00 and if you take that out and add in cash flow after dividends the ratio is 1.40. I prefer to see it at 1.50 or higher.

The liquidity Ratio has always been low with 5 year median of 0.90. If you add in cash flow after dividends the 5 year median is better at 1.62. The Debt Ratio is 1.83. A Debt Ratio of 1.50 or higher is good. The Leverage and Debt/Equity Ratio are ok if a little high at 2.21 and 1.21. I would prefer to see these lower.

The Total Return per year is show below for years of 5 to 23. 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.

As you can see in the chart below, Total Return has mostly been good except for the 10 year period.

Years Div. Gth Tot Ret Cap Gain Div.
5 8.03% 8.27% 3.61% 4.65%
10 1.98% 5.49% 0.59% 4.90%
15 23.35% 12.85% 6.33% 6.52%
20 23.66% 21.31% 13.51% 7.81%
23 25.17% 20.81% 14.04% 6.76%

The 5 year low, median and high median Price/Earnings per Share Ratios are 14.80, 16.53 and 18.27. The 10 year corresponding ratios are 14.66, 16.51 and 19.08. The historical corresponding ratios are 15.84, 18.08 and 20.08. The current P/E Ratio is 10.32 based on a stock price of $24.77 and 2018 EPS estimate of $2.40. This stock price testing suggests that the stock price is relatively cheap.

I get a Graham Price of $19.21. The 10 year low, median and high median Price/Graham Price Ratios are 1.48, 1.67 and 1.95. The current P/GP Ratio is 1.29. This stock price testing suggests that the stock price is relatively cheap.

I get a 10 year median Price/Book Value per Share of 3.80. The current P/B Ratio is 3.62 based on Book Value of $1,819M, Book Value per Share of $6.84 and a stock price of $14.77. The current ratio is some 4.6% lower than the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get an historical median dividend yield of 3.48%. The current dividend yield is 5.69% based on dividends of $1.41 and a stock price of $24.77. The current dividend yield is some 64% higher than the historical median. This stock price testing suggests that the stock price is relatively cheap.

The 10 year median Price/Sales (Revenue) Ratio is 4.13. The current P/S Ratio is 2.89 based on 2018 estimates of $2,286M, Revenue per Share of $8.58 and a stock price of $24.77. The current ratio is some 30% lower than the 10 year 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 (3), Hold (4) and Underperform (1). The consensus would be a Hold. The 12 month stock price is $28.67. This implies a total return of 21.44% with 15.74% from capital gains and 5.69% from dividends based on a current stock price of $24.77.

Fisher Staff Writer on Fisher Business News says this company has a Value Composite score of 26. This suggests that stock is neither under or overvalued. A Danvers Record writer on Danvers Record says that the company has a Montier C-score of 4 where 0 says there is no evidence of cooking the books to 6 which indicates a high likelihood of book cooking. Joey Frenette on Motley Fool writes an interesting article in which he says that a ban on trailer fees will really harm this company. See what analysts are saying about this stock on Stock Chase. Some think the company is in a tough business. Most think it will do ok.

CI Financial Corp is a wealth management company that provides financial products and services including mutual funds, exchange traded funds, segregated funds, financial planning, insurance, investment advice, and succession planning. Its web site is here CI Financial Corp.

The last stock I wrote about was about was Algonquin Power & Utilities Corp (TSX-AQN, NTSE-AQN)... learn more. The next stock I will write about will be Computer Modelling Group Ltd. (TSX-CMG, OTC-CMDXF)... learn more on Friday, June 22, 2018 around 5 pm. With getting my new computer, I doubt that I will have time to write on my other blog on Thursday, June 21, 2018.

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.

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