Sound bite for Twitter and StockTwits is: Dividend Growth Industrial. I think that the stock is a bit pricey at the moment, but I would be bullish on this stock for the long term. See my spreadsheet on Badger Daylighting Ltd.
I do not own this stock of Badger Daylighting Ltd. (TSX-BAD, OTC-BADFF). I started to follow this stock after reading a couple of articles in February 2012 in the G&M that talked about the company. The first article looked at what the pros who manage small-cap funds are buying. Badger was one of 10 stocks mentioned and it looked like an interesting stock. It is a dividend paying small cap. The second article looked at why stocks might appeal to a conservative investor looking for income.
When I was updating my spreadsheet, I noticed a lot of green ink. The company is growing is revenue, earnings, cash flow and book value. The only red if for dividend growth for the past 10 years. This is not surprising as this company used to be an income trust. Income Trust companies can pay out more than corporations in dividends, so most income trusts had to cut dividends when they became corporation.
Currently dividends are low and dividend growth is good. The current dividend yield is 1.86% with 5 year median at 1.45%. The last dividend increase was this year and it was for 18.4%. The dividend yields were much higher when it was an income trust with it sometimes over 10%. This is still reflected in the historical median dividend yield of 4.75%.
They can afford their dividend as the Dividend Payout Ratio for 2017 was 24% with 5 year coverage at 31%. The DPR for CFPS for 2017 was 13% with 5 year coverage at 15%. This is a good coverage also.
All the debt ratios are good. Long Term Debt/Market Cap Ratio for 2017 is low at 0.09. The Liquidity Ratio for 2017 was 3.08 with 5 year median of 3.08 also. The Debt Ratio for 2017 is 2.74 with 5 year median at 2.50. Thee Leverage and Debt/Equity Ratios are also quite good at 1.57 and 0.57 respectively and 10 year medians at 1.92 and 0.92 respectively.
The Total Return per year 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.
Shareholders have done well with this stock. In the future the dividend portion of the return will be like it was for the past 5 years. Dividend yields will never go back up to were they were before the company became a corporation.
| Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|
| 5 | 4.02% | 24.00% | 21.45% | 2.55% |
| 10 | -0.10% | 17.45% | 14.16% | 3.28% |
| 13-15 | 6.58% | 45.63% | 29.34% | 16.29% |
| 20 | 10.25% | 12.03% | 10.05% | 1.97% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 17.31, 23.06, 28.78. The corresponding 10 year ratios are 9.25, 13.77 and 16.98. The historical ones are 9.19, 11.15 and 13.99. The current P/E Ratio is 17.91 based a stock price of $29.01 and a 2018 EPS estimate of $1.62. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of 18.20. The 10 year low, median, and high median Price/Graham Price Ratios are 0.93. 1.40 and 1.74. The current P/GP Ratio is 1.59 based on a stock price of $29.01. 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 Ratio of 3.22. The current P/B Ratio is 3.19 based on a stock price of $29.01, Book Value of $337M and a Book Value per Share of $9.09. The current ratio is some 0.9% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and around the median.
I get an historical median dividend yield of 4.75%, 5 year and 10 year median of 1.45% and 2.82% and since 2011, 1.50%. It would appear that the current yield is less since it because of corporation in 2011. The current yield is some 24% above the median yield since 2011. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10 year median Price/Sales (Revenue) Ratio is 1.77. The current P/S Ratio is 1.84 based on 2018 Revenue estimate of $585M, Revenue per Share of $15.77 and a stock price of $29.01. The current ratio is some 4% above the 10 year median. This stock price testing suggests that the stock price is relatively reasonable and above the median.
When I look at analysts’ recommendations I find Strong Buy (1), Buy (4), Hold (1) and Underperform (1). The consensus would be a Buy. The 12 month stock price consensus is $34.43. This implies a total return of 20.54% with 18.68% from capital gains and 1.86% from dividends based on a current stock price of $29.01.
Jenifer Prater on Simply Wall Street talks about the volitivity of the stock’s price. There is an interesting article by Dan Healing in The Star about a short selling possibly making untrue accusation against this company. Joey Frenette on Motley Fool thinks that things look bright for this company’s future. See what analysts are saying on Stock Chase. They like the stock and think that they have proved the short-sellers wrong.
Badger Daylighting Ltd is a provider of non-destructive hydrovac excavation services through two methods: Badger Corporate locations and Operating Partners. The company's technology, Badger Hydrovac System, is a truck-mounted hydrovac excavation unit. Its web site is here Badger Daylighting Ltd.
The last stock I wrote about was about was Andrew Peller Ltd. (TSX-ADW.A, OTC-ADWPF) ... learn more. The next stock I will write about will be Chemtrade Logistics Income Fund (TSX-CHE.UN, OTC-CGIFF) ... learn more on Friday, August 31, 2018 around 5 pm, maybe.
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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