Friday, September 28, 2018

Gluskin Sheff + Associates Inc

Sound bite for Twitter and StockTwits is: Dividend Growth Financial. If you want to buy this stock, it would seem that now is the time as it is cheap. The company has a habit of paying special dividends. Yield on special dividends for 2018 financial year was 8.76%. CEO and CFO are buying stock. See my spreadsheet on Gluskin Sheff + Associates Inc.

I own this stock of Gluskin Sheff + Associates Inc. (TSX-GS, OTC-GLUSF). I started to review some of the stock recommended by Jennifer Dowty from a column she wrote and I reviewed in February 2010 on Dividends and Special Dividends. The title of the article in Investor’s Digest was Dividend Stocks: Buy, Hold and Collect. Jennifer is now working at the Globe and Mail and she used to be a Portfolio Manager for Manulife Asset Management Limited.

When I was updating my spreadsheet, I noticed that they spend a lot of cash during the financial year ending in June 2018. They settled the suit of the Founders costing $11M and they paid two special dividends of which totaled $44M. Results were that the book value when down around 29%. Also, there is inside buying of 0.25% of Market Cap. This is high as generally it would be around 0.01 or 0.02% at most. The CEO and CFO are buyers.

Dividend yields are moderate to good. The current yield is 6.72%. The 5, 10 and historical dividend yields are 4.68%, 3.45% and 3.81%. There has been no dividend increase since 2017. However, they paid $1.45 in two special dividends in financial year ending 2018.

The Dividend Payout Ratio for 2018 financial year is 202% with 5 year coverage of 111%. It is not as bad as it seems. Because they were being sued by the founders, money was set aside for these claims. Now these claims have been settled by the courts, they paid out special dividends. The regular dividend had coverage in 2017 of 82%.

The Debt Ratios are good. The Long Term Debt/Market Cap Ratio is very low at 0.02. The Liquidity Ratio for 2018 is 1.69 with 5 year median at 1.81. The Debt Ratio for 2018 is 3.23 with 5 year median at 3.23 also. The Leverage and Debt/Equity Ratios for 2018 are 1.45 and 0.45 with5 year medians at 1.40 and 0.40.

The Total Return per year is show below for years of 5 to 12. 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.

Capital gains have been very low. Dividends have been quite good.

Years Div. Gth Tot Ret Cap Gain Div.
5 7.78% 15.59% 2.15% 13.44%
10 9.00% 2.35% -4.58% 6.93%
12 12.36% 6.53% -0.87% 7.41%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 11.74, 13.67 and 15.61. The corresponding 10 year ratios are 10.94, 14.07 and 16.59. The corresponding historical ratios are 11.35. 14.46 and 17.58. The current P/E Ratio is 9.66 based on a current stock price of $14.88 and 2019 EPS estimate of $1.54. This stock price testing suggests that the stock price is relatively cheap.

I get a Graham Price of $10.32. The 10 year low, median, and high median Price/Graham Price Ratios are 1.48, 1.91 and 2.29. The current P/GP Ratio is 1.44 based on a stock price of $14.88. This stock price testing suggests that the stock price is relatively cheap.

I get a 10 year median Price/Book Value per Share Ratio of 5.83. The current P/B Ratios is 4.84 based on Book Value of $96M, Book Value per Share of $3.08 and a stock price of $14.88. The current ratio is some 17% below the 10 year 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 3.45%. The current dividend yield is 6.72% based on dividends of $1.00 and a stock price of $14.88. The current yield is some 95% above the historical median. This stock price testing suggests that the stock price is relatively cheap.

The 10 year median Price/Sales (Revenue) Ratio is 4.43. The current P/S Ratio is 2.92 based on 2019 Revenue estimate of $159M, Revenue per Share of $5.09 and a stock price of $14.88. The current ratio is below the 10 year median by some 34%. This stock price testing suggests that the stock price is relatively cheap.

When I look at analysts’ recommendations I find only Hold (6) recommendations. The consensus would be a Hold. The 12 month stock price consensus is $17.42. This implies a total return of 23.79% with 17.07% from capital gains and 6.72% from dividends.

Mary Kom on Fairfield Current talks about recent analysts’ ratings. Business Wire on Financial Post highlights some of the company’s fourth quarterly results. Karen Thomas on Motley Fool liked this stock last year. See what analysts are saying about this stock on Stock Chase. There are some worries.

Gluskin Sheff & Associates Inc provides discretionary investment management services to high net worth private clients and institutional investors in Canada and abroad. Its web site is here Gluskin Sheff + Associates Inc.

The last stock I wrote about was about was Great-West Lifeco Inc. (TSX-GWO, OTC-GWLIF) ... learn more. The next stock I will write about will be Granite REIT (TSX-GRT.UN, NYSE-GRP.U) ... learn more on Monday, October 1, 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.

Wednesday, September 26, 2018

Great-West Lifeco Inc.

Sound bite for Twitter and StockTwits is: Dividend Growth Financial. Stock is selling at a good price and last few dividend increases were above 6%. If you want to hold this stock, it would seem like a good time to buy. See my spreadsheet on Great-West Lifeco Inc..

I do not own this stock of Great-West Lifeco Inc. (TSX-GWO, OTC-GWLIF). This stock seems to be a favorite with investors who like solid, stable, dividend paying stock. It was on Mike Higgs' list and it used to be on the dividend lists. I have been following this stock for some time. However, I will not buy it because I have Power Financial Corp. (TSX-PWF). Great West Lifeco Inc. is one of the companies under the Power Financial Corp. and Power Corp. (TSX-POW).

When I was updating my spreadsheet, I noticed that this company did get hit hard by the last recession. Most insurance companies did. There were no dividend increases for 5 years from 210 to 2014 inclusive.

This stock had lower yields until the 2008 bear and then they went from low (1% and lower) and moderate (2 and 3%) to good (4% and higher). The current dividend yield is 4.92%, with 5, 10 and historical dividend yields at 4.06%, 4.33% and 3.37%. Dividend growth is low at the present time with the 5 and 10 year growth at 3.60% and 3.31%. Pass growth was higher, see chart below. The last dividend increase was in 2018 and it was for 6%.

The Dividend Payout Ratio for EPS for 2017 was at 68% with 5 year coverage at 53%. The DPR for CFPS for 2017 was at 42% with 5 year coverage at 42%. The coverage for EPS is fine, but I would prefer the coverage for CFPS to be 40% or less.

Life Insurance companies generally have lots of debt because of their contracts. So, for them, the Long Term Debt/Market Cap is not the measure you want. You want the Long Term Debt to be covered by cash and investments. For this company the Debt/Investment Ratio is 0.95.

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.

Except for 10 year returns, shareholders have done well. Make sure that you are not overpaying when buying stocks because if you do it can affect your long term results. 10 years ago, the stock hit a high. It was probably not a good time to buy.

Years Div. Gth Tot Ret Cap Gain Div.
5 3.60% 12.29% 7.59% 4.70%
10 3.31% 3.45% -0.13% 3.58%
15 7.85% 8.35% 4.09% 4.26%
20 10.91% 11.19% 6.68% 4.50%
23 12.39% 18.67% 11.67% 7.00%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 11.37, 12.53 and 13.91. the corresponding 10 year corresponding ratios are 11.34, 12.48 and 14.21. The historical ratios are 12.27, 13.47 and 15.32. The current P/E Ratio is 10.30 based on a current stock price of $31.61 and 2018 EPS estimate of $3.07. This stock price testing suggests that the stock price is relatively cheap.

I get a Graham Price of $39.29. The 10 year low, median, and high median Price/Graham Price Ratios are 0.89. 1.00 and 1.16. The current P/GP Ratio is 0.83 based on a stock price of $31.61. This stock price testing suggests that the stock price is relatively cheap.

I get a 10 year median Price/Book Value per Share Ratio of 1.82. The current P/B Ratio is 1.49 based on a Book Value of $20,989M, Book Value per Share of $21.22 and a stock price of $31.61. The current P/B Ratio is some 18% below the 10 year median. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get an historical median dividend yield of 3.37%. The current Dividend yield is 4.92% based on dividends of $1.556 and a stock price of $31.61. The current dividend yield is some 46% above the historical yield. This stock price testing suggests that the stock price is relatively cheap.

The 10 year median Price/Sales (Revenue) Ratio is 0.75. The current P/S Ratio is 0.66 based on 2018 Revenue estimate of $47,705M, Revenue per Share of $48.24 and a stock price of $31.61. The current ratio is some 13% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I see no reason to say that any of these tests are invalid. So, it would seem that the stock price is running from relatively cheap to relatively reasonable and below the median. The P/B Ratio test shows the price close to cheap as the stock price is considered cheap if the current ratio is 20% below the 10 year median ratio. This test shows the stock price close to cheap. So, 3 of 5 test show stock is cheap and one shows it nearly cheap. Certainly, the stock is selling at a good price.

When I look at analysts’ recommendations I find Strong Buy (1), Buy (1) and Hold (8). The consensus would be a Hold. The 12 month stock price consensus is $36.40. This implies a total return of 20.08% with 15.15% from capital gains and $4.92% from dividends based on a current price of $31.61.

David French and John Tilak on Reuters talk about this company selling off some Life Insurance contracts. Hector Vargas on Simply Wall Street talks about ownership and seems to have missed the ownership by Power Corp. Maria Luz-Campos on X News Press talks about recent analyst’s reports. Jason Phillips on Motley Fool talks about Yield Curve and Insurance Companies. See what analysts are saying about this company on Stock Chase. Some are no keen on this company.

Great-West Lifeco Inc is a life insurance company that also offers health insurance, retirement and investment services, asset management and reinsurance businesses. It operates in Canada, U.S. and Europe. Its web site is here Great-West Lifeco Inc..

The last stock I wrote about was about was Trican Well Service Ltd (TSX-TCW, OTC-TOLWF) ... learn more. The next stock I will write about will be Gluskin Sheff + Associates Inc. (TSX-GS, OTC-GLUSF) ... learn more on Friday, September 28, 2018 around 5 pm. Tomorrow on my other blog I will write about Money Show 2018 – Steven Hawkins.... learn more on Thursday, September 26, 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.

Monday, September 24, 2018

Trican Well Service Ltd

Sound bite for Twitter and StockTwits is: Industrial Services Stock. This company services the oil and gas industry. It would seem that the stock is relatively cheap, but it is also quite risky. It does have very good debt ratios. See my spreadsheet on Trican Well Service Ltd.

I do not own this stock of Trican Well Service Ltd (TSX-TCW, OTC-TOLWF). I was following Canyon Services Group Inc. and Trican Well Services Ltd. had a plan of arrangement with Canyon Shareholders. I used to get a newsletter weekly from MPL Communications called Advice Hotline. They wrote up the Canyon Services Group stock on July 19, 2012 and I was impressed with it so I did a spreadsheet.

I am following this company from Canyon Services Group into Trican Well Services. When I was updating my spreadsheet, I noticed it does not seem to be doing very well and it would seem that it will be a while before it has dividends again. TCW cancelled dividends in 2014 and analysts do not expect it to make a profit this year.

All the debt ratios are good. This is always a good idea if you have volatility in your earnings like this company. Long Term Debt/Market Cap is low at 0.06. Liquidity for 2017 is 1.94 with 5 year median of 1.52. The Debt Ratio for 2017 is 4.56 with 5 year median of 3.97. Leverage and Debt/Equity Ratios for 2017 are 1.28 and 0.28 with 5 year median of 1.31 and 0.31.

The Total Return per year is show below for years of 5 to 11. 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 stock is rather risky, so you would want a good long term return. The only return that would justify the risk would be the 10 year return. However, this stock is in a boom, bust industry.

Years Div. Gth Tot Ret Cap Gain Div.
5 n/a -6.10% -9.38% 3.28%
10 n/a 17.22% 11.92% 5.30%
11 6.36% 3.11% 3.25%


The 5 year low, median, and high median Price/Earnings per Share Ratios are -3.56, -4.52 and -5.88. The corresponding 10 year ratios are 0.22, 1.64 and 1.72. The historical corresponding ratios are 0.22, 1.72 and 2.22. These are low or negative ratios are because of earnings losses. The current P/E ratio is -25.33. It is not possible to test the stock price using P/E Ratios.

I get a Graham Price of $1.92. The 10 year low, median, and high median Price/Graham Price Ratios are 0.52, 0.94 and 1.31. The current P/GP Ratio is 1.19 based on a stock price of $2.28. This stock price testing suggest that the stock price is relatively reasonable but above the median. Next year the Graham Price is projected to be $4.04 with a P/GP Ratio of just 0.57. However, projections are notorious for being inaccurate and the further way they are the more inaccurate they seem.

I get a 10 year median Price/Book Value per Share Ratio of 1.59. The current P/B Ratio is 0.69 based on Book Value of $1074M, Book Value per Share of $3.29 and a stock price of $2.28. The current P/B Ratio is some 54% below the 10 year median ratio. This stock price testing suggest that the stock price is relatively cheap.

I get an historical median dividend yield of 0% because dividends have been cancelled, so we cannot do any testing using the dividend yield.

The 10 year median Price/Sales (Revenue) Ratio is 1.78. The current P/S Ratio is 0.70 based on Revenue estimates for 2018 of $1,070M, Revenue per Share of $3.28 and a stock price of $2.28. The current P/S Ratio is some 61% below the 10 year median ratios. This stock price testing suggest that the stock price is relatively cheap.

I do so many tests on the stock price because for different stocks in different periods some tests are not really applicable for various reason. For this stock the best tests seem to be the P/B Ratio and P/S Ratios. Both these show the stock has being relatively cheap. The P/B Ratio test maybe the best because it uses no estimates.

When I look at analysts’ recommendations I find Strong Buy (3), Buy (9) and Hold (4). The Consensus would be a Buy. The 12 month stock price is $4.71. This implies a 107% return of all capital gains based on a stock price of $2.28.

Vince Mercandetti on Baseball Daily Digest talks about some analysts downgrading this stock. News on Reuters talk about the TSX going up 0.06% and this stock falling 6.2% on September 21, 2018. Karen Thomas on Motley Fool talks about there being some good upside for oil service stocks in the future, including for this one. She is right about the industry upswing returns being phenomenal and downturns being brutal. See what analysts are saying about this stock on Stock Chase. They think it is cheap, almost debt free and well run.

Trican Well Service Ltd is an oilfield services company engaged in providing products, equipment, services, and technology used in drilling, completion, stimulation and reworking of oil and gas wells in Canada, United States and internationally. Its web site is here Trican Well Service Ltd.

The last stock I wrote about was about was Wajax Corp. (TSX-WJX, OTC-WJXFF) ... learn more. The next stock I will write about will be Great-West Lifeco Inc. (TSX-GWO, OTC-GWLIF) ... learn more on Wednesday, September 26, 2018 around 5 pm. Tomorrow on my other blog I will write about Money Show 2018 – Gordon Pape.... learn more on Tuesday, September 25, 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.

Friday, September 21, 2018

Wajax Corp

Sound bite for Twitter and StockTwits is: Dividend Paying Industrial. This does not have a great track records for dividends. However, the current price seems reasonable and below the median. They have good debt ratios and this will see them through the tough times. See my spreadsheet on Wajax Corp .

I do not own this stock of Wajax Corp. (TSX-WJX, OTC-WJXFF). TD Waterhouse put out a report on good dividend paying stocks to own in November 2011. This was a stock they named. I had not heard of it before, so I decided to investigate it.

When I was updating my spreadsheet, I noticed that the company did not do well after 2012, but there is improvement in 2017 and in the first two quarters of 2018. This stock used to be an income trust from 2004 to 2011. As an income trust they paid quite high dividends.

Since starting dividends in 1986, the dividends have gone up and down and been cancelled. The historical high is around 14.38% and low at 0%. This historical median is 4.27%. See the chart below. Where there is n/a, it means that at the start of the period the dividends were 0%. There were no dividends from 1992 to 2003. Dividends were restarted when the company became an income trust.

The dividend yields have always been in the moderate (2 and 3% range) to good (over 4%). The current dividend is 3.82% with 5, 10 and historical medians are 5.12%, 6.30% and 4.27%. The dividends were decreasing from 2013 to 2016 inclusive. They have been flat since 2016. There is currently no growth in dividends.

They can currently afford their dividends as the Dividend Payout Ratio for EPS for 2017 is 65%. However, 5 year coverage is 124%. The DPR for CFPS is better with the DPR for CFPS in 2017 at 24% and 5 year coverage at 38%. Analysts expect the DPR for EPS to decrease in 2018 and following years so there might be hope for future growth in dividends.

The Long Term Debt/Market Cap Ratio is good at 0.29. The other debt ratios are good also with Liquidity Ratio at 2.21 and the Debt Ratio at 1.69. The Leverage and Debt/Equity Ratios at 2.44 and 1.44 are typical.

The Total Return per year is show below for years of 5 to 31. 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.

In 2002, 15 years ago, the stock price hit a low point, but the company provided great dividends after 2004 and two special dividends in 2007 and 2008.

Years Div. Gth Tot Ret Cap Gain Div.
5 -19.89% -4.69% -9.55% 4.86%
10 -12.68% 6.29% -2.59% 8.88%
15 n/a 41.03% 13.09% 27.94%
20 n/a 8.14% 1.59% 6.55%
25 n/a 11.76% 5.48% 6.28%
30 1.95% 8.05% 3.06% 4.99%
31 1.89% 6.09% 1.73% 4.36%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 12.22, 14.23 and 16.42. The corresponding 10 year ratios are 8.77, 10.68 and 12.63. The corresponding historical ratios are 9.36, 11.39 and 13.87. The current P/E Ratio is 11.34 based on a stock price of $26.20 and 2018 EPS estimate of $2.31. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a Graham Price of $27.89. The 10 year low, median, and high median Price/Graham Price Ratios are $0.92, 1.14 and 1.34. The current P/GP Ratio is 0.94 based on a stock price of $26.20. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a 10 year median Price/Book Value per Share Ratio of 2.16. The current P/B Ratio is 1.75 based on Book Value of $300M, Book Value per Share of $14.97 and a stock price of $26.20. The current ratio is some 19% below the 10 year ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get an historical median dividend yield of 4.27%. The current dividend yield is 3.82% based on dividends of $1.00 and a stock price of $26.20. The current yield is some 11% below the historical median. This stock price testing suggests that the stock price is relatively reasonable but above the median.

The 10 year median Price/Sales (Revenue) Ratio is 0.37. The current P/S Ratio is 0.36 based on 2018 Revenue estimate of $1,463M, Revenue per Share of $72.90 and a stock price of $26.20. The current ratio is some 4% below the 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I think that the best tests for this stock currently is the Graham Price, B/P Ratio and P/S Ratio tests. These tests all show a stock price that is reasonable and below the median.

The P/E Ratios have moved around a lot. This is often not a good test. Also, with this company’s history of dividend payments and the fact that is was a corporation, then an income trust and then a corporation makes the dividend yield test questionable. That is because what can be paid in dividends is calculated differently with income trusts and corporations.

When I look at analysts’ recommendations I find Buy (2) and Hold (2). The consensus would be a Buy. The 12 month stock price consensus is $31.63. This implies a total return of 24.54% with 20.73% from capital gains and 3.82% from dividends based on a current stock price of $26.20.

Liz Campbell on Simply Wall Street says that this company’s Return On Capital Employed (ROCE) is low. The company talks about its four quarterly results for 2017 on Canadian News Wire. Ambrose O'Callaghan on Bay Street talk about the company share going up 7% after reporting of the fourth quarter of 2017. Mat Litalien on Motley Fool says this company is a good buy. See what analysts are saying about this stock on Stock Chase. There are few analysts following this stock.

Wajax Corp is a distributor of industrial components. Its products include machinery used for construction, machines used in power generation and transmission and other industrial components used in businesses like forestry and mining. Its web site is here Wajax Corp.

The last stock I wrote about was about was Telus Corp. (TSX-T, NYSE-TU) ... learn more. The next stock I will write about will be Trican Well Service Ltd (TSX-TCW, OTC-TOLWF) ... learn more on Monday, September 24, 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.

Wednesday, September 19, 2018

Telus Corp

Sound bite for Twitter and StockTwits is: Dividend Growth Utility. The stock price is at the high end of reasonable as it is above the median. The debt ratios are mediocre so that is a vulnerability. See my spreadsheet on Telus Corp.

I do not own this stock of Telus Corp. (TSX-T, NYSE-TU). I started to follow this stock because of a list of stock John Sartz talked about in 2008. At the Toronto Money Shows in 2009 and 2010 Aaron Dunn from KeyStone Financial Publishing Corp talked about having recommended this stock. Aaron Dunn says he likes companies with resilient business models, which are profitable and are growing their earnings. He also like companies with strong management teams, health balance sheets and compelling valuations. They look at the P/E and the Price/Cash Flow ratios. Telus Corp (TSX-T) was one of three stocks he recommended in 2009.

When I was updating my spreadsheet, I noticed the 20 year total return was low at 6.41% compared to the other total returns. This case shows that sometimes a stock gets overpriced and that is not the time to buy. If you pay too much for a stock, it can badly affect long term results.

The dividend yields are moderate (2 and 3%) to good (4% and over). The current dividend yield is 4.35% with 5, 10 and historical yields at 3.92%, 4.22% and 3.91%.

Dividends growth has varied over the years. They increased since 2005, but before that they declined and were flat some years. As you can see in the chart below, the dividend increases have been good over thee last 5, 10 and 15 years, but the increases are currently slowing down.

The Dividend Payout Ratio for 2017 is 79% with 5 year coverage at 74%. This is acceptable for a utility. The DPR for CFPS for 2017 is 29% with 5 year coverage at 29%. This is also fine.

The Long Term Debt/Market Ratio for 2017 is fine at 0.43. The Liquidity Ratio is low at just 0.56. This means that current assets cannot cover current liabilities. If you add in cash flow after dividends it is only 1.09. If you add back in the current portion of the long term debt it is 1.50. This 5 year median is also low at 1.15 with cash flow and 1.45 with long term debt added back. This is a vulnerability.

The Debt Ratio is also low at 1.39 with 5 year median at 1.41. This is also a vulnerability. I prefer this to be at 1.50. The Leverage and Debt/Equity Ratios are a little high at 3.58 and 2.58 respectively. The 5 year median ratios are better at 2.68 and 1.68.

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.

From the chart below, you can see that the total return over the past 5, 10 and 15 years is good, but it is decreasing.

Years Div. Gth Tot Ret Cap Gain Div.
5 10.33% 12.18% 7.91% 4.27%
10 19.55% 10.62% 6.78% 3.84%
15 13.27% 16.61% 11.98% 4.63%
20 5.76% 6.41% 3.82% 2.59%
23 5.21% 9.75% 6.18% 3.57%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 17.20, 18.51 and 19.64. The corresponding 10 year ratios are 14.35, 15.94 and 17.53. The corresponding historical ratios are 14.84, 17.92 and 19.83. So, you can see that the P/E Ratios are going up for the 5 year durations due to rising price but that the 10 year duration went down from the historical due to price decline. The current P/E Ratio is 18.03 based on a stock price of $48.31 and 2018 EPS estimate of $2.68. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get a Graham Price of $31.29. The 10 year low, median, and high median Price//Graham Price Ratios are 1.22, 1.36 and 1.49. The current P/GP Ratio is 1.54 based on a stock price of $48.31. This stock price testing suggests that the stock price is relatively expensive.

I get a 10 year median Price/Book Value per Share Ratio of 2.60. The current P/B Ratio is 2.97 based on a stock price of $48.31, Book Value of $9,679M, and Book Value per Share of $16.24. The current P/B Ratio is 14% above the 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get an historical median dividend yield of 3.91%. The current dividend yield is 4.35% based on dividends of $2.10 and a stock price of $48.31. The current yield is some 11% above the historical yield. 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 1.83. The current P/S Ratio is 2.04 based on 2018 Revenue estimate of $14,111M, Revenue per Share of $23.68 and a stock price of $48.31. The current ratio is some 11% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.

My least liked stock price testing is using the P/E Ratio. In this case the P/E Ratio seems a bit volatile and it is going up because the price part is going up without a corresponding rise in earnings. On of my favorites is the dividend yield test because you use current information and not estimates. However, the yield is going up because they are paying out a higher portion of the earnings. The P/B Ratio and P/S Ratios are very often good tests. For this stock they show that the stock price is relatively reasonable but above the median. This is probably right.

When I look at analysts’ recommendations I find I find Strong Buy (2), Buy (11) and Hold (6). The consensus would be a Buy. The 12 month stock price is $50.83. This implies a total return of 9.56% with 5.22% from capital gains and 4.35% from dividends.

Andrew Walker on Motley Fool talks about why you should have this stock in your RRSP. Peter Morris on Simply Wall Street discusses Telus Corp’s P/E Ratio. Ted Liu on Private Capital Journal talk about Telus Corp’s purchase of Medisys Health Group Inc. Michael Canly on Simply Wall Street talks about the company’s debt levels. See what analysts are saying about this stock on Stock Chase. Most analysts like it and some mention its high P/E Ratios.

TELUS Corp is engaged in providing phone, Internet access, and television services to residential and business customers. It also offers cloud-based services to business customers through its data centers. Its web site is here Telus Corp.

The last stock I wrote about was about was Accord Financial Corp (TSX-ACD, OTC-ACCFF) ... learn more. The next stock I will write about will be Wajax Corp. (TSX-WJX, OTC-WJXFF) ... learn more on Friday, September 21, 2018 around 5 pm. Tomorrow on my other blog I will write Toronto Money Show.... learn more on Thursday, September 20, 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.

Monday, September 17, 2018

Accord Financial Corp

Sound bite for Twitter and StockTwits is: Dividend Growth Financial. Stock is cheap to reasonable. The company is small and it is risky. See my spreadsheet on Accord Financial Corp.

I do not own this stock of Accord Financial Corp (TSX-ACD, OTC-ACCFF). Fred Poulin from StockTwits recommended this stock saying it was a small cap that pay dividends. Also, the stock has a solid background and would be a good filler stock.

When I was updating my spreadsheet, I noticed that this stock has not done very well over the past 5 years. Last year (2017) was the first year they have not raised the dividends since 2002. Outstanding share have been growing by 0.21% per year over past 5 years and declining 1.28% per year over the past 10 years. With declining shares (for 10 year period), you need to look at things like Revenue and not Revenue per Share.

Revenue for the past 5 and 10 years has grown at 3.94% and 1.03% per year. Revenue per Share has grown at 3.72% and 2.34% per year. With declining shares, EPS can look better than they really are. EPS has declined by 1.08% over the past 5 years and grown by 0.87% over the past 10 years. Net Income has declined by 0.52% and 0.12% over the past 5 and 10 years.

Dividend yields are moderate (2 and 3%) to good (4% and over). The current dividend yield is 3.60%. The 5, 10 and historical median dividend yields are 3.90%, 4.00% and 2.59%. Dividend growth over the past 25 years has been low and it is been going down over the past 15 years. See chart below.

The Dividend Payout Ratio for 2017 for EPS is 50% with 5 year coverage at 41%. The DPR for CFPS for 2017 is 34% with 5 year coverage at 17%. So they can afford their dividends

The Long Term Debt/Market Cap Ratio is 1.81 which is high, but this debt can be covered by what they have in cash and near cash with a ratio of 0.60. The Liquidity Ratio is 8.45 but this is not very important on financial stocks. The Debt Ratio is 1.47 which is a little low as I like this at 1.50 and above. The 5 year median Debt Ratio is 1.79.

Leverage and Debt/Equity Ratios are a little high at 3.28 and 2.24 respectively. The 5 year median values are better at 2.26 and 1.26 respectively.

The Total Return per year is show below for years of 5 to 25. 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.

The 10 year grow is low, but a lot of financials had problems coming out of the 2008 bear market and following recession.

Years Div. Gth Tot Ret Cap Gain Div.
5 3.04% 10.03% 5.62% 4.41%
10 5.05% 5.01% 1.41% 3.60%
15 6.50% 10.56% 4.08% 6.48%
20 2.98% 9.18% 4.06% 5.11%
25 2.38% 12.48% 6.74% 5.74%
30 12.69%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 9.46, 11.20 and 12.34. The 10 year corresponding ratios are 8.77, 10.65 and 11.95. The corresponding historical ratios are 8.56, 10.42 and 11.75. The current P/E Ratio is 10.42 based on a stock price of $10.00 and 12 month earnings to the end of the second quarter of $0.96. This stock price is relatively reasonable and below the median.

I get a Graham Price of $14.46. The 10 year low, median, and high median Price/Graham Price are 0.64, 0.73 and 0.83. The current P/GP Ratio is 0.69 based on a stock price of $10.00. This stock price is relatively reasonable and below the median.

I get a 10 year median Price/Book Value per Share Ratio of 1.25. The current P/B Ratio is 1.03 based on Book Value of $80.4M, Book Value per Share of $9.68 and a stock price of $10.00. The current ratio is some 17% below the 10 year median. This stock price is relatively reasonable and below the median.

I get an historical median dividend yield of 2.59%. The current dividend yield is 3.60% based on dividends of $0.36 and a stock price of $10.00. The current dividend yield is some 39% above the historical median. This stock price is relatively cheap.

The 10 year median Price/Sales (Revenue) Ratio is 2.35. The current P/S Ratio is 2.12 based on 12 month revenue to the end of the second quarter of 2018 of $39M, Revenue per Share of $4.78 and a stock price of $10.00. The current ratio is some 9.8% below the 10 year median. This stock price is relatively reasonable and below the median.

When I look at analysts’ recommendations I find that no analysts are following this company.

The company announced via Canada Newswire that they have secured revolving credit of $292M. The company announced via Canada Newswire their fourth quarterly results for 2017. Interview of Accord’s CEO on Small Cap Power starts around 8.36 minute mark. Austin Wood on Simply Wall Street talks about ownership of this company. According to INK, the chairman owns 24%.

Accord Financial Corp provides asset-based financial services to businesses such as asset-based lending, including factoring, working capital financing, credit protection and receivables management, and supply chain financing for importers. Its web site is here Accord Financial Corp.

The last stock I wrote about was about was Just Energy Group Inc. (TSX-JE, NYSE-JE) ... learn more. The next stock I will write about will be Telus Corp. (TSX-T, NYSE-TU) ... learn more on Wednesday, September 19, 2018 around 5 pm. Tomorrow on my other blog I will write about Efficient Markets Hypothesis.... learn more on Tuesday, September 18, 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.

Friday, September 14, 2018

Just Energy Group Inc.

Sound bite for Twitter and StockTwits is: Dividend Paying Utility. The stock seems to be cheap and very risky. I do not like to debt ratios. On the other hand, Insiders are buying. See my spreadsheet on Just Energy Group Inc..

I do not own this stock of Just Energy Group Inc. (TSX-JE, NYSE-JE). I started to follow this is July 2010. It was one of the high yield Income Trusts that people were talking about, so I decided to check it out.

When I was updating my spreadsheet, I noticed a lot of red ink. They are still using Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO) even though it has not been a unit trust since 2009. However, even these values are going down. The EPS is very volatile. With the 5 year running average EPS over the past 5 years, there is a gain because of the huge loss in 2009. Looking at the 5 year running average EPS after over a longer period, the EPS is down.

On the other hand, there is insider buying. There is insider buying by both the CEO and Chairman. Insider buying is at 0.05%. This is high.

Dividend yields are very high. The old income trusts tended to have higher dividends then corporation because income trust can pay higher dividends. However, the yields on this company never went down even with the cuts to dividends. The current dividend yield is 12.53% with 5, 10 and historical yields at 7.22%, 9.41%, and 7.92%.

Since changing to a corporation, the company first increased the dividends, then kept them flat, then decreased them and now they are flat again. It would seem like the company has no idea where they should go on dividends. Most companies have a sense about how much they can afford now and in the future. This company seems to have no idea at all.

The dividends are sufficiently covered by FFO and AFFO. However, the company is now a corporation. Now dividends need to be covered by earnings. The Dividend Payout Ratio for EPS for 2017 is high at 113% with 5 year coverage at 120%. The DPR for CFPS is better with the coverage for 2017 fine at 35%, but the 5 year coverage at 51% is high. Ideally the DPR for CFPS should be 40% or lower.

In August of this year, the company says that they have a strong balance sheet. I think it is very weak. The Liquidity Ratio for 2017 is low at 1.25. I like to see this at 1.50 or above. Adding in Cash Flow after dividends does no good. If you add back in the current portion of the long term debt it only rises to 1.45.

The Debt Ratio is 1.16 in 2017. This has been lower than 1.00 a lot of times. When it is below 1.00 it means that assets cannot cover liabilities. The 5 year median of the Debt Ratio is 0.89. Leverage and Debt/Equity Ratios are high at 20.35 and 17.49 respectively. The 5 year medians of these ratios are -2.81 and -3.79 respectively because of negative book values.

The definition of a strong balance sheet is a company having great debt ratios. You want the Liquidity Ratio and Debt Ratios to be consistency at or above 1.50. You would especially want the current assets to cover current liabilities and assets to cover liabilities. That means these ratios have to be at 1.00 or above. You want the Leverage and Debt/Equity Ratios to be below 2.00 and 1.00 respectively. However, for utilities, below 3.00 and 2.00 is normal.

The Total Return per year is show below for years of 5 to 16. 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.

You can see that even the high dividends cannot cover the losses for shareholders over the past 5 and 10 years.

Years Div. Gth Tot Ret Cap Gain Div.
5 -16.61% -3.05% -10.66% 7.62%
10 -8.22% -3.07% -11.49% 8.42%
15 -0.51% 14.72% -1.43% 16.15%
16 3.24% 20.28% 0.99% 19.29%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 2.66, 3.11 and 3.56. The corresponding 10 year ratios are 2.34, 2.88 and 3.56. The corresponding historical ratios are 5.78, 6.92 and 8.06. These ratios are low because there are some years of earning losses. The current P/E Ratio is 6.54 based on a stock price of $3.99 and EPS estimate for 2019 of $0.61. Using the historical P/E Ratios, this stock price is relatively reasonable and below the median.

Problems with Graham price is not only years with earnings losses, but also years with negative book values. I get a current Graham Price of $2.74. The low, median, and high median Price/Graham Price Ratios are 0.87, 1.11 and 1.33. The current P/GP Ratio is 1.46 based on a stock price of $3.99. This stock price is relatively expensive.

I get a 10 year median Price/Book Value per Share Ratio of 7.31. The 10 year median P/B Ratio is a negative 3.21. The problem with P/B Ratios is there are a number of years with negative book values. However, a P/B ratio is 7.31 is very high. On an absolute basis this stock price is relatively expensive.

I get an historical median dividend yield of 7.92%. The current dividend yield is 12.53% based on dividends of $0.50 and a stock price of $3.99. The current yield is some 58% above the historical yield. Problems with this is that as an income trust it would have had high yields. Also, the dividends have had a number of cuts in a number of years.

The 10 year median Price/Sales (Revenue) Ratio is 0.34. The current P/S Ratio is 0.15 based on 2019 Revenue estimate of $4,054M, Revenue per Share of 27.32 and a stock price of $3.99. the current ratio is some 57% below the 10 year ratio. This stock price is relatively reasonable and below the median.

The only stock price test that is clean is the P/S Ratio test. All the other ones have problems because of earnings losses, negative book values and varying dividends. Also, a very high yield tends to signal a cheap and risky stock.

When I look at analysts’ recommendations I find Strong Buy (1), Buy (2) and Hold (4). The consensus recommendation would a Hold. The 12 month stock price is $5.53. This implies a total return of 51.13% with 38.60 from capital gains and 12.53% from dividends.

Darrell McKinsey on Fairfield Current talks about some recent analysts buys on this stock. Just Energy on Global News Wire proves some comments on recent market activity. Will Ashworth on Motley Fool thinks that the company is oversold but still a risky buy. See what analysts are saying about this company on Stock Chase. Opinions vary, but the last couple were negative.

Just Energy Group Inc is a retail energy provider specializing in electricity and natural gas commodities, energy efficiency solutions and renewable energy options. Its web site is here Just Energy Group Inc..

The last stock I wrote about was about was Smart REIT (TSX-SRU.UN, OTC-CWYUF) ... learn more. The next stock I will write about will be Accord Financial Corp (TSX-ACD, OTC-ACCFF) ... learn more on Monday, September 17, 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.

Wednesday, September 12, 2018

SmartCentres REIT

Sound bite for Twitter and StockTwits is: Dividend Growth REIT. Most of the test show the stock price is reasonable. There is a complex ownership structure and the chairman has special voting units. See my spreadsheet on SmartCentres REIT.

I do not own this stock of Smart REIT (TSX-SRU.UN, OTC-CWYUF). Once you have 5 or 6 stocks, you might want to consider a REIT for diversification. REITs are an easy way to investment in real estate. I am therefore following a few REIT stocks and in 2009 I decided to look at a few on the Dividend Achiever's List. Unfortunately, this stock is no longer on the Dividend Achiever's List.

When I was updating my spreadsheet, I noticed it has a complex ownership structure and the chairman still has Limited Partnership Shares and Special Voting Shares. Because it is a REIT, analysts look at Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO). They decided to change the AFFO to ACFO (which is Adjusted Cash Flow from Operations). This does nothing to help in analyzing a company.

Dividend yields are in the good category at 4% and above. The current dividend is 5.61% with the 5, 10 and historical median dividend yields at 5.43%, 5.81% and 5.90%. Dividend increases are low and over the past 5 and 10 years under 2% per year. This is because there were no dividend increases from 2009 to 2013 inclusive. The last dividend increase was for 2.9% and it occurred in 2017.

The Dividend Payout Ratio (DPR) for EPS is fine and in 2017 it was 76% with 5 year coverage at 73%. Because this is a REIT, it is normal to look at DPR using Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO). The DPR for FFO for 2017 is 76% and the 5 year coverage is 78%. The DPR for AFFO for 2017 is 82% and the 5 year coverage is 83%. The good range for DPR coverage by FFO and AFFO is 75% to 95%.

The Liquidity Ratio is low as it is for most REITs. The ratio for 2017 is 0.41. This means that the current assets cannot cover current liabilities. However, if you add back in Long Term Debt (LTD) due currently and add in cash flow after distributions, the ratio is 1.64. The Debt Ratio is 2.06. Leverage and Debt/Equity Ratios are 1.94 and 0.94. So, we are fine here.

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.

The long term Total Return is high because it seems that the first shares were sold cheaply and it was a Limited Partnership at that time. It because an REIT in March 2002

Years Div. Gth Tot Ret Cap Gain Div.
5 1.99% 6.75% 1.32% 5.43%
10 1.18% 8.21% 2.36% 5.86%
15 2.86% 18.09% 8.03% 10.06%
20 27.98% 15.66% 12.32%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 12.59, 13.65 and 15.05. The corresponding 10 year ratios are 12.72, 13.98 and 15.29. The corresponding historical ratios are 12.99, 16.85 and 22.86. The current P/E Ratio is 13.07 based on last 12 months EPS of $2.39 and a stock price of $31.21. This stock price testing suggests that the stock price is relatively reasonable and below the median.

Because this is a REIT, we should also look at P/FFO Ratios. The 5 year low, median, and high median Price/FFO per Share Ratios are 12.96, 14.28 and 15.33. The corresponding 10 year ratios are 12.98, 14.47 and 15.69. The current P/FFO Ratio is 13.81 based on a stock price of $31.21 and 2018 FFO estimate of $2.26. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a Graham Price of $36.25. The 10 year low, median, and high median Price/Graham Price Ratios are 0.82, 0.89 and 0.96. The current P/GP Ratio is 0.86 based on a stock price of $31.21. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a 10 year median Price/Book Value per Share Ratio of 1.25. The current P/B Ratio is 1.21 based on a stock price of $31.21, Book Value of $4,075M and Book Value per Share of $25.84. The current ratio is some 3.12% below the 10 year 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 5.90%. The current dividend yield is 5.61% based on distributions of $1.75 and a stock price of $31.21. The current yield is some 5% below the historical yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.

The 10 year median Price/Sales (Revenue) Ratio is 6.13. The current P/S Ratio is 6.18 based on 2018 Revenue of $796M, Revenue per Share of $5.05 and a stock price of $31.21. The current ratio is 0.9% above the 10 year median. This stock price testing suggests that the stock price is relatively reasonable and at the median.

When I look at analysts’ recommendations I find Strong Buy (1), Buy (3) and Hold (4). The consensus recommendations would be a Buy. The 12 month consensus stock price is $33.00. This implies a total return of 11.34% with 5.74% from capital gain and 5.61% from dividends.

Joey Frenette of Motley Fool thinks you should buy this stock because its malls are anchored by Walmart. Gary James on Marea Informative talks about what analysts are recently saying about this stock. Chris Amalia on Simply Wall Street talks about the uses of the FFO metric. See what analysts are saying on Stock Chase. There are quite mixed views about this REIT or any REIT.

SmartCentres Real Estate Investment Trust develops, leases, constructs, owns and manages shopping centres in Canada. The company comprises two groups of properties are retail and mixed-use. Its web site is here SmartCentres REIT.

The last stock I wrote about was about was High Liner Foods (TSX-HLF, OTC-HLNFF) ... learn more. The next stock I will write about will be Just Energy Group Inc. (TSX-JE, NYSE-JE) ... learn more on Friday, September 14, 2018 around 5 pm. Tomorrow on my other blog I will write about Stock Trading Styles.... learn more on Thursday, September 13, 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.

Monday, September 10, 2018

High Liner Foods

Sound bite for Twitter and StockTwits is: Dividend growth consumer. All the stock price tests show this stock as relatively cheap. It is at a low point for a good buy if you believe in this company. Recent problems are the acquisition of Rubicon Resources, product recall and US threatening a tariff on seafood. See my spreadsheet on High Liner Foods.

I do not own this stock of High Liner Foods (TSX-HLF, OTC-HLNFF). This is a stock liked by the Investment Reporter and is considered to be of average risk. The MPL Communication’s site is here. Ryan Irvine of Keystone also likes this company.

When I was updating my spreadsheet, I noticed the stock price went very high in the mid 1980’s then dropped with a low point mid 1990’s to 2000. It has dropped last year by 26% and this year by 47%. They did not have a very good second quarter of 2018, but the dropped probably is the threat of a 25% tariff on some seafood going into US. There is also problems with their recent acquisition and a product recall.

The stock price has fallen because of recent problem so the dividend yield is the highest it has ever been. The historical high yield was 4.43% but the current yield is 7.35%. Prior the dividend yield has always been in the low to moderate ranges. The 5,10 and historical dividend yield medians are 2.41%, 2.59% and 2.16%. The historical low is just 0.79%.

I do not think that there is a question about them covering their dividends. The Dividend Payout Ratio for EPS for 2017 is 46% with 5 year coverage at 38%. The DPR for CFPS for 2017 is 29% with 5 year coverage at 16%. The DPR for EPS estimate for 2018 is 59% with 5 year coverage at 42%. From this perspective, the dividends are safe.

They started to pay dividends late in 2003 and started to grow them in 2008. The dividends have grown nicely until 2017 when the increase was only 3.6%. This last increase was late in 2017 and there has been no increase in 2018 so far. However, the 5 and 10 year growth dividend rates are 22% and 19% per year over the past 5 and 10 years.

The Long Term Debt/Market Cap Ratio was acceptable until this year when it is 1.77. However, this is to do with the drop in Stock Price. So currently I am not worried about this. The Liquidity and Debt Ratios have gone up and down in the past. For 2017 the Liquidity Ratio was 1.76 with the 5 year median at 2.27. The Debt Ratio for 2017 was 1.48 with the 5 year median at 1.41. The Debt Ratio is a bit lower than I like as I like both these ratios to be 1.50 or above.

Leverage and Debt/Equity Ratios are a bit higher than I like to see at 3.07 and 2.07. I would prefer them to be under 3 and under 2 respectively. The 5 year medians are higher at 3.26 and 2.26.

The Total Return per year is show below for years of 5 to 33 in CDN$. 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 from the chart below, the stock has not done well lately. You can also see the results of the highs it made in the 1980’s with negative 30 years returns and very low 33 year returns. You can see the company’s history at their site. Also, the Contra the Heard guys talk about this stock in 2000.

Years Div. Gth Tot Ret Cap Gain Div.
5 21.89% 1.77% -1.22% 2.99%
10 18.91% 15.28% 11.88% 3.40%
13-15 14.25% 11.46% 8.95% 2.51%
20 7.70% 6.14% 1.55%
25 6.56% 5.38% 1.17%
30 -2.20% -2.84% 0.64%
33 0.72% 0.07% 0.65%


This second chart is in US$. I just do not have stock prices for this company in US$ for more than 11 years. The stock does not trade much on the US market.

Years Div. Gth Tot Ret Cap Gain Div.
5 16.45% -1.31% -6.42% 5.10%
10 16.10% 15.74% 9.32% 6.43%
13 13.88%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 10.52, 14.66 and 20.13. The corresponding 10 year ratios are9.85, 13.90 and 18.18. The historical corresponding ratios are 8.57, 11.38 and 13.59. The current P/E Ratio is 7.99 based on a current stock price of $7.89 CDN$ and 2018 EPS estimate of $0.99 CDN$ ($0.75 US$). This stock price testing suggests that the stock price is relatively cheap.

I get a Graham Price of $15.4 CDN$6. The 10 year low, median, and high median Price/Graham Price Ratios are 0.78, 1.12 and 1.47. The current P/GP Ratio is 0.51 based on a stock price of $7.89 CDN$. This stock price testing suggests that the stock price is relatively cheap.

I get a 10 year median Price/Book Value per Share Ratio of 2.03. The current P/B Ratio is 0.73 based on Book Value of $359M, Book Value per Share at $10.76 and a stock price of $7.89. The current P/B Ratio is some 64% below the 10 year ratio. This stock price testing suggests that the stock price is relatively cheap.

I get an historical median dividend yield of 2.16%. The current dividend yield is 7.35% based on dividends of $0.58 and a stock price of $7.89 CDN$. The current yield is some 240% below the historical one. This stock price testing suggests that the stock price is relatively cheap.

The 10 year median Price/Sales (Revenue) Ratio is 0.40 US$. The current P/S Ratio is 0.17 US$ based on Revenue of $1,085M US$, Revenue per Share at $32.49 US$ and a stock price of $5.68 US$. The current ratio is some 56% below 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) and Hold (5). The consensus recommendations would be a Hold. The 12 month target price is $8.77 CDN$ ($6.66 US$). This implies a total return of 18.47% with 11.12% from capital gains and 7.35% from dividends.

In the news section of their site High Liner talks about their recent acquisition. There is an article in the Chronicle Herald about the disappointing second quarter. It also mentions that us might put a 25% tariff on some seafood going into US. Demetris Afxentiou of Motley Fool is not worried about this stock in the long term. Daryl Painter on Simply Wall Street thinks this is a dividend stock worth considering for an income portfolio. James Risdon on Chronicle Herald talks about High Liner’s product recall. See what analysts are saying about this stock on Stock Chase. The latest reviews are negative.

High Liner Foods Inc is engaged in the processing and marketing of prepared and packaged frozen seafood products. The company produces and markets seafood products for the retail, foodservice and club store channels. Its web site is here High Liner Foods.

The last stock I wrote about was about was ATCO Ltd. (TSX-ACO.X, OTC-ACLLF) ... learn more. The next stock I will write about will Smart REIT (TSX-SRU.UN, OTC-CWYUF) ... learn more on Wednesday, September 12, 2018 around 5 pm. Tomorrow on my other blog I will write about Aurora Village.... learn more on Tuesday, September 11, 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.

Friday, September 7, 2018

ATCO Ltd

Sound bite for Twitter and StockTwits is: Dividend Growth Utility. I would think that the stock price is currently relatively cheap to reasonable. I do not like the Long Term Debt/Market Cap ratio over 1.00, but it has been that way for a long time. It is so high currently because of the drop in the stock price. See my spreadsheet on ATCO Ltd .

I do not own this stock of ATCO Ltd. (TSX-ACO.X, OTC-ACLLF). This is a dividend growth utility stock and as such I would consider it if I was looking for such a stock. Some people do not like the share structure. This stock is closely linked to Canadian Utilities (TSX-CU), so you would not buy both.

When I was updating my spreadsheet, I noticed is that none of my figures for the June 2017 reported in the June 2017 statements matched these figures in the June 2018 statements for June 2017. They say it was due to accounting policy changes. The other thing is that the Long Term Debt/Market Cap ratio is very high at 2.20. I think it is a problem when it is 1.00 and above.

Dividend yields used to be in the low (0 to 1%) to moderate (2 and 3%) range but lately they are in the good range (over 4%). The current dividend is 4%. The 5 year, 10 year and historical median dividend yields are 2.38%, 2.07% and 2.12%. Dividend growth has been moderate (8 to 14% range) with growth between 10.58% and 14.87%. The highest growth is the most recent. The increase for 2018 is $14.99%.

They can afford their dividends. The Dividend Payout Ratio for 2017 is 74% with the 5 year coverage at 38%. The DPR for CFPS for 2017 is 8% with 5 year coverage at 6%.

The debt ratio I do not like is the Long Term Debt/Market Cap Ratio. It was 1.93 in 2017 and is currently at 2.28. What this means is the market does not value the company’s debt at the level it is at. They do have assets to cover their debt but the concern here is what the market thinks (or the people in the market think). This is a concern.

The Liquidity Ratio for 2017 is very good at 2.20 but the current one at the end of the second quarter is low at 1.29. This company tends to have worsening Liquidity Ratios as the year goes on. However, they have a good cash flow and this cash flow per share after dividends leaves them with a good Liquidity Ratio. For example, for the second quarter of 2018 when you added in CFPS after dividends the ratio is 2.33.

The Debt Ratio for 2017 is 1.50. For the second quarter of 2018 it is 1.48. This ratio used to be higher but has been dropping since 2003. The 5 and 10 year median ratios are 1.57 and 1.59. Leverage and Debt/Equity Ratios are high, but this is usual for utilities. The ratios for 2017 are 3.01 and 2.01. The ratios at the end of the second quarter are 3.07 and 2.07.

The Total Return per year is show below for years of 5 to 25. 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.

The total return has been low over the past 5 and 10 years. Dividends have been good but the stock price has been falling. The stock price was level in 2017, but it has fallen by 16% so far in 2018. Problem is probably it is an Alberta company.

Years Div. Gth Tot Ret Cap Gain Div.
5 14.87% 4.57% 2.20% 2.37%
10 11.53% 7.16% 5.01% 2.15%
15 10.58% 12.82% 10.02% 2.81%
20 11.63% 11.35% 8.85% 2.49%
25 13.71% 15.14% 11.85% 3.29%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 12.08, 14.12 and 16.69. The corresponding 10 year ratios are 10.43, 11.57 and 13.10. The historical ratios are 9.54, 10.74 and 12.37. The current P/E Ratio is 12.07 based on a stock price of $37.65. The P/E Ratio has been increasing due a increase the price part of the ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get a Graham Price of $46.75. The 10 year low, median, and high median Price/Graham Price Ratios are 0.78, 0.91 and 1.07. The current P/GP Ratio is 0.81 based on a stock price of $37.65. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a 10 year median Price/Book Value per Share Ratio of 1.49. The current P/B Ratio is 1.21 based on Book Value of $3,569M, Book Value per Share of $31.13 and a stock price of $37.65. The current ratio is some 19% below 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 2.12%. The current dividend yield is 4.00% based on dividends of $1.51 and a stock price $37.65. The current dividends are 89% above the historical median. This stock price testing suggests that the stock price is relatively cheap.

The 10 year median Price/Sales (Revenue) Ratio is 1.04. The current P/S Ratio is 0.99 based on 2018 Revenue estimate of $4,348M, Revenue per Share of $37.92 and a stock price of $37.65. The current ratio is some 4% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.

Most of the tests except for the P/E Ratio test and Dividend Yield test show that the stock is reasonable and below the median. The P/E Ratio show the stock is relatively reasonable but above the median but test is not a good one. It is based on EPS estimates which do not tend to be very accurate. The Dividend Yield test is a good one and it shows that the stock is relatively cheap. This is a good test because it is based on currently values and no estimates. The P/B Ratio test is also a good test and it shows that the stock is very close to cheap. I would think that the stock is from cheap to reasonable.

When I look at analysts’ recommendations I find Strong Buy (1), Buy (2), Hold (3) and Underperform (1) Ratings. These are all over the place just like the remarks on Stock Chase. The consensus would be a Hold. The 12 month stock price is $44.07. This implies a total return of $21.05 with 17.05% from capital gains and 4.00% from dividends and is based on a current price of $37.65.

Peter Morris Simply Wall Street says that this company is selling below its intrinsic value. Caroline Biscotti on Holland Review says that the Williams Percent Range shows that this company is neither overbought nor oversold. Ameya Charnalia on Toronto Star talks of more staff layoffs by ATCO in Alberta. James Watkins-Strand on Motley Fool says this company represents exceptional value. See what analysts are saying about this stock on Stock Chase. They have varying views. Some think it is cheap and others that it will get cheaper. Some see a problem with it only being in Canada and quite tied to Alberta.

Atco Ltd generates, transmits, and distributes electricity to customers. The company is also engaged in structures and logistics and pipelines and liquids business activities. Its web site is here ATCO Ltd.

The last stock I wrote about was about was Exchange Income Corp. (TSX-EIF, OTC-EIFZF) ... learn more. The next stock I will write about will be High Liner Foods (TSX-HLF, OTC-HLNFF) ... learn more on Monday, September 10, 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.

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