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.|
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.
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