I do not own this stock of Granite REIT (TSX-GRT.UN, NYSE-GRP.U) but I used to own it as MI Developments. I first bought some of this stock in 2003. TD bank also had an Action Buy Call (Strong Buy) on this stock. By the December 2006, it was doing well and my stock was up some 15% per year. I bought some more. The year of 2006 was the last time I did well on this stock. It kept going down and I sold it in 2009; being discourage it would ever do well again.
When I was updating my spreadsheet, I noticed they do not tell you directly anywhere how many units are outstanding and how it has changed from last year. This is a rather simply thing to do and I do not see why they cannot simply put that information on the report rather than make you figure it out from the verbiage on the report. This company used to report in US$, but switched to CDN$ in 2012.
The dividend yield is good (4% and higher) and the dividend are increasing. The increases are getting lower than before. See the chart below. The current dividend yield is 4.91%. The 5, 10 and historical median dividend yields are 5.61%, 5.55% and 3.78%. Dividend growth has been lower since the change to a REIT in 2012.
The Dividend Payout Ratio for 2017 for EPS is 30% with 5 year coverage at 50%. The DPR for CFPS for 2017 is 67% and 5 year coverage at 68%. The DPR for AFFO for 2017 is 84% with 5 year coverage at 74%. The DPR for FFO for 2017 is 80% with 5 year coverage at 71%. It would seem that they can cover their dividends.
The Long Term Debt/Market Cap Ratio is 0.28 for 2017. The Liquidity Ratio for 2017 is 2.82 with 5 year median at 1.25 (and 5 year median is low). The Debt Ratio for 2017 is 3.00 with 5 year median at 3.03. The Leverage and Debt/Equity Ratios for 2017 are 1.50 and 0.50. All these are good debt ratios. The only problem is with the Liquidity Ratios are few years ago but when you add in cash flow after dividends, the 5 year median is 1.75, a good ratio.
The Total Return per year is show below for years of 5 to 15. 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.
| Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|
| 5 | 5.43% | 10.97% | 5.46% | 5.51% |
| 10 | 15.95% | 10.00% | 5.90% | 4.10% |
| 15 | 13.09% | 7.23% | 4.14% | 3.09% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 8.92, 10.01 and 11.10. The corresponding 10 year ratios are 6.69, 7.72 and 8.75. The corresponding historical Ratios are 7.30, 8.60 and 9.91. The current P/E Ratio is 4.64 based on a current stock price of $55.47 and last 12 month for EPS of $11.96. This stock price testing suggests that the stock price is relatively cheap.
Since this is a REIT, we should also do testing using Funds from Operations (FFO). The 5 year low median and high median P/FFO Ratis are 11.34, 12.61 and 13.57. The corresponding 10 year ratios are 11.06, 12.68 and 13.87. The current P/FFO Ratio is 15.45 based on a stock price of $55.47 and 2018 FFO estimate of $3.59. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $62.77. The 10 year low, median, and high median Price/Graham Price Ratios are 0.69, 0.76 and 0.83. The current P/GP Ratio is 0.88 based on a stock price of $55.47. 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 1.05. The current P/B Ratio is 1.14 based on Book Value of $2,288M, Book Value per Share of $48.79 and a stock price of $55.47. The current ratio is some 8.8% above the 10 year ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get an historical median dividend yield of 3.78%. The current dividend yield is 4.91% based on dividends of $2.72 and a stock price of $55.47. The current dividend yield is some 30% higher than the historical yield. This stock price testing suggests that the stock price is cheap.
The 10 year median Price/Sales (Revenue) Ratio is 8.57. The current P/S Ratio is 8.65 based on 2018 Revenue estimate of $261M, Revenue per Share of $5.56 and a stock price of $55.47. The current ratio is 1% higher than the 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable and slightly above the median.
In doing the stock price testing we should note that using EPS says that the stock is cheap, but FFO says it is not. The thing is that for REITs, the FFO counts more than EPS. Dividend testing says that the stock is cheap, but this company changed from a corporation to an REIT and here you would expect the dividends (or distributions) to go up. The best tests for this company looks to be the P/B Ratio and the P/S Ratio. Both these say the stock price is reasonable, but above the median.
When I look at analysts’ recommendations I find Buy (1) and Hold (5). The consensus recommendations would be a Hold. The 12 month stock price is $55.10. this implies a total return of 4.24% with a capital loss of 0.67% and dividends of 4.92% based on a current stock price of $55.47.
Ploutos Investing on Seeking Alpha analyses this stock and approves the move into warehouses. Trapping Value on Seeking Alpha likes this REIT because of low leverage. Barry Critchley on Financial Post talks about COO assaulting the CFO. There is an Granite REIT announcement on Canadian Newswire about selling of properties and a new credit facility. See what analysts are saying about this stock on Stock Chase. There was a recent buy recommendation by Joshua Varghese, but few follow this company.
Granite Real Estate Investment Trust is a real estate investment trust. The Company is engaged in the ownership and management of industrial, warehouse and logistics properties in North America and Europe. Its web site is here Granite REIT.
The last stock I wrote about was about Gluskin Sheff + Associates Inc. (TSX-GS, OTC-GLUSF) ... learn more. The next stock I will write about will be Le Chateau Inc. (TSX-CTU, OTC-LCUAF)... learn more on Wednesday, October 03, 2018 around 5 pm. Tomorrow on my other blog I will write about Dividend Stocks October 2018.... learn more on Tuesday, October 2, 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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