Monday, December 31, 2018

Element Fleet Management Corp

Sound bite for Twitter and StockTwits is: Dividend Growth Financial. This stock is considered to be a Financial Services stock. It also seems to be cheap. There is quite of bit of insider buying. Debt Ratios are not where I would like them to be. See my spreadsheet on Element Fleet Management Corp.

I do not own this stock of Element Fleet Management Corp (TSX-EFN, OTC-ELEEF). I was looking for stocks to follow and I found this stock in 100 best Dividend Stocks Money Sense for 2018.

When I was updating my spreadsheet, I noticed that the debt ratios were not good. See remarks below. The Comprehensive Income (which is really more important than the Net Income was low in 2016 and negative in 2017. This is not good. It is expected that there will be an earning loss this year and the third quarterly reports points that way. Problem for 2018 is that they will have to write off a big loan due them. Problem in 2017 was the writing off of two investments.

It is hard to say where they are going with dividends. They only started dividends in 2016 and so far, they have gone both up and down. The dividend yield is currently moderate at 2.59%. Dividends started quite low, but with all the changes, they are still up some 22% per year since starting.

The Dividend Payout Ratio for EPS for 2017 was 86%. Since they are not expected to earn anything this year, they will not be covering their dividends. In 2019 the DPR for EPS is expected to be around 33%. The total dividends paid exceed the total earnings, but only because the separation of ECN Capital Corp was considered to be a dividend. The DPR for CFPS is at 9.38% in 2017. This is a good ratio.

The Long Term Debt/Market Cap Ratio is very high in 2017 at 3.66 and even higher at 5.69 currently. This is a real problem over 1.00 (because the market is valuing it lower than what they think the company is worth via the stock price.) Some analysts think that anything over 0.50 is too high. The Liquidity Ratio has varied and not always over 1.50, but the one for 2017 was 1.51 with 5 year median at 1.56, but the current one is just 0.98. (Which means that the current assets cannot cover current debts.)

The debt ratio has varied and is often below 1.50 with the one for 2017 at 1.27 and the current one at 1.25. The Leverage and Debt/Equity Ratio for 2017 are high at 5.74 and 4.52. The current ones are higher at 6.32 and 5.07

The Total Return per year is show below for years of 5 to 6 to the end of 2017. 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 dividends are so high because the separation of ECN Capital Corp was considered to be a dividend. By the way, if shareholders had kept their ECN shares (TSX-ECN), they are currently worth $3.43 per share. The dividend, as far as I can tell from the financial statements was worth $3.73.

Years Div. Gth Tot Ret Cap Gain Div.
5 21.64% 14.79% 6.55% 8.24%
6 20.03% 12.54% 7.49%


The total returns to date are a lot different. Over the past 5 years, shareholders would have lost money. They would be ahead if they had the stock for 6 years instead.

Years Div. Gth Tot Ret Cap Gain Div.
5 21.64% -4.83% -12.40% 7.58%
6 9.25% 0.28% 8.97%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 23.11, 28.89 and 34.67. The corresponding 6 year ratios are 9.72, 11.61 and 13.50. The current P/E Ratio cannot be calculated because the 2018 EPS estimate is a loss. The P/E Ratio for 2019 is 12.64 based on a current stock price of $6.95 and 2019 EPS estimate of $0.55. This stock price testing suggests that the stock price is relatively reasonable.

I get a Graham Price of $6.89. The 6 year low, median, and high median Price/Graham Price Ratios are 1.12, 1.43 and 1.71. The current P/GP Ratio is 1.01 based on a stock price of $6.95. This stock price testing suggests that the stock price is relatively cheap.

I get a 6 year median Price/Book Value per Share Ratio of 1.18. The current P/B Ratio is 0.95 based on a Book Value of $2,772M, Book Value per Share of $7.28 and a stock price of $6.95. The current ratio is some 19% below the 6 year ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median and almost cheap.

I get an historical median dividend yield of 1.55% (with historical only covering some two years). The current yield is 2.59%. The current yield is some 67% above the short historical one. This stock price testing suggests that the stock price is relatively cheap.

The 6 year median Price/Sales (Revenue) Ratio is 8.71. The current P/S Ratio is 3.03 based on 2018 Revenue estimate of $873, Revenue per Share of $2.29 and a stock price of $6.95. The current P/S Ratio is some 65% below the 6 year median. This stock price testing suggests that the stock price is relatively cheap.

On an absolute basis a P/E Ratio of 12.64 is a reasonable one. Generally, a very good P/B Ratio is 1.50. when it is below 1.00, the stock is selling for less than the theoretical broke up value of the company and so points to a very good price. Most testing is showing as cheap or almost cheap. It would seem that this stock is selling at a good price.

When I look at analysts’ recommendations, I find Strong Buy (1), Buy (8), Hold (1) and Underperform (1). The consensus would be a buy. The 12 month stock price is $9.09. This implies a total return of 33.38%, with 30.79% from capital gains and 2.59% from dividends based on a current stock price of $6.95.

Cole Patterson on Simply Wall Street talks about insider buying. Steven Smith on Modern Readers talks about director insider buying shares in the company. David Jagielski |on Motley Fool thinks this might be a good stock to buy, but it has been inconsistent. See what analysts are saying about this stock on Stock Chase. Their head office is in Toronto, but apparently most of their business is in the US.

Element Fleet Management is a leading global fleet management company, providing world-class management services and financing for commercial vehicle and equipment fleets. Element's suite of fleet management services spans the total fleet lifecycle, from acquisition and financing to program management and remarketing – helping customers optimize performance and improve productivity. Its web site is here Element Fleet Management Corp.

The last stock I wrote about was about was write Bird Construction Inc. (TSX-BDT, OTC- BIRDF)... learn more. The next stock I will write about will be Metro Inc (TSX-MRU, OTC-MTRAF) ... learn more on Wednesday, January 2, 2019 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, December 28, 2018

Bird Construction Inc

Sound bite for Twitter and StockTwits is: Dividend Growth Industrial. It would seem that the stock price is relatively cheap. This company would be vulnerable in bad times because of debt ratios. There is lots of insider buying. See my spreadsheet on Bird Construction Inc.

I do not own this stock of Bird Construction Inc (TSX-BDT, OTC-BIRDF). This was listed as a top stock in ETF of iShares S&P TSX Canadian Dividend Aristocrats Index. I had not heard of it before, so I decided to do a spreadsheet on this stock.

When I was updating my spreadsheet, I noticed that the Balance Sheet has not strengthen for the end of 2017. Both the Liquidity Ratio and Debt Ratios are lower than what I would like at 1.17 and 1.28 in 2017. In 2016 these ratios were 1.19 and 1.25. For the third quarter of 2018 the ratios were 1.16 and 1.26. I prefer the to be at 1.50 or higher. There was insider buy and no insider selling for the past 12 months. Net insider Buying was 0.27. This is high as it is generally in the 0.01% to 0.02% range.

They talked about the need for a strong balance sheet and adequate working capital as reasons to lower the dividend in 2018. There is a always a trade off between a company paying dividends and keeping enough money for working capital. Without a strong balance sheet and enough working capital a company cannot grow.

Dividend yields are in the good range. The current dividend yield is 7.43%. The 5, 10 and historical median dividend yields are 5.71%, 5.70% and 6.01%. Dividend growth was good until 2013 then it became flat and in 2017 the dividends were decreased almost 50%.

The dividends were probably decreased because they could not afford them. The Dividend Payout Ratio was over 100% since 2013. For 2017 in which dividends were decreased, the DPR was 156% with 5 year coverage at 84%. The 5 year coverage was also over 100% in 2015 and 2016. The DPR for CFPS has been a little high with the one for 2017 at 60% with 5 year coverage at 36%.

The Long Term Debt/Market Cap Ratio for 2017 is 0.03 and is therefore good and low. The Liquidity Ratio has always been low and this is a vulnerability. The Debt Ratio for 2017 is 1.28. This is low and a vulnerability. Adding in cash flow after dividends does not help as the ratios is even lower at 1.13. I prefer both these ratios to be at 1.50 or higher for safety sake. Leverage and Debt/Equity Ratios are a little too high at 4.54 and 3.54 respectively.

The Total Return per year is show below for years of 5 to 20 to the end of 2017. 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 -9.81% 0.62% -5.17% 5.79%
10 0.85% 3.35% -2.20% 5.55%
15 10.05% 34.34% 13.31% 21.02%
20 8.68% 49.87% 22.33% 27.54%


If you look at Total Return to Date, the most recent of 5 and 10 years have changed. Shares are down by some 48% this year.

Years Div Gth Tot Ret Cap Gain Div
5 -9.81% -10.45% -16.96% 6.52%
10 0.85% 8.13% -2.36% 10.49%
15 10.05% 27.38% 5.90% 21.48%
20 8.68% 47.92% 15.58% 32.33%
21 49.65% 17.42% 32.22%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 18.39, 23.42 and 28.45. The corresponding 10 year ratios are 13.01, 15.64 and 18.27. The corresponding historical median ratios are 7.12, 10.03 and 11.38. The current P/E Ratio is negative 131.25. This is no help in testing. The P/E Ratio for 2019, which is close is 8.90 based on a stock price of $5.25 and 2019 EPS estimate of $0.59. This stock price testing suggests that the stock price is relatively cheap to reasonable and below the median.

I get a Graham Price of $4.38. The 10 year low, median, and high median Price/Graham Price Ratios are 1.18, 1.44 and 1.69. The current P/GP Ratio is 1.20 based on a stock price of $5.25. 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 2.97. The current P/B Ratio is 1.67 based on Book Value of $134M, Book Value per Share of $3.15 and a stock price of $5.25. The current ratio is some 44% 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 6.01%. The current dividend yield is 7.43% based on dividends of $0.39 and a stock price of $5.25. The current yield is some 24% above the historical median yield. This stock price testing suggests that the stock price is relatively cheap.

The 10 year median Price/Sales (Revenue) Ratio is 0.40. The current P/S Ratio is 0.16 based on 2018 Revenue of $1,374M Revenue per Share of 32.32 and a stock price of $5.25. The current ratio is some 60% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

The P/E Ratios are increasing because the stock price is going up faster than earnings. On an absolute basis both the 2019 P/E Ratio of 8.90 and the current P/B Ratio of 1.67 shows a cheap stock. All the stock price testing but the Graham Price show that the stock price is relatively cheap. I am assuming that the stock price is relatively cheap.

When I look at analysts’ recommendations, I find Strong Buy (2) and Buy (2) recommendations. The consensus would be a Strong Buy. The 12 month stock price is $9.63. This implies a total return of 90.86% with 83.43% from capital gains and 7.43% from Dividends based on a current stock price of $5.25.

Gerald Huddleston on Simply Wall Street talks about ownership of the shares of this company. Lester Strauss on Simply Wall Street talks about this company’s Beta. Ryan Goldsman on Motley Fool thinks that the dividends are giving the company a current headwind . See what analysts are saying about this company on Stock Chase. One analyst thinks that the worse might be over for them.

Bird Construction Inc operates as a contractor in construction market. It also provides pre-construction services, building information modeling and involves in public-private partnership projects. The company focuses on commercial, institutional, retail, tenant, residential, industrial, mining, water, wastewater, energy, and civil sectors. It operates its business in Canada. The industrial market sector generates a majority of the revenues of the company. Its web site is here Bird Construction Inc.

The last stock I wrote about was about was Richards Packaging Income Fund (TSX-RPI.UN, OTC- RPKIF) ... learn more. The next stock I will write about will be Element Fleet Management Corp (TSX- ENF, OTC-ELEEF) ... learn more on Monday, December 31, 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, December 26, 2018

Richards Packaging Income Fund

Sound bite for Twitter and StockTwits is: Dividend Growth Consumer. This is a stock that I decided to start following. My testing is showing that the stock price is relatively expensive currently. Also, there is a lot of insider selling. Now may not be a good time to buy this stock. See my spreadsheet on Richards Packaging Income Fund .

I do not own this stock of Richards Packaging Income Fund (TSX-RPI.UN, OTC-RPKIF). A member of one of my investment club suggested this stock.

When I was updating my spreadsheet, I noticed the company has a complicated structure. There is a Board of Directors for Richards Packaging and a Board of Trustees for Richards Packaging Income Fund. It would also appear that some people have special voting shares. There is also a lot of insider selling over the past year. Net Insider selling is at 8% where normal is around 0.01% to 0.02%.

Because of the odd set up of their Balance Sheet, I missed that the Exchangeable Shares could be current or non-current liabilities and so had to go back when I had finished the spreadsheet to fix this section. This sort of thing really annoys me. Also, I am not exactly clear on the company’s set up. There appears to a Board of Directors and a Board of Trustees. Another odd thing is that, at least for Canadians, the distributions are all taxed as Return of Capital.

This stock has paid dividends since it appeared on the TSX in 2004. The dividend yield is good with growth that has varied. Dividends were cut by 75% in 2009 and only 4 distributions occurred in 2009. Then distributions were flat until 2014 when the company started to raise them again. The current yield is good at 4.22%. This company used to be an income trust so the dividend yields were very high in the past and they are still relatively high.

Affordability of dividends is calculated very differently on income trust companies. Currently they are getting the Dividend Payout Ratios down to a proper level. The DPR for EPS for 2017 is 85% with 5 year coverage at 111%. For 2018 the DPR for EPS is expected to be 75% with 5 year coverage at 95%. The DPR for CFPS for 2017 is good at 35% with 5 year coverage at 35% also.

All the debt ratios currently seem fine. The Long Term Debt/Market Cap Ratio is quite low at just 0.10 in 2017. The Liquidity Ratio is a bit low in in 2017 and even lower at the end of the third quarter of 2018 with ratios of 1.43 and 1.38 respectively. The 5 year median is better at 1.73. The Debt Ratio is good at 1.92 with 5 year median at 1.95. Leverage and Debt/Equity Ratios for 2017 are 2.09 and 1.09 respectively with 5 year median at 2.05 and 1.05.

The Total Return per year is show below for years of 5 to 13 to the end of 2017. 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 10.65% 36.58% 29.56% 7.02%
10 1.51% 18.54% 12.86% 5.68%
13 5.37% 14.34% 8.42% 5.92%


The Total Return to date is not quite as good as to the end of 2017. Stock price is up marginally in 2017 by 0.42%.

Years Div. Gth Tot Ret Cap Gain Div.
5 10.65% 31.14% 24.37% 6.77%
10 1.51% 25.26% 18.16% 7.10%
13 5.37% 16.79% 10.11% 6.68%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 15.46, 17.92 and 20.37. The corresponding 10 year ratios are 13.69, 15.65 and 17.48. The historical ratios are 13.2, 15.53 and 17.48. The current P/E Ratio is 17.68 based on a stock price of $31.30 and last 12 months EPS of $1.77. This stock price testing suggests that the stock price is relatively reasonable to expensive.

I get a Graham Price of $18.93. The 10 year low, median, and high median Price/Graham Price Ratios are 0.86, 0.98 and 1.09. The current P/GP Ratio is 1.65 based on a stock price of $31.30. 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 1.26. The current P/B Ratio is 3.48 based on Book Value of $98M, Book Value per Share of $9.00 and a stock price of $31.30. The current ratio is some 177% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.

I get an historical median dividend yield of 8.67%. Since this used to be an income trust, I looked at the median dividend yield since 2011. In this case the yield is still very high at 7.31%. The current yield is 4.22% based on dividends of $1.32 and a stock price of $31.30. Testing the current dividend against the historical or the one since 2011 shows a broad spread from 51% to 42% between the testing yields and the current yields with the current yield being the much lower one. This stock price testing suggests that the stock price is relatively expensive.

The 10 year median Price/Sales (Revenue) Ratio is 0.50. The current P/S Ratio is 1.10 based on the last 12 months of Revenue at $309M, Revenue per Share of $28.34 and a stock price of $31.30. The current P/S Ratio is 121% above the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.

When I look at analysts’ recommendations, I find none. There seems like there are no analysts following this stock.

On an absolute basis a P/E Ratio 17.68 shows a stock price that is probably relatively reasonable. However, all the other tests are showing that the stock price is relatively expensive. The stock price has been holding well this year with very little movement while the Canadian Index is down.

Caroline Biscotti on Essex Caller says the Piotroski F-Score is 8 and therefore shows a strong balance sheet on this stock. Mat Litalien on Motley Fool thinks that this stock will be on the Canadian Dividend Aristocrats list in 2019 but also thinks that it will not continue to rise the dividends. See what analysts are saying about this company on Stock Chase. They like the company but one analyst is worried about liquidity in trading.

The Fund owns Richards Packaging Inc. the leading packaging distributor in Canada, and third largest in North America. Richards Packaging is a full-service packaging distributor targeting small- and medium-sized North American businesses. Richards Packaging has operated since 1912 and currently serves over 14,000 regional companies from 18 locations throughout North America. Its web site is here Richards Packaging Income Fund.

The last stock I wrote about was about was Magna International Inc. (TSX-MG, NYSE-MGA) ... learn more. The next stock I will write about will be Bird Construction Inc. (TSX-BDT, OTC- BIRDF)... learn more on December 28, 2018 around 5 pm. Tomorrow on my other blog I will write about Top Dividend Definitions.... learn more on December 27, 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, December 24, 2018

Magna International Inc

Sound bite for Twitter and StockTwits is: Dividend Growth Consumer. The current price is from cheap to reasonable. The price seems good then. Over the past year the CEO and CFO has increased their shares in this company. See my spreadsheet on Magna International Inc.

I do not own this stock of Magna International Inc. (TSX-MG, NYSE-MGA), but I used to. Magna is a stock I have tracked for some time. I have always liked Frank Stronach, the entrepreneur who used to run this company. Manufacturing firms are fairly risky and it is not the sort of company I usually buy.

When I was updating my spreadsheet, I noticed Canadian Shareholders seemed to have done better than US Shareholders.

Dividend yields are low to moderate. Dividend growth for Canadians has been in the good range, but the dividends are paid in US$ and in US$ the growth has been in the moderate range, but some times close to the good range. The current dividend yield is 2.91%. The 5, 10 and historical yields are 1.86%, 2.01% and 1.82%. Dividend Growth over the past 5 and 10 years in US$ has been just under 15% (which is the start of the good range).

They can afford the dividends. The Dividend Payout Ratios are good. The Dividend Payout Ratios for EPS for 2017 in US$ is 18.6% with 5 year coverage at 18.5%. The DPR for CFPS for 2017 in US$ is 11.0% with 5 year coverage at 11.3%.

The Long Term Debt/Market Cap Ratio for 2017 is 0.16. This is good and low. The Liquidity Ratios is lower than what I like with the 2017 ratio at 1.26 and 5 year median at 1.31. This is lower than what I like as I like it to be at 1.50 or higher. The Debt Ratio is good at 1.86 with 5 year median also at 1.86. The Leverage and Debt/Equity Ratios are rather normal for this sort of company at 2.26 and 1.22 for 2017.

The Total Return per year is show below for years of 5 to 26 to the end of 2017 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.

It would seem that over the long term investors in this company has done just fine.

Years Div. Gth Tot Ret Cap Gain Div.
5 19.04% 26.17% 23.46% 2.71%
10 16.58% 15.19% 13.52% 1.67%
15 6.16% 9.70% 8.38% 1.32%
20 10.31% 7.31% 6.05% 1.25%
25 15.96% 12.35% 10.30% 2.04%
26 15.50% 12.69% 2.81%


The Total Return per year is show below for years of 5 to 26 to date. The stock price has gone down by 13.6% this year. Doing total return to date changed the last 5 and 10 years returns quite a bit. This is to be expected when the stock price goes down year to date.

Years Div. Gth Tot Ret Cap Gain Div.
5 19.04% 7.16% 7.16% 2.51%
10 16.58% 20.95% 20.95% 3.05%
15 6.16% 7.48% 6.11% 1.37%
20 10.31% 6.40% 4.99% 1.41%
25 15.96% 8.05% 6.50% 1.55%
26 11.56% 9.32% 2.24%


The Total Return per year is show below for years of 5 to 26 to the end of 2017 in US$. Generally, the difference in total return in US$ and CDN$ is because of foreign exchange.

Years Div. Gth Tot Ret Cap Gain Div.
5 14.87% 20.26% 17.77% 2.48%
10 14.36% 12.56% 10.92% 1.64%
15 8.14% 11.61% 9.84% 1.77%
20 11.29% 8.55% 7.05% 1.50%
25 16.24% 12.31% 10.27% 2.04%
26 7.82% 6.58% 1.25%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 7.13, 9.53 and 10.93. The corresponding 10 year ratios are 7.09, 9.58 and 11.71. The historical ratios are 8.48, 12.17 and 13.11. The current P/E Ratio is 6.64 based on a stock price of $61.54 and 2018 EPS of $9.27 CDN$ ($6.83 US$). This stock price testing suggests that the stock price is relatively cheap.

I get a Graham Price of $96.18 CDN$. The 10 year low, median, and high median Price/Graham Price Ratios are 0.63, 0.81 and 1.04. The current P/GP Ratio is 0.64 based on a stock price of $61.54. This stock price testing suggests that the stock price is relatively reasonable and below the median and almost cheap.

I get a 10 year median Price/Book Value per Share Ratio of 1.43 US$. The current P/B Ratio is 1.38 based on Book Value of $11,018M, Book Value per Share of $32.71 and a stock price of $45.29, all in US$. The current ratio is 3% 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 1.82% US$. The current dividend yield is 2.91% based on a stock price of $45.29 and dividends of $1.32, all in US$. The current yield is some 60% 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 0.40 US$. The current P/S Ratio is 0.37 based on 2018 Revenue estimate of $41,017, Revenue per Share of $121.77 and a stock price of $45.29, all in US$. The current ratio is some 8% below the 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.

All my tests are valid. The stock price in these tests is showing as relatively cheap or relatively reasonable and below the median. It would seem like the price of this stock is good. If you are interested in this stock, now may be the time to buy.

When I look at analysts’ recommendations, I find Strong Buy (3), Buy (6), Hold (3) and Underperform (1) recommendations. The consensus would be a Buy. The 12 month stock price consensus is $88.44 CDN$ ($65.19 US$). This implies a total return of 46.62% with 43.71% from capital gains and 2.91% from dividends. You have to wonder about the stock price consensus as it has come down only a little since the stock price has sharply declined since around June 2018.

News item by Canadian Press on Cape Breton Post talks about Magna buying a Spanish company. Jodi Pearce on Simply Wall Street talks about insider selling at Magna. A Lakeland Staff Writer on Lakeland Observer talks about some metrics for this company. Victoria Hetherington on Motley Fool thinks this stock is a good choice for a bear market because of its Sino-connection. See what analysts are saying about this stock on Stock Chase. One analyst thinks that growth will be slow because the company is so big.

Magna International is the most diversified global automotive supplier. They design, develop and manufacture technologically advanced automotive systems, assemblies, modules and components, and engineer and assemble complete vehicles, primarily for sale to original equipment manufacturers ("OEMs") of cars and light trucks. Their capabilities include the design, engineering, testing, and manufacture of automotive interior systems; seating systems; closure systems; body and chassis systems; vision systems; electronic systems; exterior systems; powertrain systems; roof systems; hybrid and electric vehicles/systems; as well as complete vehicle engineering and assembly. Its web site is here Magna International Inc.

The last stock I wrote about was about was Methanex Corp. (TSX-MX, NASDAQ-MEOH) ... learn more. The next stock I will write about will be Richards Packaging Income Fund (TSX-RPI.UN, OTC- RPKIF) ... learn more on December 26, 2018 around 5 pm. Tomorrow I will not be blogging.

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, December 21, 2018

Methanex Corp

Sound bite for Twitter and StockTwits is: Dividend Growth Materials. Stock Price is cheap to reasonable. Some institutions are selling some of their shares as is the CEO. Shares have fallen some 13.8% this year. See my spreadsheet on Methanex Corp.

I do not own this stock of Methanex Corp (TSX-MX, NASDAQ-MEOH). I started a spreadsheet in November 2010 as I had read some good reports on the stock at that time. It is also got a solid “C” grade in a 2009 Money Sense review of stocks. Money Sense rated the top 100 Canadian Dividend Paying stocks. Money Sense was looking for stocks that provided generous income at reasonable prices.

When I was updating my spreadsheet, I noticed that earnings are volatile with not much growth over the past 10 years, but good growth over the past 5 years. Last 7 EPS were at $2.16; -$0.73; $3.46; $4.79; $2.21; -$0.14; and $3.64. We have two negative periods with some good earnings. The 5 year running average growth in EPS is 26.19% per year, but 10 year running average growth is only 1.66%. Also, over the past 2 years the CEO has been reducing his shares. However, he still has shares worth some $3.7M.

Dividend yields are moderate and the dividend growth is moderate to good. The current dividend is 2.66%, with 5, 10 and historical medians at 2.31%, 2.46% and 2.46% respectively. The growth in dividends is slower than it was when the company first started to pay dividends 15 years ago. Dividends are paid in US$.

They can afford their dividends. It is the long term Dividend Payout Ratios that really count. For this stock for 2017 the DPR for EPS is 26% with 5 year coverage at 38%. This is a good ratio. The DPR for CFPS is 375 with 5 year coverage at 18%.

The Long Term Debt/Market Cap Ratio is low and good at 0.29 in 2017. The Liquidity Ratio is good at 1.66 in 2017 with 5 year median at 1.77. The Debt Ratio is good at 1.61 in 2017 with 5 year median at 1.75. The Leverage Ratio is a little high at 3.19 for 2017 with 5 year median at a better 2.55. The Debt/Equity Ratio is fine at 1.91 in 2017 with 5 year median at 1.40.

The Total Return per year is show below for years of 5 to 22 to the end of 2017 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.

Years Div. Gth Tot Ret Cap Gain Div.
5 15.37% 21.96% 19.18% 2.79%
10 10.59% 12.83% 10.70% 2.13%
15 16.06% 14.93% 12.34% 2.59%
20 11.59% 9.99% 1.60%
22 11.08% 9.67% 1.41%


The Total Return per year is show below for years of 5 to 22 to date in CDN$. You will notice that the 5 and 10 year total return has changed, but the longer terms is pretty similar compared to return to 2017.

Years Div. Gth Tot Ret Cap Gain Div.
5 15.37% 3.15% 0.87% 2.28%
10 10.59% 20.63% 16.96% 3.68%
15 16.06% 13.33% 10.57% 2.76%
20 13.49% 11.09% 2.40%
22 9.50% 7.85% 1.65%


The Total Return per year is show below for years of 5 to 22 to the end of 2017 in US$. Here it is mostly the 5 year total return that is really different from the CDN$ return. This has to do with currency exchange.

Years Div. Gth Tot Ret Cap Gain Div.
5 10.14% 16.15% 13.70% 2.45%
10 7.99% 11.37% 9.21% 2.17%
15 17.85% 17.37% 14.09% 3.27%
20 12.51% 10.69% 1.82%
22 11.65% 10.09% 1.56%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 9.55, 13.68, and 16.83. The corresponding 10 year ratios are 9.91, 13.25 and 16.09. The corresponding historical ratios are 8.68, 10.79 and 14.94. The current P/E Ratio is 6.41 based on current stock price of $65.61 and 2018 EPS estimate of $10.24 ($7.61 US$). This testing is in CDN$. This stock price testing suggests that the stock price is relatively cheap.

I get a Graham Price of $75.79 CDN$. The 10 year low, median, and high median Price/Graham Price Ratios are 0.96, 1.27 and 1.58 CDN$. The current P/GP Ratio is 0.87 CDN$ based on a stock price of $65.61 CDN$. 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 2.07 CDN$. The current P/B Ratio is 2.63 based on Book Value of $1,957M, Book Value per Share of $24.94 and a stock price of $65.61, all in CDN$. The current ratio is some 27.3% above the 10 year ratio. This stock price testing suggests that the stock price is relatively expensive.

I get an historical median dividend yield of 2.46% US$. The current dividend yield is 2.66% based on dividends of $1.32 and a stock price of $49.58 all in US$. The current dividend yield is 8.2% above the historical median 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 1.28 US$. The current ratio is 0.98 based on 2018 Revenue estimate of $3,982M, Revenue per Share of $50.76 and a stock price of $49.58 all in US$. The current P/S is some 23.7% below 10 year ratio. This stock price testing suggests that the stock price is relatively cheap.

The stock price testing outlying results is for the P/B Ratio and this is because the Book Value is growing a lot slower than earnings. Part of the reason is the dividends paid in shareholders. The other testing is showing the stock as cheap or reasonable and below the median. The P/E Ratio of 6.41 is a very low ratio. The P/B Ratio of 2.63 is a little high on an absolute basis.

When I look at analysts’ recommendations, I find Strong Buy (1), Buy (6), Hold (2) and Underperform (1). The consensus would be a Buy. The 12 month stock price is $73.35 US$ or $98.78 CDN$. This implies a total return of 53.26% with 2.71% from dividends and 50.55% from capital gains.

Peter Erickson on What’s on Thorold talks about Prudential PLC reducing their shares in this company. Troy Warner on MTL News talks about the strong downward momentum of this stock. Hazel Jackson on What’s on Thorold talks about Hillsdale selling of this this stock. Victoria Hetherington on Motley Fool thinks it is a good stock but overprice at present. See what analysts are saying about this stock on Stock Chase. Analysts like this stock.

Methanex Corp manufactures and sells methanol. Methanex's customers use methanol as a feedstock to produce end products including adhesives, foams, solvents, and windshield washer fluids. Its web site is here Methanex Corp.

The last stock I wrote about was about was Stantec Inc. (TSX-STN, NYSE-STN) ... learn more. The next stock I will write about will be Magna International Inc. (TSX-MG, NYSE-MGA) ... learn more on Monday, December 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, December 19, 2018

Stantec Inc

Sound bite for Twitter and StockTwits is: Dividend Growth Industrial. The stock price is probably reasonable and below the median. There is some insider buying. I see mostly green on my spreadsheet except for earnings. Unfortunately, for this stock, earnings can be volatile. See my spreadsheet on Stantec Inc.

I do not own this stock of Stantec Inc (TSX-STN, NYSE-STN) but I used to. I bought and sold this stock between 2008 and 2011 and did not make any money. It was a non-core holding. With their new policy of dividends, this stock has become more interesting.

When I was updating my spreadsheet, I noticed when updating the stock prices that the stock chart for this company just shows the price going up and down but not going anywhere. Price was higher in 2014 than later. Price had a plateau from 208 to 2012, then there was a sharp rise and then a plateau from 2013 to today.

Dividend yields are low and the dividen0d growth is moderate. The current dividend yield is 1.83%. The 5 year dividend yield is 1.25% and since 2013 is 1.31%. The 5 year dividend growth is 10.20% per year.

They can afford their dividends. The Dividend Payout Ratio for 2017 was 57% with 5 year coverage at 38%. The DPR for CFPS for 2017 was 2% with 5 year coverage at 2.7%.

The Long Term Debt/Market Cap Ratio for 2017 is low at 0.13. It has increased by the third quarter of 2018 to a still low value of 0.26. The Liquidity Ratio has varied and it is a bit low in 2017 at 1.39, but improves by the third quarter of 2018 to 1.67. The 5 year median is 1.51. The Debt Ratio has always been good with the 2017 ratio at 1.96 and 5 year median at 2.15. Leverage and Debt/Equity Ratios are also fine with ratios at 2017 at 2.04 and 1.04 respectively and 5 year medians at 2.05 and 1.05 respectively.

The Total Return per year is show below for years of 5 to 23 to the end of 2017. 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 10.20% 13.70% 12.10% 1.60%
10 6.90% 6.11% 0.79%
15 16.18% 15.48% 0.70%
20 18.02% 17.47% 0.56%
23 17.55% 17.07% 0.48%


Doing long term total returns to date gives basically the same answer as above except for 5 year duration where in the last 5 years we have a negative total return. This is mainly because the stock price is down around 15% this year.

Years Div. Gth Tot Ret Cap Gain Div.
5 10.20% -0.43% -1.83% 1.40%
10 8.34% 7.13% 1.21%
15 12.89% 11.95% 0.94%
20 17.92% 17.08% 0.84%
23 18.71% 17.96% 0.75%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 17.66, 20.27 and 22.95. The corresponding 10 year Ratios are 16.59, 20.34 and 24.12. The historical median ratios are 12.38, 15.71 and 18.99. The current P/E Ratio is 26.33 based on a stock price of $30.02 and 2018 EPS estimate of 1.14. This stock price testing suggests that the stock price is relatively expensive.

I get a Graham Price of $20.71. The 10 year low, median, and high median Price/Graham Price Ratios are 1.16, 1.47 and 1.74. The current P/GP Ratio is 1.45 based on a stock price of $30.02. This stock price testing suggests that the stock price is relatively reasonable but above the median. It is almost expensive.

I get a 10 year median Price/Book Value per Share Ratio of 2.10. The current P/B Ratio is 1.80 based on Book Value of $1902M, Book Value per Share of $16.72. and a stock price of $30.02. The current ratio is some 14.5% 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 1.31%. The current yield is 1.83% based on dividends of $$0.55 and a stock price of $30.02. The current yield is 40% above historical one. This stock price testing suggests that the stock price is relatively cheap.

The 10 year median Price/Sales (Revenue) Ratio is 1.12. The current P/S Ratio is 0.97 based on 2018 Revenue estimate of $43,533M Revenue per share of $31.05 and a stock price of $30.02. The current P/S Ratio is some 14% below the 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.

The P/E Ratio, which has never been my favourite measure, says the stock price is expensive as does the P/GP Ratio. Since they have only been paying dividends for 6 years, the dividend yield test may not be that good. Both the P/B Ratio and P/S Ratios have no negative aspects for this stock and they are quite good measurements. They both say the stock is relatively reasonable and below the median.

When I look at analysts’ recommendations, I find Strong Buy (1), Buy (5) and Hold (5). The consensus would be a Buy. The 12 month stock price consensus is $38.59 which implies a total return of 30.38% with 28.55% from capital gains and 1.83% from dividends.

Asher Wright on Simply Wall Street talk about this company’s ROE, which is currently low. David Hasegawa on Press Oracle talks about recently ratings for this company. Mary Kom on Fairfield Current talks about institutional investors. Andrew Button on Motley Fool suggests that you would be better off with a company with more upside. See what analysts are saying about this company on Stock Chase. They say good things about the company, but one analyst prefers Aecon.

Stantec Inc is a global engineering and construction firm. It designs buildings, energy and resource projects, and infrastructure developments. Stantec derives the substantial majority of its sales from the United States and Canada, and the company works in both the public and private sectors. Its web site is here Stantec Inc.

The last stock I wrote about was about was FirstService Corp (TSX-FSV, NASDAQ-FSV) ... learn more. The next stock I will write about will be Methanex Corp. (TSX-MX, NASDAQ-MEOH) ... learn more on Friday, December 21, 2018 around 5 pm. Tomorrow on my other blog I will write about Understanding Financial Statements.... learn more on December 20, 2018 around 5 pm.

Also, on my book blog I have put a review of the book Capital Compounders by Robin Speziale learn more...

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, December 17, 2018

FirstService Corp

Sound bite for Twitter and StockTwits is: Dividend Growth Real Estate. The ratios on this company are very high, so it would seem that it is relatively expensive. All analysts seem to be giving the company a Hold Rating. It has done well for shareholders since the split with Collier International. See my spreadsheet on FirstService Corp.

I do not own this stock of FirstService Corp (TSX-FSV, NASDAQ-FSV). I bought FirstService Corp in 2002 as it a good solid company that knows how to make money. At that time, I was still buying companies to earn capital gains. FSV was a non-dividend paying stock, but it had issued preferred shares to shareholders. Their way of paying dividends by issuing preferred shares was interesting. However, only if you held shares at the time of the special dividend of preferred shares would you get any dividends.

When I was updating my spreadsheet, I noticed Net Insider Selling was high at 2.2%. Generally, NIS is around 0.01%. It seems the Chairman and Founder was the insider selling. In the prior two years, NIS was at 0.015 and 0.02%, respectively. The other thing is that the stock price has really taken off. The capital gain over the past 5 years is 43.9% per year. This is high.

The company started to pay dividends in 2013. The dividends are paid in US$ and the yield has been low. The current dividend yield is just 0.71%. The 4 year median is 1.16%. The 4 year high is 2% and the low is 0.66%. The dividend growth is also low, with 4 year growth at 4.5% per year.

They can afford their dividends. The Dividend Payout Ratio for 2017 was 33% with 4 year coverage at 53%. The DPR for CFPS for 2017 is 145 with 4 year coverage at 16%.

The Debt Ratios on this company are generally good. The Long Term Debt/Market Cap Ratio for 2017 is low and good at just 0.11. For 2017 the Liquidity Ratio is 1.57 and the Debt Ratio is 1.62. These are good as I like them to be 1.50 or higher. The Leverage and Debt/Equity Ratio are fine at 2.61 and 1.61 respectively.

The Total Return per year is show below for years of 5 to 22 to the end of 2017 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.

The same total return if done to date is not much different except for the 5 and 10 year period where total returns are 34.08% and 28.89% per year respectively rather than 46.03% and 23.52% per year in the table below. So, the 5 year total return is lower and the 10 year total return is higher.

Years Div. Gth Tot Ret Cap Gain Div.
5 8.93% 46.03% 43.95% 2.08%
10 23.52% 22.85% 0.68%
15 22.71% 22.27% 0.44%
20 16.27% 16.00% 0.27%
22 22.20% 21.90% 0.30%


The Total Return per year is show below for years of 5 to 22 to the end of 2017 in US$. It is the same here where the 5 and 10 year total returns are different to date at 29.49% and 28.22% per year respectively rather than the ones of the table below of 38.735 and 20.29% per year respectively. As for CDN$, the 5 year total return is lower and the 10 year total return is higher.

Years Div. Gth Tot Ret Cap Gain Div.
5 4.53% 38.73% 37.32% 1.41%
10 20.29% 19.83% 0.45%
15 23.89% 23.56% 0.33%
20 16.94% 16.73% 0.21%
22 22.59% 22.37% 0.22%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 32.23, 42.62 and 50.41. The corresponding 10 year ratios are 21.01, 24.47 and 32.80. The historical ratios are 13.70, 18.48 and 23.12. The current ratio is 37.22 based on a stock price of $94.54 and 2018 EPS estimate of $2.84. These are all in CDN$. This stock price testing suggests that the stock price is relatively expensive.

I get a Graham Price of $23.30 CDN$. The 10 year low, median, and high median Price/Graham Price Ratios are 2.21, 3.02 and 3.93 in CDN$. The current P/GP Ratio is 4.24 based on a stock price of $94.54 CDN$. 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 8.88 CDN$. The current P/B Ratio is 10.86 CDN$ based on a stock price of $94.54 CDN$, Book Value of $313M CDN$ and Book Value per share of $8.70 CDN$. The current ratio is 22% above the 10 year ratio. This stock price testing suggests that the stock price is relatively expensive.

I get an historical median dividend yield of`1.16% CDN$. The current dividend yield is 0.76% based on dividends of $0.72 CDN$ and a stock price of $94.54. The current yield is some 34% lower. This stock price testing suggests that the stock price is relatively expensive.

The 10 year median Price/Sales (Revenue) Ratio is 0.47 CDN$. The current ratio is 1.36 based on 2018 Revenue estimate of $2,493M, Revenue per share of $69.30 and a stock price of $94.54, all in CDN$. The current ratio is some 188% above the 10 year ratio. This stock price testing suggests that the stock price is relatively expensive.

The very high P/E Ratio for the past 5 years show that the stock price has gone up much quicker than the EPS. The 5 and 10 year median ratios are more rational. The P/GP Ratios are also quite high considering that a good price on an absolute basis is a P/GP Ratio of 1.00. The P/B Ratio is extremely high at 8.88. The only reasonable ratio I see is the 10 year P/S Ratio at 0.47. Even with most median ratios being high, all the stock price testing shows the stock to be relatively expensive.

When I look at analysts’ recommendations, I find Hold (4) Recommendations. These are the only ones. The 12 month consensus stock price is $104.00. This implies a total return of 10.77% with 10.01% from capital gains and 0.76% from dividends.

Darrell McKinsey on Fairfield Current talks about brokerage firms giving this stock a Hold rating. Lisa Matthews on Fairfield Current talks about hedge funds buying shares in the company. Will Ashworth on Motley Fool talks about why the company split into 2 entities. . See what analysts are saying on Stock Chase. They generally like this company.

FirstService Corp operates in two business divisions: FirstService Residential and FirstService Brands. The company earns the majority of its revenue in the United States, with the remaining revenue generated in Canada. Its web site is here FirstService Corp.

The last stock I wrote about was about was Keg Royalties Income Fund (TSX-KEG.UN, OTC-KRIUF) ... learn more. The next stock I will write about will be Stantec Inc. (TSX-STN, NYSE-STN) ... learn more on Wednesday, December 19, 2018 around 5 pm. Tomorrow on my other blog I will write about How to Make Money in Value Stocks.... learn more on Tuesday, December 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, December 14, 2018

The Keg Royalties Income Fund

Sound bite for Twitter and StockTwits is: Dividend Growth Consumer. This is a restaurant stock and it is showing up on testing with a reasonable to expensive stock price. They seem to be getting their Dividend Payout Ratio under control. This is a positive going forward. See my spreadsheet on The Keg Royalties Income Fund.

I do not own this stock of Keg Royalties Income Fund (TSX-KEG.UN, OTC-KRIUF). This was a stock suggested by one of my readers. I like dining at The Keg. I find the food very good. At stock forums I viewed, investors liked this company as it is guaranteed 4% of the sales at Keg restaurants as income to the fund. So, I decided to take a look at it.

When I was updating my spreadsheet, I noticed there is a big difference between the Basic and Diluted EPS. Basic for 2017 is $1.50 and the Diluted is $1.15. The difference is due to Exchange Partnership Units. Revenue and Assets depend on Keg Restaurants Ltd (KRL) for which there is no financial statements.

However, Keg Restaurant Ltd is now owned by Recipe Unlimited Corporation (TSX-RECP). Note that Recipe Unlimited Corporation used to be Cara Operations limited (TSX-CARA) which has recently changed its name. RECP is a publicly traded company for which there are financial statements. Still the company is still wholly dependent on KRL

The current dividend yield is high with dividend yield at 6.67%. The dividend has always been high because this used to be an income trust. The historical median dividend yield is 8.20%. The dividend yield since 2011 when it changed from an income trust is 5.83%. The 5 and 10 year median dividend yields are 5.57% and 6.62%.

The historical dividend growth record looks bad because dividends were cut in 2011 by some 25%, then they held steady for a couple of years before resuming growth. Dividend were cut when the stock was no longer an income trust. Dividends started to grow again in 2015 at just over 3% per year. The last increase was in 2017 and it was for 3.1%. Last year of 2017 was the first year that the dividends were below the EPS. The Dividend Payout Ratio for 2017 is 99% with 5 year coverage at 154%.

It is interesting that as far as taxes go, most of the current distribution is taxed as Eligible Dividends and a small portion as Return of Capital. In 2017 just over 99% was Eligible Dividends and just less than 1% as ROC.

The Debt Ratios for this stock are rather meaningless and the debt ratios that really count are those for KBL, which I do not have. There is nothing wrong with the Debt Ratios for the fund. The Long Term Debt/Market Cap Ratio is 0.63. The Liquidity Ratio is 1.91. The Debt Ratio is 1.55. The Leverage and Debt/Equity Ratios are 2.83 and 1.83. Nothing surprising here, but they are wholly dependent on KBL. Some 97% of their assets depend on KBL.

The Total Return per year is show below for years of 5 to 16 to the end of 2017. 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.

If you look at total return to date, the 5 and 10 year total returns are very different with total return for the past 5 years at just 7.09%, but total return for the past 10 years at 22.10%. The 10 year return is a lot higher because exactly 10 years ago there was a big drop in the stock price. The 5 year return is different because the stock has dropped almost 15% this year.

Years Div. Gth Tot Ret Cap Gain Div.
5 2.89% 12.92% 6.63% 6.29%
10 -0.75% 11.90% 4.52% 7.39%
15 4.90% 14.58% 5.27% 9.31%
16 12.60% 4.42% 8.18%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 23.55, 24.93 and 26.36. The corresponding 10 year ratios are 17.02. 18.98 and 20.93. The corresponding historical ratios are 10.98. 11.75 and 12.98. The current P/E Ratio is 14.66 based on a stock price of $17.01 and latest 12 month EPS of $1.16. I am using the latest 12 month EPS as no estimates are available. This stock price testing suggests that the stock price is probably relatively reasonable.

I get a Graham Price of $14.54. The 10 year low, median, and high median Price/Graham Price Ratios are 1.28, 1.43 and 1.57. These are rather high P/GP Ratios for this sort of company. The current P/GP Ratio is 1.17 based on a stock price of $17.01. 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 1.72. The current P/B Ratio is 2.10 based on Book Value of $91.9M, Book Value per Share of $8.10 and a stock price of $17.01. The current P/B Ratio is some 22% above the 10 year median. This stock price testing suggests that the stock price is relatively expensive.

I get an historical median dividend yield of 8.20%. The current dividend yield is 6.67% based on dividends of $1.135 and a stock price of $17.01. The current yield is some 18.6% below the historical yield. This stock price testing suggests that the stock price is relatively reasonable but above the median (and close to expensive.)

Because this stock used to be an income trust and income trusts have much higher yields than corporation, I will also do testing on median dividend yield since 2011. Since 2011 the median dividend yield is 5.83%. The current yield at 6.67% is some 14.5% lower. 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 7.36. The current P/S Ratio is 6.52 based on Revenue of 29.6M and Revenue per Share of $2.61 and a stock price of $17.01. The current P/S Ratio some 11% below the 10 year median ratio. This stock price testing suggests that the stock price is reasonable and below the median.

There is a big increase in this company’s P/E Ratios over time. Part of this probable is due to the fact that the company used to be an income trust. Analysts expected the stock price to rise and yields to drop on all income trusts when they because corporation. However, recent P/E Ratios are rather high for this sort of company. The current one on an absolute basis might be considered to be reasonable. I generally do not like the P/E test in any event.

I find that the P/GP Ratio of 1.17 rather high for showing a cheap price. However, I do admit that everything is relatively especially when it comes to stock price testing. I do not like the fact that the P/B Ratio is showing the stock as expensive. The current P/B Ratio of 2.10 is rather high. This is because the Book Value decreased from 2011 and 2015. This is not a good situation. This was due to the fact that they were paying in dividends more than they were earning.

The P/S Ratio testing shows that the stock price is reasonable and below the median. There is no problem with this test. There is also no problem with the P/B Ratio testing which is showing the stock as relatively expensive. On the other hand, situation where they were paying more than they are earning seems to be over, so the P/B Ratio should improve.

When I look at analysts’ recommendations, I find s Buy (1) recommendations. The 12 month stock price given is $23.00. This implies a total return of $41.88% with 35.21% from capital gains and 6.67% from dividends based on a current stock price of $17.01. Frankly, I have a hard time believing this.

Troy Warner on MTL News says that Williams Percent Range for this stock is -88.75 and so it is oversold. Joseph Solitro on Motley Fool that the stock was worth buying for the high yield. See what analysts are saying on Stock Chase. This stock is not well followed, but analysts in the past think it is a decent stock, but not much growth because it is in the restaurant business.

Keg Royalties Income Fund is a Canada based company. The organization works under the Restaurant business sector. The target market of this company is those people who want higher end casual dining experience. The business model of this company is that all Keg restaurants are placed under it, so the majority of its revenue is in the form of royalty income. Its web site is here The Keg Royalties Income Fund.

The last stock I wrote about was about was Stella-Jones Inc. (TSX-SJ, OTC- STLJF) ... learn more. The next stock I will write about will be FirstService Corp (TSX-FSV, NASDAQ-FSV) ... learn more on Monday, December 17, 2018 around 5 pm.

Also, on my book blog I have put a review of the book Enlightenment Now by Steven Pinker learn more...

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, December 12, 2018

Stella-Jones Inc

I have today bought some BCE stock but an odd lot. The trouble with BCE is that every time that do something, like spinning of a company, I am left with an odd number of shares. Of course, now with most trading done electronically, one is not penalized for trading odd lots of shares.

Sound bite for Twitter and StockTwits is: Dividend Growth Materials. Stock price testing suggests that the stock price is cheap to reasonable. Stella-Jones has done very well over the years, but they do seem to have slowed down recently. See my spreadsheet on Stella-Jones Inc.

I do not own this stock of Stella-Jones Inc (TSX-SJ, OTC-STLJF). I started a spreadsheet on this stock in mid-2009 because of a favorable report I read on this stock. It was considered to be a dividend growth stock and I am always on the lookout for dividend growth stocks.

When I was updating my spreadsheet, I noticed the company has great debt ratios. The first thing you notice is that all the ink is green. This company has done very well for its shareholders. Dividends have been growing faster than EPS and that maybe why the dividend growth has slowed. Over the past 5 year dividends have grown at 23.20% per year but the EPS has only grown at 16.40% per year.

For 2017 the Long Term Debt/Market Cap is just 0.13. The Liquidity Ratio is really high and great at 7.04 with 5 year median at 8.46. The Debt Ratio is high and good at 2.66 with 5 year median at 2.14. Leverage and Debt/Equity Ratios are low and good at 1.60 and 0.60 with 5 year median at 1.91 and 0.91. Good debt ratios help company get through bad times.

The yield is low and has always been low and has often been below 1%. The current dividend yield is 1.25%. The 5, 10 and historical median dividend yields are 0.89%, 0.83% and 1.02%. Dividend have increased by 23% and 22% per year over the past 5 and 10 years. However, the increases have slowed in the last two years with the increase for 2017 at 10% and the one for 2018 at 9.1%. See the chart below for dividend growth over the past 5 to 16 years.

I do not think that there is any question about the company being able to afford their dividends. The Dividend Payout ratio for 2017 for EPS is 20% with 5 year coverage at 18%. The DPR for CFPS for 2017 is 12% with 5 year coverage at 10%.

The Total Return per year is show below for years of 5 to 23 to the end of 2017. 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.

If you redo the Total Return to the current price, the most significant change is for the total return for the last 5 years, which would be 8.26% with capital gain at 7.05%. For other time periods the returns are similar. The stock price has fallen some 24% year to date.

Years Div. Gth Tot Ret Cap Gain Div.
5 23.20% 22.51% 21.39% 1.12%
10 22.05% 18.17% 17.29% 0.88%
15 23.98% 35.21% 33.17% 2.04%
16-20 22.33% 27.05% 25.96% 1.09%
23 33.37% 18.46% 14.91%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 16.95, 20.24 and 23.16. The 10 year corresponding Ratios are 12.31, 15.52 and 19.71. The corresponding historical ratios are 8.60, 11.30 and 14.04. The current P/E Ratio is 18.53 based on a stock price of $38.30 and 2018 EPS estimate of $2.09. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get a Graham Price of $28.97. The 10 year low, median, and high median Price/Graham Price Ratios are 0.99, 1.32 and 1.67. The current P/GP Ratio is 1.32 based on a stock price of $38.30. This stock price testing suggests that the stock price is relatively reasonable and around the median.

I get a 10 year median Price/Book Value per Share Ratio of 2.51. The current P/B ratio is 2.15 based on a Book Value of $1,238M, Book Value per Share of $17.85 and stock price of $38.30. The current P/B Ratio is some 145 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 1.02%. The current dividend yield is 1.25% based on dividends of $0.48 and a stock price of $38.30. The current yield is some 23% above the historical median yield. This stock price testing suggests that the stock price is relatively cheap.

The 10 year median Price/Sales (Revenue) Ratio is 1.55. The current P/S Ratio is 1.25 based on Revenue estimate for 2018 of $2,123M, revenue per share of $30.61 and a stock price of $38.30. The current ratio is some 19% below the 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median and very close to cheap.

When I look at analysts’ recommendations, I find Buy (8) and Hold (1). The consensus would be a Buy. The 12 month stock price is $51.72. This implies a total return of 36.29% with 35.04% from capital gains and 1.25% from dividends based on a current price of $38.30.

LNR Staff at Lake Norman Review says the stock has a Williams Percent Range of -82.76. This means that the stock is oversold. Pam Parks on Simply Wall Street looks at ROE and debt. Kay Ng on Motley Fool likes this stock. See what analysts are saying about this company on Stock Chase. It is interesting that a couple of analysts recently give the stock a sell rating.

Stella-Jones Inc produces and sells lumber and wood products. The company sells products in five main customer categories. The railway ties category, which generates the most revenue of any category, sells pressure-treated lumber to the railway industry. The utility poles category, which contributes the next largest amount of revenue, sells utility poles for electrical transmission and communications infrastructure use. The other three categories are residential lumber for use in housing construction, industrial products for use in marine and building industries, and logs and lumber, which sells wood products to homebuilding markets. Its web site is here Stella-Jones Inc.

The last stock I wrote about was about was First Capital Realty (TSX-FCR, OTC-FCRGF) ... learn more. The next stock I will write about will be Keg Royalties Income Fund (TSX-KEG.UN, OTC-KRIUF) ... learn more on Friday, December 14, 2018 around 5 pm. Tomorrow on my other blog I will write about Markets Down, Dividends Up.... learn more on Thursday, December 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.

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