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 shown 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.
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