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.

1 comment:

  1. I cannot believe the amount of raw data you crunch in order analyse any given security. Definitely not a "cut & paste job" all the best this Holiday season Happy New Year. Keep up the excellent work.

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