Monday, September 16, 2019

Wajax Corp

Sound bite for Twitter and StockTwits is: Dividend Paying Industrial. The stock price is cheap. It remains to be seen if this stock will be a dividend growth stock in the future. There is some risk in the rising long term debt. On the plus side, insiders are buying. See my spreadsheet on Wajax Corp.

I do not own this stock of Wajax Corp (TSX-WJX, OTC-WJXFF). TD Waterhouse put out a report on good dividend paying stocks to own in November 2011. This was a stock they named. I had not heard of it before, so I decided to investigate it.

When I was updating my spreadsheet, I noticed that is had a very mixed record with dividends. After a couple of year of no insider trading, insiders are buying this stock. Over the past year insiders have been buying, especially when it went below $17.00. The percentage of insider buying of the market cap is 0.24%. This is high. You would expect insider buying around 0.01% to 0.02%. There has been buying by CFO, CEO and Chairman.

The current dividend yield is good (5% and above). It has been in this range in the past also. The 5, 10 and historical dividend yield is from moderate (2 to 4% ranges) to good (above 5%). These yields are, respectively, 4.99%, 5.87% and 4.31%.

The company has a mixed history for dividends. I have dividend information going back to 1986 (some 32 years). The dividends were suspended in 1992 and restarted in 2004. There were dividend increases until 2013 when they then started dividend cuts. Dividends have been flat since 2016. Analysts do not expect any dividend growth in the near term. This accounts for the Dividend Growth record in the chart below.

The Dividend Payout Ratios are improving. The DPR for EPS for 2018 is 56% with 5 year coverage at 116% DPR coverage has recently been declining. The DPR for CFPS for 2018 is 22% with 5 year coverage at 32%.

Debt Ratios are fine, but long term debt is moving higher and this is not good. The Long Term Debt/Market Cap is fine at 0.66 in 2018 but moved up higher in the second quarter of 2019 to 0.82. Debt is increasing. The Liquidity Ratio is very good at 2.15 in 2018 with 5 year median also at 2.15. The Debt Ratio is fine in 2018 at 1.56 with 5 year median at 1.69. The Leverage and Debt/Equity Ratios are fine in 2018 at 2.80 and 1.80 with 5 year medians at 2.58 and 1.58.

The Total Return per year is shown below for years of 5 to 32 to the end of 2018. 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 chart below.

Years of 15 to 25 have zero increases because dividends were suspended at the end of the periods.

From Years Div. Gth Tot Ret Cap Gain Div.
2013 5 -18.32% -9.83% -14.59% 4.76%
2008 10 -13.16% 9.17% -2.38% 11.55%
2003 15 0.00% 29.97% 4.98% 24.99%
1998 20 0.00% 15.37% 3.78% 11.59%
1993 25 0.00% 9.84% 2.47% 7.36%
1988 30 1.95% 6.26% 0.75% 5.51%
1985 32 1.83% 5.64% 0.42% 5.22%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 12.22, 14.23 and 16.23. The corresponding 10 year ratios are 9.38, 11.99 and 14.61. The corresponding historical ratios are 8.76, 11.76 and 14.21. The current ratio is 7.77 based on a stock price of $16.78 and 2019 EPS estimate of $2.16. This stock price testing suggests that the stock price is relatively cheap.

I get a Graham Price of $27.54. The 10 year low, median, and high median Price/Graham Price Ratios are 0.92, 1.14 and 1.34. The current P/GP is 0.61 based on a stock price of $16.78. 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 1.98. The current P/B Ratio is 1.07 based on a stock price of $16.78, Book Value of $305.12 and Book Value per Share of $15.61. The current ratio is 46% below the 10 year ratio. This stock price testing suggests that the stock price is relatively cheap. The recovery form 2008 has been long and slow for the economy and this has been tough on a lot of companies. This company is making headway but there is risk involved.

I get an historical median dividend yield of 4.31. The current yield is 5.96% based on dividend of $1.00 and a stock price of $16.78. The current yield is 38% above the historical yield. This stock price testing suggests that the stock price is relatively cheap.

The 10 year median Price/Sales (Revenue) Ratio is 0.37. The current P/S Ratio is 0.20 based on 2019 Revenue estimate of $1,600M, Revenue per Share of $81.86 and a stock price of $16.78. The current ratio is 45% below the 10 year ratio. This stock price testing suggests that the stock price is relatively cheap.

Results of stock price testing is that the stock price is currently relatively cheap. All the testing shows this. It is also nice that the dividend yield test and the P/S Ratio test confirm each other.

Is it a good company at a reasonable price? The company had just turned itself into and income trust in 2005 when Canadian Law on Income Trust was changed in November 2006. Their dividends were too high to be sustainable when they were to change back to a corporation. Their dividend is probably still too high, but analysts do not expect any more cuts to the dividends and expect it will be better covered in the future. This is an industrial stock and therefore will have volitivity in their business. It is uncertain if it will become a dividend growth stock in the future and mainly, I do like dividend growth stocks.

When I look at analysts’ recommendations, I find Buy (2) and Hold (3). The consensus would be a Buy. The 12 month stock price is $20.60. This implies a total return of 28.72% with 22.77% from capital gains and 5.96% from dividends based on a stock price of $16.78.

See what analysts are saying on Stock Chase. They like to company but think it is illiquid, but with a safe dividend. James Watkins-Strand on Motley Fool was positive about this company because of the high dividend yield. A writer on Simply Wall Street thinks the low P/E of this company shows pessimistic market expectations. A writer on Simply Wall Street thinks that the estimated future revenue growth does not seem like a key driver for buying this stock. A writer on Simply Wall Street thinks this stock is worth further investigation. Derek Livingston on Mak Daily says that short selling as decreased by 38% recently.

Wajax Corp is a Canadian distributor of industrial components. Its core business is the sale of parts and service support of equipment, power systems, and industrial components through a network of branches in Canada. Its web site is here Wajax Corp.

The last stock I wrote about was about was Telus Corp (TSX-T, NYSE-TU)... learn more. The next stock I will write about will be Trican Well Service Ltd (TSX-TCW, OTC-TOLWF) ... learn more on Wednesday, September 18, 2019 around 5 pm. Tomorrow on my other blog I will write about SNC Lavalin.... learn more on Tuesday, September 17, 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, September 13, 2019

Telus Corp

Sound bite for Twitter and StockTwits is: Dividend Growth Telecom. Price is probably reasonable. The company is slowing down in terms of dividend growth. See my spreadsheet on Telus Corp.

I do not own this stock of Telus Corp (TSX-T, NYSE-TU). I started to follow this stock because of a list of stock John Sartz talked about in 2008. At the Toronto Money Shows in 2009 and 2010 Aaron Dunn from Keystone Financial Publishing Corp talked about having recommended this stock. Aaron Dunn says he likes companies with resilient business models, which are profitable and are growing their earnings. He also like companies with strong management teams, health balance sheets and compelling valuations. Telus Corp (TSX-T) was one of three stocks he recommended in 2009.

When I was updating my spreadsheet, I noticed that the dividend increases are slowing down. See the chart below. The last 5 year is lower per year than the last 10 years. Also, the last increase, which was in this year was for 7.1% and this is lower than the average per year for the last 5 years which is at 9.3%.

The thing is that both Revenue and EPS has only been increasing for the past 5 and 10 years at rates in the 4 and 5% ranges. Dividends cannot increase faster than Revenue and EPS over the long term.

The dividend yield is in moderate range (2 to 4% ranges). The current dividend yield is 4.60%. The 5, 10 and historical median dividend yields are 4.27%, 4.22% and 3.92%. Dividend growth is in the moderate range (8 to 14% ranges) with the growth for the past 5 years at 9.31% per year.

The Dividend Payout Ratios are fine. The DPR for EPS for 2018 is 77% with 5 year coverage at 76%. I wish it was lower but it is probably fine. The DRR for CFPS for 2018 is 32% and with 5 year coverage at 30%. This is fine.

Debt Ratios are fine but there is vulnerability here. The Long Term Debt/Market Cap Ratio for 2018 is 0.49. The Liquidity Ratio for 2018 at 0.79 is low. It means that the current assets cannot cover the current liabilities. Adding in cash flow after dividends only rises this to 1.39. I would like to see this at 1.50 or above. The Debt Ratio is also a bit low at 1.46. I would also like to see this at 1.50 or above. The Leverage and Debt/Equity Ratios are 3.20 and 2.20. It would be nice if these were lower.

The Total Return per year is shown below for years of 5 to 24 to the end of 2018. 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 chart below.

From Years Div. Gth Tot Ret Cap Gain Div.
2013 5 9.31% 8.80% 4.36% 4.44%
2008 10 18.13% 14.32% 9.31% 5.01%
2003 15 13.71% 13.03% 8.68% 4.35%
1998 20 5.98% 6.85% 3.94% 2.91%
1994 24 5.24% 9.44% 5.69% 3.76%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 17.20, 18.51 and 19.64. The corresponding 10 year ratios are 15.27, 17.05 and 18.51. The corresponding historical ratio are 15.27, 17.42 and 19.74. The current P/E Ratio is 16.65 based on a stock price of $48.94 and 2019 EPS estimate of $2.94. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a Graham Price of $34.00. The 10 year low, median, and high median Price/Graham Price Ratios are 1.31, 1.43 and 1.54. The current P/GP Ratio is 1.44 based on a stock price of $48.94. This stock price testing suggests that the stock price is relatively reasonable but above the median

I get a 10 year median Price/Book Value per Share Ratio of 2.67. The current P/B Ratio is 2.80 based on a stock price of $48.94, Book Value of $10,504M and Book Value per Share of $17.48. The current ratio is some 4.7% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median

I get an historical median dividend yield of 3.92%. The current dividend yield is $4.60% based on a stock price of $48.94 and dividends of $2.25. The current ratio is 17% above the historical dividend 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 1.85. The current P/S Ratio is 1.99 based on 2019 Revenue estimate of $14,784M, Revenue per Share of $24.60 and a stock price of $48.94. The current ratio is some 7.7% above the 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median

Results of stock price testing is that the stock price is probably reasonable. The P/S Ratio testing is show as reasonable but above the median when the dividend yield is showing the price as reasonable and below the median. The rest of the testing show similar things.

Is it a good company at a reasonable price? I think that this is a good dividend growth stock that could be held for the long term. Currently the price seems reasonable. On the other hand, it does seem to be slowing down currently in regards to dividend growth.

When I look at analysts’ recommendations, I find Strong Buy (3), Buy (5) and Hold (10). The consensus would be a Buy. The 12 month stock price is $51.58. This implies a total return of 9.99% with 5.39% from capital gains and 4.60% from dividends.

See what analysts are saying on Stock Chase. They like this company but say the stock is expensive. Andrew Button on Motley Fool likes the company’s dividend growth. A writer on Simply Wall Street talks about why income investors should have this stock. A writer on Simply Wall Street says that the stock is trading below his calculated Intrinsic Value. Dennis Silva on Altcoin Mercury talks about TD Asset Management being bullish on this stock.

Telus is one of the big three wireless service providers in Canada, with its 9 million subscribers nationwide constituting almost 30% of the total market. It is also the ILEC (incumbent local exchange carrier; the legacy telephone provider) in the western Canadian provinces of British Columbia and Alberta, where it provides Internet, television, and landline phone services. It also has a small wireline presence in eastern Quebec. Its web site is here Telus Corp.

The last stock I wrote about was about was Accord Financial Corp (TSX-ACD, OTC-ACCFF) ... learn more. The next stock I will write about will be Wajax Corp (TSX-WJX, OTC-WJXFF) ... learn more on Monday, September 16, 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.

Wednesday, September 11, 2019

Accord Financial Corp

Sound bite for Twitter and StockTwits is: Dividend Growth Financial. The shares are probably cheap. There is significate insider ownership and recent insider buying. However, the company has slowed down in recent years. It would be nice to see them increase the dividend as this would show management’s confidence in the future. See my spreadsheet on Accord Financial Corp.

I do not own this stock of Accord Financial Corp (TSX-ACD, OTC-ACCFF). If I was looking for a small cap financial stock, I would consider this stock. The dividend is good and it does raise the dividend in the past. It has had some problems recently, but a lot of companies are with this long drawn out recover. As with all small cap stocks there is low trading volume.

When I was updating my spreadsheet, I noticed that they used to give quite good dividend increases, then the increases stopped in 2015 and there have been none since. There has always been good insider buying on this stock, including in 2019, but at 0.06% it is the lowest. Past years were in 2018 at 0.25% and 2017 at 0.36%. You would expect Net Insider Buy to be around 0.01% to 0.2%. However, this is a rather small company with around $72M.

Talk about dividends yields and growth. Dividend yields are moderate (2% to 4% range). The current dividend is 4.22%. The 5, 10 and 15 year median dividend yields are 3.86%, 4.00% and 2.62%. The last dividend increase was in 2015 and it was for 5.9%. Dividend have been flat since.

The Dividend Payout Ratios are fine. The DPR for EPS for 2018 is 29% with 5 year coverage at 38%. The DPR for CFPS for 2018 is 23% with 5 year coverage at 7%.

Debt Ratios are good. The Long Term Debt/Market Cap Ratio is 2.95. However, this is a financial services company so I looked at Long Term Debt/Cash Ratio and it is 0.63. So, Cash (and near cash) adequately covers the debt. The Liquidity Ratio for 2018 is 12.18 and very high. The Debt Ratio is 1.47 which is good for a financial services stock. The Leverage and Debt/Equity Ratios are fine at 3.28 and 2.24 for 2018.

The Total Return per year is shown below for years of 5 to 26 to the end of 2018. 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 chart below.

For Dividend Growth, I have up to 31 years. According to their annual reports, the company started to pay dividends in 1988 but did not go public on the TSX until 1992.

From Years Div. Gth Tot Ret Cap Gain Div.
2013 5 2.38% 7.18% 2.95% 4.23%
2008 10 4.14% 9.11% 4.58% 4.53%
2003 15 5.56% 7.09% 1.71% 5.38%
1998 20 2.98% 9.23% 3.81% 5.42%
1993 25 2.38% 9.85% 4.85% 5.00%
1992 26 10.11% 12.31% 6.43% 5.88%
1987 12.25%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 9.46, 11.20 and 12.34. The corresponding 10 year ratios are 8.56, 10.04 and 11.52. The corresponding historical ratios are 8.55. 10.25 and 11.56. The current P/E Ratio is 6.72 based on a stock price of $8.53 and last 12 months EPS of $1.27. This stock price testing suggests that the stock price is relatively cheap.

I get a Graham Price of $17.49. The 10 year low, median, and high median Price/Graham Price Ratios are 0.64, 0.73 and 0.82. The current P/GP Ratio is 0.49 based on a stock price of $8.53. 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 1.22. The current P/B Ratio is 0.80 based on Book Value of $90.4M, Book Value per Share of $10.70 and a stock price of $8.53. The current P/B Ratio is some 35% below the 10 year median. This stock price testing suggests that the stock price is relatively cheap.

I get an historical median dividend yield of 2.62%. The current dividend yield is 4.22% based on dividends of $0.36 and a stock price of $8.53. The current yield is 61% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.

The 10 year median Price/Sales (Revenue) Ratio is 2.35. The current P/S Ratio is 1.65 based on the last 12 months Revenue of $45.6M, Revenue per Share of $5.16 and a stock price of $8.53. The current ratio is 30% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

Results of stock price testing is that the stock price is probably relatively cheap. All the tests are showing this. Of note is that the stock price is below Book Value per Share. This strongly points to a cheap stock price.

Is it a good company at a reasonable price? I think that this is a good company. However, it is a small cap financial services company with little to no analysts following this stock. The thing that stands out is that the company seems to be slowing down. What would be nice to see is a dividend increases. This would signal that the company has confidence in the future. There is significant insider ownership with the chairman holding shares worth $17M and almost 24% of the outstanding shares.

When I look at analysts’ recommendations, I find one Buy recommendation on Market Watch. No other site gives any ratings that I could find.

See what analysts are saying on Stock Chase. A number of analysts talk about this being a well-run company. A writer on Simply Wall Street thinks this company deserves further attention. Blogger called Safety in Value on Seeking Alpha talks about this stock. Mark Bunting interviews CEO Simon Hitzig Small Cap Power.

Accord Financial Corp is a provider of asset-based financial services to businesses. Its asset-based financial services include asset-based lending, including factoring, lease financing, working capital financing, credit protection and receivables management, and supply chain financing for importers. Its web site is here Accord Financial Corp.

The last stock I wrote about was about was Just Energy Group Inc. (TSX-JE, NYSE-JE) ... learn more. The next stock I will write about will be Telus Corp (TSX-T, NYSE-TU)... learn more on Friday, September 13, 2019 around 5 pm. Tomorrow on my other blog I will write about Best Canadian Stocks.... learn more on Thursday, September 12, 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.

Monday, September 9, 2019

Just Energy Group Inc

Sound bite for Twitter and StockTwits is: Power Utility Stock. The stock is probably cheap. It has a negative book value and it has suspended dividends. See my spreadsheet on Just Energy Group Inc.

I do not own this stock of Just Energy Group Inc (TSX-JE, NYSE-JE). I started to follow this is July 2010. It was one of the high yield income trusts that people were talking about, so I decided to check it out.

When I was updating my spreadsheet, I noticed none of the sites I looked at for estimates were agreeing on what the EPS was in 2019. They do agree on EPS for 2018. For example, Market Screener says for 2019 the EPS was -$0.88 and the Thomson Reuters Report says -$0.62. The Financial Statements says -$1.68. According to the annual statement notes the EPS for 2019 was adjusted and restated from -$0.88 to -$1.68. Sometimes also, when FFO is involved, as in this stock, sites confuse FFO and EPS.

The company announced in August 2019 that the dividend was being suspended. The other thing is that there was lots of insider buying within the last year, but all prior to the latest decline in the stock that started at the end of July 2019. Note that this stock has a financial year ending at March 31 each year.

This is an old income trust company and it stopped increasing the dividends when it became a corporation. In 2014 it started to reduce the dividends, they became flat in 2017 and now in 2019 they have suspended them. Income Trust always had high dividends and this company was no exception reaching over 20% at one point. Just below the recent suspension the yield reached almost 30% because of falling stock price. The historical median was 8.17%.

The Dividend Payout Ratios are too high. Cutting the dividend is an appropriate move until they can start again to have some earnings. The DPR for EPS for 2019 is not calculable because of negative returns. Even the 5 year coverage is non calculable because of EPS losses. Prior to the dividend cut the DPR for 2020 was expected at 119%. It is now 30% for 2020. The DPR for CFPS for 2019 was 47% with 5 year coverage at 44%.

Debt Ratios are a vulnerability. The Long Term Debt/Market Cap ratio for 2019 is 1.02. Far too high. It is high because long term debt went up 63% between 2018 and 2019. Also, the stock price did fall. The current ratio is 2.95. The debt has gone up 7% and the stock price fell 63% since the end of the 2019 financial year. The Liquidity Ratio is low at 1.14. If you add back in the current portion of the long term debt you get 1.32. There is no sense in adding in cash flow after dividends as the cash flow is negative.

The Debt Ratio is 0.95. This means that the assets cannot cover the liabilities and we have a negative book value. The Leverage (A/BK) and Debt/Equity Ratios cannot be calculated because of the negative book value.

The Total Return per year is shown below for years of 5 to 17 to the end of 2018. 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 chart below.

As you can see from the chart below, any money made was in the dividends. Now that dividends are suspended, will shareholders make any money at all?

From Years Div. Gth Tot Ret Cap Gain Div.
2013 5 -9.86% -1.60% -9.91% 8.31%
2008 10 -8.63% 17.69% -2.00% 19.69%
2003 15 -2.40% 3.62% -7.25% 10.86%
2001 17 3.05% 20.01% -0.13% 20.14%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 2.01, 10.34 and 3.27. The corresponding 10 year ratios are 2.34, -3.64 and 3.56. The corresponding historical ratio or 5.64, 6.85 and 8.06. The current P/E Ratio is 3.98 based on a stock price of $1.67 and 2020 EPS estimate of $0.42. Most of this makes no sense because of all the years at earning losses.

I get a Graham Price of $2.27. The 10 year low, median, and high median Price/Graham Price Ratios are 0.92, 1.11 and 1.33. The current P/GP Ratio is 0.74 based on a stock price of $1.67. This stock price testing suggests that the stock price is relatively cheap.

I cannot do a Price/Book Value per Share Ratio test as the Book Value is negative. I also cannot do an historical median dividend yield test because the dividends have been suspended.

The 10 year median Price/Sales (Revenue) Ratio is 0.33. The current P/S Ratio is 0.08 based on 2020 Revenue estimate of $3,153M, Revenue per Share of $21.08 and a stock price of $1.67. The current ratio is 76% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

Results of stock price testing is that the stock price is that the stock price is probably cheap. Really, the only good test is the P/S Ratio test. It is hard to know how good the Graham Price is because of all the EPS losses and the negative book value.

Is it a good company at a reasonable price? I personally would not buy a stock with a negative Book Value. I like dividend growth stocks, but this stock does not have a good dividend paying history.

When I look at analysts’ recommendations, I find Strong Buy (2) and Hold (3). The consensus would be a Buy. The 12 month stock price consensus is $3.25. This implies a total return of 94.6% all from capital gains.

See what analysts are saying on Stock Chase. It is not well covered and not liked. David Jagielski on Motley Fool talks about this company’s recent problems. A writer on Simply Wall Street talks about insider buying over the past year. A writer on Simply Wall Street talks about the past and future EPS. The company put out a press release on Glove Newswire commenting on a recent Globe and Mail article station that the founder of the company is looking to bail out of the struggling company.

Just Energy Group Inc is a Canadian-based electricity and natural gas company that operates in various Canadian provinces, the United States, and the United Kingdom. The company mainly sells its products to residential and small community customers through its Consumer segment and to mid-sized commercial customers through its Commercial segment. Its web site is here Just Energy Group Inc.

The last stock I wrote about was about was SmartCentres REIT (TSX-SRU.UN, OTC-CWYUF) ... learn more. The next stock I will write about will be Accord Financial Corp (TSX-ACD, OTC-ACCFF) ... learn more on Wednesday, September 11, 2019 around 5 pm. Tomorrow on my other blog I will write about Brookfield Renewable Energy Partners.... learn more on Tuesday, September 10, 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, September 6, 2019

SmartCentres REIT

Sound bite for Twitter and StockTwits is: Dividend Growth REIT. The current stock price is probably reasonable. It might be vulnerability in a recession due to liquidity. A high percentage of the return on this stock will be in dividends. See my spreadsheet on SmartCentres REIT .

I do not own this stock of SmartCentres REIT (TSX-SRU.UN, OTC-CWYUF). Once you have 5 or 6 stocks, you might want to consider a REIT for diversification. REITs are an easy way to investment in real estate. I am therefore following a few REIT stocks and in 2009 I decided to look at a few on the Dividend Achiever's List. Between 2009 and now it was taken from the list and added back to this list. From 2009 and 2013 it had no increases in dividends.

When I was updating my spreadsheet, I noticed I had a hard time hunting for the figures I needed to update my spreadsheet. I hate when the company makes it difficult to find things in the financial statements.

This is a REIT, so you would expect it to have good dividend yield (5% and over). The dividend yield is 5.69%. The 5, 10 and historical dividend yields are 5.43%, 5.75% and 5.88%. The other thing with REIT is that the dividend growth tends to be low (under 8%). Hopefully, the dividends will grow faster than inflation. That is generally the best to be expected from a REIT.

The Dividend Payout Ratios are fine. It is interesting that this REIT has reasonable DPR for EPS which for 2018 was 85% with 5 year coverage at 76%. For REITs you generally want to look at the DPR in connection with Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO). The DPR for FFO for 2018 is 77% with 5 year coverage also at 77%. The DPR for AFFO for 2018 is 82% with 5 year coverage also at 82%.

Debt Ratios are currently fine. The concern for this REITs is that in a recession they may not be able to cover current portion of the long term debt. The Long Term Debt/Market Cap Ratio is good at 0.72 for 2018. The Long Term Debt/Assets Ratio is also good at 0.40 for 2018. Assets/Current Liabilities Ratio is also good at 11.87 for 2018. The first two ratios you want to be below 1.00 and the third and last ratio, higher is better.

The Liquidity Ratio for 2018 is really low at 0.18. This means that current assets cannot cover current liabilities. To get to a decent ratio you have to add in cash flow after dividends and current portion of the long term debt and then you get to 1.46. I would prefer this final ratio to be at 1.50 or higher. The current Liquidity Ratio is 0.44 and with cash flow and current portion of long term debt it is 2.27.

The Debt Ratio is good at 2.13 for 2018 with a current one at 2.20. Leverage and Debt/Equity Ratios for 2018 is 1.89 and 0.89 with current ratios at 1.83 and 0.83. These are good ratios.

The Total Return per year is shown below for years of 5 to 21 to the end of 2018. 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 chart below.

As with most REITs, a high portion of the total return is from dividends.

From Years Div. Gth Tot Ret Cap Gain Div.
2013 5 2.58% 10.23% 4.15% 6.08%
2008 10 1.28% 20.36% 10.51% 9.85%
2003 15 2.87% 13.69% 5.53% 8.16%
1998 20 14.20% 7.31% 6.89%
1997 21 27.69% 14.85% 12.85%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 12.84, 13.95 and 15.05. The corresponding 10 year ratios are 12.92, 13.98 and 15.29. The corresponding historical ratios are 9.41, 16.43. and 20.65. The current P/E Ratio is 15.29 based on a stock price of $31.65 and 2019 EPS estimate of $1.80. This stock price testing suggests that the stock price is relatively reasonable but above the median.

Because this is a REIT, we need also to look at P/FFO Ratios. The 5 year low, median, and high median Price/FFO per Share Ratios are 13.01, 14.28 and 15.33. The corresponding 10 year ratios are 13.12, 14.51 and 15.77. The current P/FFO Ratio is 13.89 based on a stock price of $31.65 and 2019 FFO estimate of $2.28. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a Graham Price of $35.01. The 10 year low, median, and high median Price/Graham Price Ratios are 0.81, 0.83 and 0.95. The current P/GP Ratio is 0.90 based on a stock price of $31.65. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get a Graham Price of $36.74 using the FFO in the formula. The 10 year low, median, and high median Price/Graham Price Ratios are 0.82, 0.89 and 0.96. The current P/GP Ratio is 0.86 based on a stock price of $31.65. 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 1.23. The current P/B Ratio is 1.20 based on a Book Value of $4,421M, Book Value per Share of $26.31 and a stock price of $31.65. The current ratio is 2.5% below the 10 year median 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 5.88%. The current dividend yield is 5.69% based on dividends of $1.80 and a stock price of $31.65. The current yield is 3.3% below the historical yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.

The 10 year median Price/Sales (Revenue) Ratio is 6.25. The current P/S Ratio is 6.72 based on 2019 Revenue estimate of $792M and a stock price of $31.65. The current ratio is 7.5% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.

Results of stock price testing is that the stock price is probably reasonable. For this stock, the P/S Ratio is a good test as is the dividend yield test. Both say that the stock is reasonable, but above the median. Other good tests of P/FFO Ratio and the P/B Ratio say the stock is reasonable and below the median.

Is it a good company at a reasonable price? For this stock the debt levels are currently fine, but maybe vulnerable with liquidity in bad times as cash flow could drop and it is possible to have problems with debt rollover. A number of analysts feel that they will do fine. You should have at least one REIT in a balance portfolio.

When I look at analysts’ recommendations, I find Strong Buy (2), Buy (2) and Hold (5). The consensus would be a Buy. The 12 month stock price consensus is $34.72. This implies a total return of 13.35% with 9.67% from capital gains and 5.69% from dividends.

See what analysts are saying on Stock Chase. Some are negative to growth because of Amazon, but others like it. Nelson Smith on Motley Fool likes this stock and thinks this is a great stock time to buy it. A writer on Simply Wall Street thinks the interest coverage for this stock is a bit low at 2.63x when he prefers 3x coverage. Mike Newton on BNN Bloomberg discusses this stock. Evelyn Kraus on Altcoin Mercury says there has been an 6.9% increase in short sellers of this stock.

SmartCentres Real Estate Investment Trust is a Canadian open-ended mutual fund trust. The company principally generates revenue from property leasing operations. Smart REIT comprises two groups of properties: retail and mixed-use. Its web site is here SmartCentres REIT.

The last stock I wrote about was about was High Liner Foods (TSX-HLF, OTC-HLNFF) ... learn more. The next stock I will write about will be Just Energy Group Inc. (TSX-JE, NYSE-JE) ... learn more on Monday, September 09, 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.

Wednesday, September 4, 2019

High Liner Foods

Sound bite for Twitter and StockTwits is: Dividend Paying Consumer. The stock price is relatively cheap at present on a number of tests. The current cheap price might not make up for the risk involved in owning this company. Dividend cutting signals that the company is expecting future problems See my spreadsheet on High Liner Foods.

I do not own this stock of High Liner Foods (TSX-HLF, OTC-HLNFF). This is a stock liked by the Investment Reporter and is considered to be of average risk. The MPL Communication’s site is here. Ryan Irvine of Keystone also likes this company.

When I was updating my spreadsheet, I noticed that shareholders who bought some 30 years ago have done poorly. This is because the stock peaked in in 1986 around $70 a share. It has never come close to that since. This is why the low return over the past 30 and 33 years. It started to revive in 2009. This stock has a very checkered past with producing shareholder value. It is only the 10 year holding period with a good return. The started P/E Ratio for that is 9.09.

Dividends are paid in CDN$ currency even though this stock now reports in US$. The current dividend yield is low (below 2%) at just 1.73%. This is because it just decreased its dividend by 65.5%. Prior it this the dividend used to be in the moderate range (2% to 4% ranges). The 5, 10 and historical median dividend yields are 2.62%, 2.59% and 2.41%.

The growth rates in the table below are misleading. Generally, the growth to the end last financial year is representative of growth. However, since they just cut their dividends, the growth rate in CDN$ for 5, 10 and 15 years is a negative 13.37%, 4% and 5.85%. Dividend cutting is always negative. It signals that the company is expecting future problems.

The Dividend Payout Ratios are current fine. The DPR for EPS for 2018 was 85% with 5 year coverage at 44%. The DPR for CFPS for 2018 is 22% with 5 year coverage at 18%.

Debt Ratios are a vulnerability, but not serious at present. The Long Term Debt/Market Cap Ratio for 2018 is too high at 1.98. The stock price dropped as did a lot of Canadian stock at 2018 year end. However, the current ratio is still too high at 1.15. The Liquidity Ratio is good at 1.95. The Debt Ratio is a little low at 1.46. I like this ratio to be at 1.50 or higher. The Leverage and Debt/Equity Ratios are a little high at 3.17 and 2.17 respectively.

The Total Return per year is shown below for years of 5 to 35 to the end of 2018 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 chart below.

From Years Div. Gth Tot Ret Cap Gain Div.
2013 5 10.63% -16.80% -20.37% 3.56%
2008 10 18.22% 14.53% 8.15% 6.38%
2003 15 13.38% 6.32% 2.55% 3.76%
1998 20 4.27% 1.67% 2.60%
1993 25 6.25% 3.96% 2.29%
1988 30 -1.79% -3.15% 1.36%
1983 35 -0.50% -1.81% 1.31%


The Total Return per year is shown below for years of 5 to 14 to the end of 2018 in US$. In US$, this stock has not been traded in the US for very long. Another problem is that this stock is not traded very often in the US in US$.

From Years Div. Gth Tot Ret Cap Gain Div.
2013 5 5.38% -22.30% -25.87% 3.57%
2008 10 16.95% 12.98% 5.50% 7.48%
2004 14 12.37% 5.76% 1.06% 4.70%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 9.31, 14.66 and 20.13. The corresponding 10 year ratios are 9.91, 14.29 and 19.63. The corresponding historical ratios are 8.35, 10.65 and 13.15. The current P/E Ratio is 9.76 based on a stock price of $11.55 and 2018 EPS estimate of $1.18 CDN$ (0.89 US$). This stock price testing suggests that the stock price is relatively cheap. This is in CDN$.

I get a Graham Price of $17.09. The 10 year low, median, and high median Price/Graham Price Ratios are 0.78, 1.12 and 1.47. The current P/GP Ratio is 0.68 based on a stock price of $11.55. This stock price testing suggests that the stock price is relatively cheap. This is in CDN$.

I get a 10 year median Price/Book Value per Share Ratio of 2.03. The current P/B Ratio is 1.05 based on a stock price of $11.55, Book Value of $366M, and Book Value per Share of $10.98. The current ratio is some 48% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This is in CDN$.

I get an historical median dividend yield of 2.41%. The current dividend yield is 1.73% based on a stock price of $11.55 and dividends of $0.20. The current yield is 28% below the historical dividend yield. This stock price testing suggests that the stock price is relatively expensive. This is in CDN$.

The 10 year median Price/Sales (Revenue) Ratio is 0.40. The current P/S Ratio is 0.31 based on 2019 Revenue estimate of $1,255 CDN$ ($944M US$), Revenue per Share of $28.28 and a stock price of $11.55. The current ratio is below the 10 year median ratio by 23%. This stock price testing suggests that the stock price is relatively cheap. This is in CDN$.

Results of stock price testing is that the stock price is probably cheap, but for good reasons. Most of the tests shows that the stock is cheap. The only one to show it is expensive is the dividend yield test and this is because of the dividend cut. Of course, dividend cuts show that the company expects future problems so it maybe a stock you want to avoid.

Is it a good company at a reasonable price? It would seem that the price is cheap, but that does not necessarily point to good stock to buy. There is a lot of risk here. The company, when it was called National Sea Products Ltd almost went bankrupt in 1984. In 1986 it had a high of around $138 pre-consolidation. It had dividends but suspended them in 1990 and did a stock consolidation in 1995. So, it has had a checked past. They had just cut dividends this year. The current cheap price might not make up for the risk involved in owning this company.

When I look at analysts’ recommendations, I find only Hold (4) recommendations. The 12 month price is $9.36 CDN$ ($7.04 US$). This implies a total loss of 17.23% with a capital loss of 18.96% and dividends of 1.36%.

See what analysts are saying on Stock Chase. One analyst says that they made a horrible acquisition in southeast Asia which they have not recovered from. David Jagielski on Motley Fool about this stock and it recent dividend drop. It is true that dividend stocks can cut their dividends, but you less likely to lose money on dividend stocks compared to growth stocks. The company has a press release for the second quarter on Yahoo via the Canadian Press. There is a report on IntraFish about the company dropping less profitable lines. DFS Staff on DFS News says that the Piotroski F-Score shows company has a reasonable good balance sheet. .

High Liner Foods Incorporated is the leading North American processor and marketer of value-added frozen seafood. High Liner Foods' retail branded products are sold throughout the United States, Canada and Mexico under the High Liner, Fisher Boy, Mirabel, and Sea Cuisine labels. The Company also sells branded products to restaurants and institutions under the High Liner, Icelandic Seafood and FPI labels and is the major supplier of private label value-added seafood products to North American food retailers and foodservice distributors. Its web site is here High Liner Foods.

The last stock I wrote about was about was ATCO Ltd (TSX-ACO.X, OTC-ACLLF) ... learn more. The next stock I will write about will be SmartCentres REIT (TSX-SRU.UN, OTC-CWYUF) ... learn more on Friday, September 6, 2019 around 5 pm. Tomorrow on my other blog I will write about Something to Buy September 2019.... learn more on Thursday, September 05, 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.

Tuesday, September 3, 2019

ATCO Ltd

Sound bite for Twitter and StockTwits is: Dividend Growth Utility. The stock price would seem to reasonable. A vulnerability is the high leverage of this company. See my spreadsheet on ATCO Ltd.

I do not own this stock of ATCO Ltd (TSX-ACO.X, OTC-ACLLF). I started to look at this stock in 2009 because it was a dividend paying stock that was on everyone’s list. At that time this stock was on the Dividend Achievers list, the Dividend Aristocrats list and also was on Mike Higgs’ list. ATCO (TSX-ACO-X) owns 88% Canadian Utilities (TSX-CU, so you would not buy both these stocks.

When I was updating my spreadsheet, I noticed that estimates for Revenue and EPS was not very accurate. The Revenue estimate for 2018 was $4,348M and it came in at $4,888. The estimate for EPS for 2018 was $3.12 and this came in at $2.86. I use estimate as stock prices are based on what analysts currently think of a stock which is reflected in the estimates. It is the best guesses available.

Dividend yield is in the moderate range (2 to 4% ranges). The current dividend is higher than the others I look at. It is currently at 3.40%. The 5, 10 and historical median dividend yields are 2.71%, 2.20% and 2.13%. Dividends have grown over the years at a moderate rate (8% to 14% range). See the chart below

The Dividend Payout Ratios are good. The DPR for EPS for 2018 was 53% with 5 year coverage at 46%. The DPR for CFPS for 2018 is 9% with 5 year coverage at 7%.

Debt Ratios are a vulnerability, especially the Long Term Debt/Market Cap Ratio. The Long Term Debt/Market Cap Ratio is high in 2018 at 2.32 and still high today at 1.61. Interestedly the balance shows Property, Plant and Equipment with a higher value than the Long Term Debt. It would seem that the market does not value these assets on the balance very highly. The Property, Plant and Equipment/Long Term debt Ratio is 0.58. This means the assets are showing as valued higher than the Long Term Debt. I would see this as a vulnerability.

The Liquidity Ratio for 2018 is 1.20. If you add in cash flow after dividends, it is 1.67. The Debt Ratio is 1.47 and this is ok, but I prefer it to be at 1.50 or higher. The Leverage and Debt/Equity Ratios are a bit high at 3.14 and 2.14.

The Total Return per year is shown below for years of 5 to 25 to the end of 2018. 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 chart below.

From Years Div. Gth Tot Ret Cap Gain Div.
2013 5 14.97% -1.03% -3.72% 2.69%
2008 10 12.35% 10.50% 7.35% 3.15%
2003 15 10.88% 11.37% 8.21% 3.16%
1998 20 11.53% 9.99% 7.23% 2.76%
1993 25 13.76% 14.35% 10.67% 3.68%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 12.29, 14.12 and 16.69. The corresponding 10 year ratios are 11.30, 13.01 and 14.45. The corresponding historical ratios are 9.68, 10.75 and 12.42. The current P/E Ratio is 14.96 based on a stock price of $47.58 and 2018 EPS of $3.18. This stock price testing suggests that the stock price is relatively expensive.

For the better returns that for the last 5 years where the P/E Ratio started at 12.89, the starting P/E for years 10, 15, 20 and 25 were 8.15, 10.92, 12.92 and 7.80. When the start P/E was 12.92, the return was the lowest at 9.99% per year. This is just another way of looking at P/E Ratios.

I get a Graham Price of $48.86. The 10 year low, median, and high median Price/Graham Price Ratios are 0.78, 0.91 and 1.07. The current P/GP Ratio is 0.97 based on a stock price of $47.58. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get a 10 year median Price/Book Value per Share Ratio of 1.48. The current P/B Ratio is 1.43 based on a Book Value of $3,825M, Book Value per Share of $33.36 and a stock price of $47.58. The current ratio is 4% below the 10 year median 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 2.13%. The current dividend yield is 3.40% based on dividends of $1.62 and a stock price of $47.58. The current dividend yield is 60% above the historical one. This stock price testing suggests that the stock price is relatively cheap.

The 10 year median Price/Sales (Revenue) Ratio is 1.05. The current P/S Ratio is 1.50 based on 2018 Revenue estimate of $5,198M, Revenue per Share of $45.33 and a stock price of $47.58. The ratios are the same. This stock price testing suggests that the stock price is relatively reasonable and at the median.

Results of stock price testing is that the stock price is probably reasonable. Last year the 12 month revenue to the end of the second quarter was already $4,964 when analysts were giving an estimate of 4,348M and it came in at $4,888. This year the 12 month Revenue to the end of the second quarter is $4,712 and the estimate is $5,198. The estimate maybe more reasonable this year. The P/S Ratio testing shows that the stock is reasonable.

On a number of levels, the P/E Ratio is showing the stock price as relatively high. The dividend yield shows that the stock price is cheap, but the dividends are going up faster than the earnings. The P/B Ratio test is probably a good one and the current ratio is just 4% lower than the 10 year ratio.

Is it a good company at a reasonable price? I would worry about the high level of leverage of this company, especially when we hit the next recession. However, utility companies are usually highly leveraged. It will probably do fine. The price seems reasonable. Analysts expect earnings growth in the future, and the last dividend increase was lower at just 7.5%.

When I look at analysts’ recommendations, I find Strong Buy (2), Buy (1) and Hold (4). The consensus would be a Buy. The 12 month stock price is $49.79. This implies a total return of $8.05%with 4.64% from capital gains and 3.40% from dividends.

See what analysts are saying on Stock Chase. It is called a defensive stock. Amy Legate-Wolfe on Motley Fool thinks the price is cheap and the stock has lots of upside. A writer on Simply Wall Street says the dividends are not covered by free cash flow. A writer on Simply Wall Street says that the company is highly leveraged because debt levels exceed equity. Geoffrey Morgan on London Free Press talks about this company getting involved with carbon capture.

Atco Ltd is a Canadian holding company that offers gas, electric, and infrastructure solutions. The largest subsidiary of the company is Canadian utilities, which operates natural gas, electricity, and logistical services. Atco's primary segments include electricity (generation, transmission, and distribution), pipelines and liquid, Neltume Ports and Structures and logistics. Its web site is here ATCO Ltd.

The last stock I wrote about was about was Exchange Income Corp (TSX-EIF, OTC-EIFZF) ... learn more. The next stock I will write about will be High Liner Foods (TSX-HLF, OTC-HLNFF) ... learn more on Wednesday, September 04, 2019 around 5 pm. Today on my other blog I will write about Dividend Stocks September 2019.... learn more on Tuesday, September 3, 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, August 30, 2019

Exchange Income Corp

Sound bite for Twitter and StockTwits is: Dividend Growth Industrial. The price seems to be reasonable, but shareholders could be affected in the future by convertible debentures and deferred shares. The good total returns in the past are from dividends and dividends as a portion of the total return will decline in the future. See my spreadsheet on Exchange Income Corp.

I do not own this stock of Exchange Income Corp (TSX-EIF, OTC-EIFZF). One of my blogger reader suggested this stock as one to review. There was an interesting article about this stock in the G&M in May 2013. This article suggested that the company had a hefty yield with an acquisition tailwind. This article is available here.

When I was updating my spreadsheet, I noticed my spreadsheet has a lot of green ink and the company has done well for the shareholders. This is another stock that was an income trust in the past and changed to a corporation. They increased their outstanding shares each year except for 2018. The other thing is that outstanding shares have been increasing. They are up by 12 % per year over the past 10 years and 7.6% per year over the past 5 years.

This company did not cut dividends when it became a corporation from an income trust. They have been giving increases over the years and also working to lower their payout Ratios. Their dividend yields are still high but not as high as they were as an income trust. This is what has happened for all income trust. The current dividend yield is 5.68%, with 5, 10 and historical yields 7.02%, 7.30% and 7.43%. The growth dividends have been low. See the chart below.

The Dividend Payout Ratios are too high for EPS. The DPR for EPS for 2018 was 99% with 5 year coverage at 114%. The DPR for CFPS for 2018 was 31% with 5 year coverage at 38%. However, this used to be an income trust and these companies because of tax credits. It has been a bit of hit and miss, but they have been lowering their DPR payout ratios and should be in better shape probably in a couple of years.

Debt Ratios are basically fine. The long Term Debt/Market Cap Ratio is 0.82 in 2018 but with the second quarter of 2019 is 0.60. The Liquidity Ratio is 2.26 for 2018 with 5 year median at 1.93. The Debt Ratio is 1.46 with 5 year median at 1.52. The Leverage and Debt/Equity Ratios are a bit high at 3.17 and 2.17.

The Total Return per year is shown below for years of 5 to 15 to the end of 2018. 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 chart below.

A good portion of the total return in the past has been from dividends. However, corporations have lower yields that income trusts. So the portion the total return in the future from dividends will decline in the future.

From Years Div. Gth Tot Ret Cap Gain Div.
2013 5 5.23% 12.39% 4.57% 7.82%
2008 10 3.72% 24.96% 12.12% 12.84%
2003 15 10.44% 35.19% 14.62% 20.57%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 12.04, 15.17 and 18.54. The corresponding 10 year ratios are 13.01, 15.80 and 19.77. The corresponding historical ratios are 12.04, 15.17 and 18.25. The current ratio is 14.66 based on a stock price of $38.56 and 2019 EPS estimate of $2.63. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a Graham Price of $33.57. The 10 year low, median, and high median Price/Graham Price Ratios are 0.89, 1.15 and 1.39. The current P/GP Ratio is 1.15 based on a stock price of $38.56. This stock price testing suggests that the stock price is relatively reasonable and at the median.

I get a 10 year median Price/Book Value per Share Ratio of 1.69. The current P/B Ratio is 2.02 based on a stock price of $38.56, Book Value per Share of $19.05 and a Book Value of $596M. The current ratio is some 20% 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 7.43%. The current dividend yield is 5.68% based on dividends of $2.19 and a stock price of $38.56. The current yield is 23% below the historical yield. This stock price testing suggests that the stock price is relatively expensive.

The 10 year median Price/Sales (Revenue) Ratio is 0.91. The current P/S Ratio is 0.92 based on 2019 Revenue estimate of $1,306M, Revenue per Share of $41.71 and a stock price of $38.56. The current ratio is 1% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and at the median.

Results of stock price testing is that the stock price is probably reasonable. A good test is the P/S Ratio test that says it is at the median. It is worrisome that the P/B Ratio test says that the stock price is expensive. The problem is the growth in Convertible Debentures and Deferred Shares (for employees). These two items are taking value away from shareholders. This means that the stock price may not be as reasonable as it appears.

Is it a good company at a reasonable price? This seems like a good company that is providing some good returns to shareholders. However, the shareholders value will probably be affected in the future by Convertible Debentures and Deferred Shares. I think caution is called for. However, generally the stock price seems reasonable.

When I look at analysts’ recommendations, I find Strong Buy (4), Buy (5) and Hold (2). The consensus would be a Buy. The 12 month stock price consensus is $45.82. This implies a total return of 24.51% with 18.83% from capital gains and 5.68% from dividends.

See what analysts are saying on Stock Chase. They think it is a buy. Christopher Liew on Motley Fool talks about the great dividends from this stock. A writer on Simply Wall Street does not like this company because of the high payout ratios, but does not seem to know it used to be an income trust. There is an interesting CBC article of 2017 which talks about what a short seller thought of the company. Jennifer Dowty on the Globe and Mail talks about stock as a TSX Breakout stock that yields 6%.

Exchange Income Corp is Canadian diversified acquisition-oriented corporation focused on opportunities in two sectors, aerospace, aviation services and equipment, and manufacturing. Its web site is here Exchange Income Corp.

The last stock I wrote about was about was Alimentation Couche-Tard Inc (TSX-ATD.B, OTC-ANCUF) ... learn more. The next stock I will write about will be ATCO Ltd (TSX-ACO.X, OTC-ACLLF) ... learn more on Tuesday, September 03, 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.

Wednesday, August 28, 2019

Alimentation Couche-Tard Inc

Sound bite for Twitter and StockTwits is: Dividend Growth Consumer. See my spreadsheet on Alimentation Couche-Tard Inc.

I do not own this stock of Alimentation Couche-Tard Inc (TSX-ATD.B, OTC-ANCUF). In 2004 I bought this stock as it had a good reputation and my spreadsheet showed I should do well with it. I sold the stock in my trading account in 2007 as I was raising mortgage money and this stock had gone down so it was cheap, tax wise, to sell. In 2013, I sold the stock in my Pension account as it had the lowest dividend yield and I had to raise money in this account because of yearly withdrawals.

When I was updating my spreadsheet, I noticed that currently the stock is doing well for its shareholders. My spreadsheet has lots of green ink. This company has been reporting in US$ since 2005, but dividends are paid in CDN$. Also, it has a financial year ending April 30 each year.

Dividends are paid in CDN$ and they were started in 2006. Dividend yields are very low and they have seldom been above 1%. The current dividend 0.61%. The 5, 10 and historical dividend yields are 0.56%, 0.60% and 0.60%. Dividend growth is good, with the increases over the past 5, 10 and 12 years all 15% or over in both CDN$ and US$. See charts below. The last dividend increase was for 25% and it was done in 2019.

The Dividend Payout Ratios are very low and therefore good. The DPR for EPS for 2019 was 10% with 5 year coverage also at 10%. The DPR for CFPS for 2019 was 6% with 5 year coverage also at 6%.

Debt Ratios are fine, but the Low Liquidity Ratio is a vulnerability. The Long Term Debt/Market Cap is low and therefore good at 0.17. The Liquidity Ratio is too low at 0.77. This means that current assets cannot cover current liabilities. If you add in cash flow after dividends, it becomes 1.30. I prefer this to be 1.50 or better. The Debt Ratio is fine at 1.68. The Leverage and Debt/Equity Ratios are also fine at 2.53 and 1.50.

The Total Return per year is shown below for years of 5 to 23 to the end of 2018 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 chart below.

From Years Div. Gth Tot Ret Cap Gain Div.
2013 5 28.61% 21.35% 20.59% 0.76%
2008 10 24.72% 31.27% 30.30% 0.97%
2003 15 22.65% 21.37% 20.80% 0.57%
1998 20 25.32% 24.79% 0.54%
1995 23 28.38% 27.82% 0.56%


The Total Return per year is shown below for years of 5 to 25 to the end of April 2019 US$. I only have US$ stock price for the end of April each year.

From Years Div. Gth Tot Ret Cap Gain Div.
2013 5 23.27% 16.42% 15.81% 1.14%
2008 10 23.02% 34.28% 33.14% 0.61%
2003 15 20.53% 23.03% 22.39% 0.64%
1998 20 26.80% 26.20% 0.60%
1995 23 33.28% 32.57% 0.71%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 15.93, 20.44 and 23.86. the corresponding 10 year ratios are 12.26, 15.89 and 18.94. The corresponding historical ratios are 12.79, 16.79 and 20.45. The current P/E Ratio 18.34 based on a current $81.78 and 2020 EPS estimate of $4.46 ($3.35 US$). This stock price testing suggests that the stock price is relatively reasonable but above the median. This is in CDN$.

I get a Graham Price of $46.52. The 10 year low, median, and high median Price/Graham Price Ratios are 1.14, 1.48 and 1.76. The current P/GP Ratio is 1.76 based on a stock price of $81.78. This stock price testing suggests that the stock price is relatively reasonable but above the median. This is in CDN$.

I get a 10 year median Price/Book Value per Share Ratio of 3.18. The current P/B Ratio is 3.79 based on a stock price of $81.78, Book Value of $12,173M and a Book Value per Share of $21.57. The current ratio is 19% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. This is in CDN$.

I get an historical median dividend yield of 0.60%. The current dividend yield is 0.61% based on a stock price of $81.78 and dividends of $0.50. The current yield is 1.9% above the historical yield. This stock price testing suggests that the stock price is relatively reasonable but above the median. This is in CDN$.

The 10 year median Price/Sales (Revenue) Ratio is 0.40. The current P/S Ratio is 0.57 based on 2020 Revenue estimate of $81,022M ($60,873M), Revenue per Share of $143.55 and a stock price of $81.78. The current ratio is 41% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This is in CDN$.

Results of stock price testing is that the stock price is reasonable to expensive. You cannot ignore the P/S Ratio testing which says the stock is expensive. Also, for this stock the dividend yield test is a good one and the current yield is basically at the historical median. The other tests show the stock price as reasonable, but above the median.

Is it a good company at a reasonable price? I think this is a good dividend growth company. However, I generally do not buy companies when their dividend yield is under1%. It takes too long to get a decent return on your original purchase price. The yield has been 1% in the past but only around a recession. However, if you are not investing for dividend income, you might consider this stock when the yield is lower than 1%.

When I look at analysts’ recommendations, I find Strong Buy (3), Buy (6), and Hold (2). The consensus would be a Buy. The 12 month stock price is $90.96 CDN$ ($68.34 US$). This implies a total return of 11.84% with 11.23% from capital gains and 0.61% from dividends.

See what analysts are saying on Stock Chase. The analysts like this stock and think it is a long term buy. Kay Ng on Motley Fool thinks this is a great and stable consumer stock. A writer on Simply Wall Street thinks this stock is undervalued and its intrinsic value is $99.54 US$ or $134.05 CDN$. Greg Lindenberg on CSP Daily News talks about the company’s investment in Fire & Flower Holdings Corp which is a cannabis retailer. Breaking News on Global News Alerts says this company is giving off sell signals..

Alimentation Couche-Tard Inc. or simply Couche-Tard is one of the largest company-owned convenience store operators in the world with more than 12,000 stores across Canada, the United States, Europe, Mexico, Japan, China, and Indonesia. Its web site is here Alimentation Couche-Tard Inc.

The last stock I wrote about was about was Chemtrade Logistics Income Fund (TSX-CHE.UN, OTC-CGIFF) ... learn more. The next stock I will write about will be Exchange Income Corp (TSX-EIF, OTC-EIFZF) ... learn more on Friday, August 30, 2019 around 5 pm. Tomorrow on my other blog I will write about Purpose of a Corporation.... learn more on Thursday, August 29, 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.

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