Wednesday, February 27, 2019

Home Capital Group

Sound bite for Twitter and StockTwits is: Specialty Bank Stock. The stock price seems currently to be relatively cheap. There is insider buying and analysts expect the dividends to be resumed this year. See my spreadsheet on Home Capital Group.

I own this stock of Home Capital Group (TSX-HCG, OTC-HMCBF). I started reviewing this company in September 2009. It is a dividend growth company and was coming up on lists of good dividends paying stocks. It is on some dividend paying companies lists that I look at.

When I was updating my spreadsheet, I noticed that there is lots of insider buying this year as there was last year. This year NIB is at 0.14% with last year at 0.15%. Normal would be around 0.01% or 0.02%. The company is also buying back shares. Last year they bought back almost 23% of the outstanding shares. I do not generally agree with buybacks, but at least they are buying back shares at a low price.

After they got into trouble in 2017, they cancelled their dividends. Analysts do expect that dividends will be reinstated. Some thought it would be in 2018 but since that did not happen, they are giving 2019 as the year for dividend reinstatements.

Prior to 2017 they could afford their dividends. The Dividend Payout Ratio for 2016 for EPS was 26% with 5 year coverage at 19%. The DPR for 2016 for CFPS was 23% with 5 year coverage at 14%.

Debt Ratios are fine on this stock. As with other financials, you do not look at Long Term debt/Market Cap Ratios for at Deposit/Asset Ratios. You want to make sure that they can cover their deposits with assets. For this stock the Deposit/Asset Ratio is 0.74. This is good. I do Liquidity Ratio which is 2.62 and good. However, analysts do ignore this ratio for banks and some other financials. The Debt Ratio is 1.10. For this sort of company, you want this ratio at 1.04 or higher.

The Total Return per year is shown below for years of 5 to 23 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 charts below.

It would seem that long term investors have not done badly. It is just recent investors, like me, that have done poorly.

From Years Div. Gth Tot Ret Cap Gain Div.
2013 5 0.00% -16.79% -18.67% 1.87%
2008 10 0.00% 7.92% 3.82% 4.10%
2003 15 0.00% 6.86% 3.73% 3.13%
1998 20 0.00% 20.36% 15.11% 5.25%
1995 23 39.95% 27.92% 12.03%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 7.61, 9.38 and 11.89. The corresponding 10 year ratios are 7.15, 9.15 and 11.02. The corresponding historical ratios are 7.50, 9.11 and 11.72. The current P/E Ratio is 8.09 based on a stock price of $17.15 and 2019 EPS estimate of $2.12. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a Graham Price of $35.51. The 10 year low, median, and high median Price/Graham Price Ratios are 0.66, 0.86 and 1.07. The current P/GP Ratio is 0.48 based on a stock price of $17.15. 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 1.77. The current P/B Ratio is 0.65 based on Book Value of $1,641M, Book Value per Share of $26.45 and a stock price of $17.15. The current ratio is 63% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

I cannot do an historical median dividend yield test as dividends have been suspended.

The 10 year median Price/Sales (Revenue) Ratio is 5.31. The current P/S Ratio is 2.76 based on 2019 Revenue estimate of $386M, Revenue per Share of $6.22 and a stock price of $17.15. The current P/S Ratio is 48% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

Results of stock price testing is saying that the stock is relatively cheap. The P/E Ratio test does not say this, but that is my least favourite test.

When I look at analysts’ recommendations, I find Hold Recommendations (7) only. The consensus recommendations would therefore be a Hold. The 12 month stock price consensus is $18.86. This implies a total return of 9.97% all from capital gain and based on a current stock price of $17.15.

See what analysts are saying on Stock Chase. They think the company has challenges. Karen Thomas on Motley Fool thinks this stock is too risky to buy. Jacob Boyd on Simply Wall Street notes that analysts expect a big increase in earnings. Lisa Matthews on Fairfield Current talks about CIBC raising their target price on this stock. .

Home Capital Group Inc is a specialty finance company that offers residential and commercial mortgage lending, securitization of insured mortgage products, consumer lending, and credit card services. The company also offers deposits via brokers and financial planners, and through its direct-to-consumer deposit brand, Oaken Financial. Home Capital's mortgage lending focuses on homeowners who typically do not meet all the lending criteria of traditional financial institutions. Its web site is here Home Capital Group.

The last stock I wrote about was about was Emera Inc. (TSX-EMA, OTC-EMRA) ... learn more. The next stock I will write about will be Bombardier Inc. (TSX-BBD.B, OTC-BDRBF) ... learn more on Friday, March 1, 2019 around 5 pm. Tomorrow on my other blog I will write about Banks and Other Things.... learn more on Thursday, February 28, 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, February 25, 2019

Emera Inc

Sound bite for Twitter and StockTwits is: Dividend Growth Utility. The stock price is cheap to reasonable. It would seem that this utility stock will grow at a lower rate than it has over the past 5 and 10 years. Debt ratios are not good, but they are set to sell off assets. See my spreadsheet on Emera Inc.

I own this stock of Emera Inc. (TSX-EMA, OTC-EMRA). I found this company in Mike Higg’s site. Mike’s site had a spreadsheet showing Dividend Paying Canadian Growth stocks. In 2005, I wanted to buy something for my Locked-In RRSP. I think that this was an appropriate stock and has good value. I was using up excess cash in my account.

When I was updating my spreadsheet, I noticed the debt ratios were not nice. There are none that I like. Their Long Term Debt/Market Cap ratios are over 1.00 with the one for 2018 at 1.40. The Liquidity Ratio for 2018 is 0.62. This means that the current asses cannot cover current liabilities. It is only adding back in the current portion of the long term debt and cash value after dividends that it just gets over 1.00 at 1.01. This is a big vulnerability. What if in a recession they cannot roll over their current portion of the long term debt?

The Debt Ratio is low at just 1.35. The 5 year median is 1.40. I like this at 1.50 at least. Leverage and Debt/Equity Ratios are 4.44 and 3.29 respectively and these are too high. The debt ratios have basically not been good since 2015.

Dividends are currently good with current moderate growth. The current dividend yield is 5.06% with growth over the last 5 years are 10.07% per year. The yield used to be in the moderate range with 5, 10 and historical yield at 4.35%, 4.26% and 4.82%. The last 10 year’s growth in dividend was good at 8.99% per year, but the years prior, growth was less than 8% per year. See the chart below. The last dividend increase occurred in 2018 and it was for 4%.

The Dividend Payout Ratio for 2018 is 75% with 5 year coverage at 86%. The DPR for CFPS is 42% with 5 year coverage at 38%. These are a little high, but not by much. The last two years of 2016 and 2018 the DPR for EPS was above 100%. The TD Bank looks also a DPR for AFFO which has a 2018 payout of 51% with 5 year coverage at 59%.

I covered the debt ratios above and I was not pleased with them. However, Emera is selling some assets and so this will probably help this situation. See a Business Wire item on the Financial post.

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 charts below.

From Years Div. Gth Tot Ret Cap Gain Div.
2013 5 10.07% 12.75% 7.41% 5.34%
2008 10 8.99% 12.08% 7.01% 5.07%
2003 15 6.72% 10.87% 6.16% 4.71%
1998 20 5.25% 8.70% 4.51% 4.19%
1993 25 4.55% 9.72% 4.97% 4.75%
1992 26 10.87% 5.54% 5.32%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 14.34, 15.88 and 17.42. The corresponding 10 year ratios are 14.31, 16.32 and 18.75. The corresponding historical ratios are 13.06, 15.5 and 16.96. The current P/E Ratio is 16.31 based on a stock price of $46.47 and 2019 EPS estimate of $2.85. This stock price testing suggests that the stock price is relatively reasonable and around the median.

I get a Graham Price of $44.66. The 10 year low, median, and high median Price/Graham Price Ratios are 1.11, 1.28 and 1.44. The current P/GP Ratio is 1.04 based on a stock price of $46.47. 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 1.84. The current P/B Ratio is 1.49 based on a Book Value of $7.283, Book Value per Share of $31.11 and a stock price of $46.47. The current ratio is 19% below the 10 year ratios. This stock price testing suggests that the stock price is relatively reasonable but below the median.

I get an historical median dividend yield of 4.82%. The current dividend yield is 5.06% based on dividends of $2.35 and a stock price of $46.47. The current yield is 5% above the historical median yield. This stock price testing suggests that the stock price is relatively reasonable but below the median.

The 10 year median Price/Sales (Revenue) Ratio is 1.90. The current P/S Ratio is 1.62 based on 2019 Revenue estimate of $6,710M, Revenue per Share of $28.66 and a stock price of $46.47. The current ratio is 15% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but below the median.

Results of stock price testing is showing up as suggesting that the stock price is relatively reasonable but below the median. The Graham Price testing says the stock price is relatively cheap. For the P/B Ratio testing, if the difference in ratios was 20%, not 19%, the stock would be considered cheap.

When I look at analysts’ recommendations, I find Strong Buy (2), Buy (5), Hold (7) and Underperform (10. The consensus would be a Buy. The 12 month stock price is $48.57. This implies a total return of 9.58% with 4.52% from capital gains and 5.06% from dividends based on a current price of 46.47.

See what analysts are saying at Stock Chase. An analyst has said they plan to cut dividend growth probably to 3 to 4% per year. Most analysts like the company. Andrew Button on Motley Fool thinks this stock is a wise investment. Kyle Sanford on Simply Wall Street thinks that this is a top dividend stock. Adrian McCoy on What’s on Thorold says some analysts are positive about this stock.

Emera is geographically diverse energy and services company investing in electricity generation, transmission, and distribution as well as gas transmission and utility energy services. Emera has operations throughout North America and in four Caribbean countries. Its web site is here Emera Inc .

The last stock I wrote about was about was Atrium Mortgage Investment Corp (TSX-AI, OTC-AMIVF) ... learn more. The next stock I will write about will be Home Capital Group (TSX-HCG, OTC-HMCBF) ... learn more on Wednesday, February 27, 2019 around 5 pm. Tomorrow on my other blog I will write about Four Advisor Stocks.... learn more on Tuesday, February 26, 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, February 22, 2019

Atrium Mortgage Investment Corp

Sound bite for Twitter and StockTwits is: Dividend Growth Financial. A little on the pricey side but not overly so. Dividends are taxed as interest so suitable for TFSA RRSP or RRIF accounts. See my spreadsheet on Atrium Mortgage Investment Corp.

I own this stock of Atrium Mortgage Investment Corp (TSX-AI, OTC-AMIVF). I saw this on company on the Canadian Dividend All-Star List. It has just recently started to pay dividends. It has only been around since 2012 and has good dividends. It has just recently started to pay dividends and dividends are good but are taxed as interest. So, this stock should go into a TFSA, RRSP or RRIF account.

When I was updating my spreadsheet, I noticed that shares are increasing rapidly with outstanding shares up by 11.5% and 21.9% per year over the past 5 and 8 years. It is therefore the per share values that count. For example Revenue is up by 19.7% and 27.3% per year over the past 5 and 8 years, but Revenue per Share is only up by 7.3% and 6.5% per year over the past 5 and 10 years

The yield is good but growth is low. The current yield is 6.83%, with 5 and 8 year median yields at 7.22% and 7.16%. The dividend growth is low with 5 year growth at 4.1% per year. They just started paying dividends in 2013. However, they have paid special dividends each year since. The special dividends are not high, but sort of equivalent to one monthly dividend payment.

They are paying out 99% of the EPS if you include the special dividends paid. For 2019 they have not raised their dividends, but it is expected that they will still pay a special dividend in 2019. However, if you look at dividends paid in cash compared to net income, the percentage of payout is 86.7% with 5 year coverage at 88.3%.

The Debt Ratios are good. The Long Term Debt/Market Cap Ratio is 0.32. The Liquidity Ratio is really high at 108.41 for 2018 as they have few current liabilities, but this ratio tends to be ignored for Financials such as this company. The Debt Ratio is good at 2.24. The Leverage and Debt/Equity Ratios are also good at 1.81 and 0.81.

The Total Return per year is shown below for years of 5 to 9 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 charts below.

From Years Div. Gth Tot Ret Cap Gain Div.
2013 5 4.14% 11.11% 3.04% 8.07%
2009 8 7.52% 2.70% 4.82%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 11.95, 12.71 and 13.43. The 8 year corresponding Ratios are 11.78, 12.71and 13.43. The current P/E Ratio is 13.44 based on a stock price of $13.17 and 2019 EPS estimate of $0.98. This stock price testing suggests that the stock price is relatively expensive, but it is just in the expensive range.

I get a Graham Price of $15.28. The 8 year low, median, and high median Price/Graham Price Ratios are 0.73, 0.80 and 0.85. The current P/GP Ratio is 0.86 based on a stock price of $13.17. This stock price testing suggests that the stock price is relatively expensive, but it is just in the expensive range.

I get an 8 year median Price/Book Value per Share Ratio of 1.11. The current P/B Ratio is 1.24 based on Book Value of $387M, Book Value per Share of $10.59 and a stock price of $13.17. The current ratio is 11.9% above the 8 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 7.16%. The current dividend yield is 6.83% based on dividends of $0.90 and a stock price of $13.17. The current yield is 4.6% below the historical yield. This stock price testing suggests that the stock price is relatively reasonable, but above the median.

The 8 year median Price/Sales (Revenue) Ratio is 7.89. The current ratio is 7.40 based on 2019 Revenue estimate of $65.1M, Revenue per share of $1.78 and a stock price of $13.17. The current ratio is some 6.2% below the 8 year median ratio. This stock price testing suggests that the stock price is relatively reasonable, and below the median.

Results of stock price testing is mostly that it is above the median and some just into the expensive range. The one analyst following this stock gives a recommendation of Hold. It may be a bit pricey at this time.

When I look at analysts’ recommendations, I find one analyst following this stock and that analyst gives a Hold recommendation. The 12 month stock price given is $13.00. This implies a total return of 5.54% with a capital loss of 1.29% and dividend gains of 6.83%. This is based on a current stock price of $13.17.

This stock is not on Stock Chase. Brian Paradza of Motley Fool thinks this is a great stock as long as the real estate market remains stable and growing. Kevin Zeng on Simply Wall Street says the payout ratio is too high. However, no all companies are the same when looking at Dividend Payout Ratios. Edwin Gilmore on Bharatapress says Fundamental Research reaffirmed a “hold” rating on this stock. There is a press release on Market Watch about this company closing a recent public offering.

Atrium Mortgage Investment Corp is a non-banking finance company providing residential and commercial mortgages that lends funds in major urban centres in Canada where the stability and liquidity of real estate are high. Its web site is here Atrium Mortgage Investment Corp.

The last stock I wrote about was about was Choice Properties REIT (TSX-CHP.UN, OTC-PPRQF) ... learn more. The next stock I will write about will be Emera Inc. (TSX-EMA, OTC-EMRA) ... learn more on Monday, February 25, 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, February 20, 2019

Choice Properties REIT

Sound bite for Twitter and StockTwits is: Dividend Growth REIT. Price seems currently reasonable. The Weston family certainly see this as a good long term investment. See my spreadsheet on Choice Properties REIT.

I own this stock of Choice Properties REIT (TSX-CHP.UN, OTC-PPRQF). I got this stock when CDN REIT was acquired by Choice Properties. Choice was originally a spin off from Loblaws. The Weston Family via George Weston Ltd now owns a big piece of it.

When I was updating my spreadsheet, I noticed this stock is relatively new with only 5 years of data as it was spun off form Loblaws in 2013. They stock has done fairly well so far in a short period.

REITs tend to have good yields and low growth. This REIT is not any different. The current yield is good at 5.52% with 5 year median at 5.79% and from inception at 5.57%. They have not done increases every year. They did increases in 2016 and 2017. There was no increase in 2018. The 5 year growth is low at 2.63% per year.

For REITs you look at Dividend Payout Ratios using Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO). The DPR for FFO for 2018 was 72% with 5 year coverage at 69%. The DPR for AFFO for 2018 was 89% with 5 year coverage at 86%. I think that these are fine.

The only Debt Ratio that I really like to the Long Term Debt/Market Cap Ratio at 0.72. The Liquidity Ratio is really low at 0.22 where current assets cannot coverage current liabilities. However, if you add back in current portion of the long term debt and cash flow after distributions, you get a ratio of 1.80. So, the implication is that to pay current liabilities the company is depending on rolling over debt and cash flows. The Debt Ratio is low at 1.29 where I would prefer it at 1.50.

The Total Return per year is shown below for years of 5 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 charts below. The total return over the past 5 years is satisfactory.

From Years Div. Gth Tot Ret Cap Gain Div.
2013 5 2.63% 8.14% 1.83% 6.31%


The 5 year low, median, and high median Price/AFFO per Share Ratios are 13.79, 14.89 and 16.23. The current P/AFFO Ratio is 15.76 based on a stock price of $13.40 and AFFO estimate for 2019 of $0.85. This stock price testing suggests that the stock price is relatively reasonable but above the median.

The 5 year low, median, and high median Price/FFO per Share Ratios are 11.23, 11.92 and 12.99. The current P/FFO Ratio is 12.97 based on a stock price of $13.40 and FFO estimate for 2019 of $1.00. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get a Graham Price of $16.80. The 10 year low, median, and high median Price/Graham Price Ratios are 0.79, 0.84 and 0.89. The current P/GP Ratio is 0.80 based on a stock price of $13.40. This stock price testing suggests that the stock price is reasonable and below the median.

I get a 5 year median Price/Book Value per Share Ratio of 1.12. The current P/B Ratio is 1.07 based on a Book Value of 3,491M, Book Value per Share of $12.53 and a stock price of $13.40. The current P/B Ratio is 4.9% below the 5 year ratio. This stock price testing suggests that the stock price is reasonable and below the median.

I get an historical median dividend yield of 5.57%. The current dividend yield is 5.52% based on dividends of $0.74 and a stock price of $13.40. The current yield is 0.85% below the historical median. This stock price testing suggests that the stock price is reasonable but above the median.

The 5 year median Price/Sales (Revenue) Ratio is 6.77. The current P/S Ratio is 6.63 based on Revenue estimate for 2019 of $1,350, Revenue per Share of $2.02 and a stock price of $13.40. The current ratio is some 2.1% below the 5 year ratio. This stock price testing suggests that the stock price is reasonable and below the median.

Results of stock price testing is that all the tests show the price at reasonable, but some above and some below the median.

When I look at analysts’ recommendations, I find Strong Buy (1) and Hold (8). The consensus would be a Hold. The 12 month stock price is $13.53. This implies a total return of 6.49% with 0.97% from capital gains and 5.52% from dividends.

See what analysts are saying about this stock on Stock Chase. It is considered to be a defensive stock. Vishesh Raisinghani on Motley Fool says it has a great yield but is too concentrated in retail. Bruce Howe on Simply Wall Street talks about using FFO in various calculations for this REIT. A Herdon Staff Writer on Herdon Gazette says the Williams Percent Range is -11.70 which is in overbought territory.

Choice Properties Real Estate Investment Trust invests in, manages, and develops retail and commercial properties across Canada. The company's portfolio primarily consists of shopping centres anchored by supermarkets, and stand-alone supermarkets. The properties are mostly located in Ontario and Quebec, followed by Alberta, Nova Scotia, British Columbia, and New Brunswick. Its web site is here Choice Properties REIT.

The last stock I wrote about was about was Manulife Financial Corp. (TSX-MFC, NYSE-MFC) ... learn more. The next stock I will write about will be Atrium Mortgage Investment Corp (TSX-AI, OTC-AMIVF) ... learn more on Friday, February 22, 2019 around 5 pm. Tomorrow on my other blog I will write about Investing Now… learn more on Thursday, February 21, 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, February 19, 2019

Manulife Financial Corp

Sound bite for Twitter and StockTwits is: Dividend Growth Financial. Price is Price is probably cheap to reasonable. Life Insurance companies should do better in a rising rate environment. They did poorly in the very low interest rate environment and will do better as rates normalize whenever that should be. See my spreadsheet on Manulife Financial Corp.

I own this stock of Manulife Financial Corp (TSX-MFC, NYSE-MFC). In May 2005, I was look for good companies to buy at a reasonable price. This stock met my criteria.

When I was updating my spreadsheet, I noticed the 5 and 10 year EPS growth does not tell the whole story about EPS growth. EPS growth looks to be over the past 5 and 10 years at 7.54% and 21.96%. However, looking at the 5 year running average we get growth of 19.78% over the past 5 years and negative growth over the past 10 years are 2.20%.

The 5 Year Running Average for 5 years looks at average growth for 5 years to 2013 compared to the average growth for the 5 years to 2018. After 2008 EPS was really low until 2013 when they had a good year. The 5 year running average for 5 years captures this fact.

The 5 Year Running Average for 10 years looks at the average growth for the 5 years to 2008 and compares that the average growth for the 5 years to 2018. The 10 year growth looks really good because exactly 10 years ago was a really bad year. However, prior to 2008 EPS was much better than after 2008. The 5 Year Running Average for 10 years captures this.

This insurance company was, as were all insurance companies, hit hard by the 2008 bear market and recession. An very low interest rate environment is bad for Life Insurance companies. In 2009 they cut their dividend by 50%. Things have been improving as they started to increase the dividends again in 2014. This year they will be back to the old dividend level of 2008. In 2008 was their highest level of dividend payments.

The current dividend yield is moderate as it is at 4.80%. The yield was in the low to moderate range until the 2008 problems. Of course, the stock price dropped because of 2008 and the yield moved up. The 5, 10 and historical median dividend yields are 3.48%, 3.51%and 2.84% respectively.

They can afford their dividends. The Dividend Payout Ratio for EPS for 2018 is 39% with 5 year coverage at 49%. The DPR for CFPS for 2018 is 9% with 5 year coverage at 10%.

Since this is an life insurance company, you want assets to cover the contract liabilities. The coverage could be better as it was in 2018 at 0.99. You also want to look at contract liabilities compared to total debt and this ratio is fine at 0.50. I find the Liquidity Ratio low at 1.18, but mostly the Liquidity Ratio is ignored for this sort of financial. The Debt Ratio is fine at 1.07 as you would want this to be at 1.04 or higher.

The Total Return per year is shown below for years of 5 to 19 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 charts below.

The total return has been quite low for long term investors. I am a long term investor and my return has been low. However, I do expect this to improve in the future. I did not expect that it should take so long for interest rates to recover, but the thing is that these situations last longer than you ever image they will.

From Years Div. Gth Tot Ret Cap Gain Div.
2013 5 11.84% 2.11% -1.54% 3.65%
2008 10 -0.94% 2.52% -0.71% 3.23%
2003 15 5.55% 2.84% -0.51% 3.35%
1999 19 8.30% 8.38% 3.98% 4.40%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 10.82, 13.78 and 17.74. The 10 year corresponding ratios are 11.02, 13.76 and 16.80. The historical ratios are 11.37, 14.14 and 16.31. The current P/E Ratio is 7.95 based on a stock price of $20.82 and 2019 EPS estimate of $2.62. This stock price testing suggests that the stock price is relatively cheap.

I get a Graham Price of $35.50. The 10 year low, median, and high Price/Graham Price Ratios are 0.68, 0.91 and 1.06. The current P/GP Ratio is 0.55 based on a stock price of 20.82. 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 1.14. The current P/B Ratio is 0.97 based on Book Value of $41,142M, Book Value per Share of $21.38 and a stock price of $20.82. The current Ratio is 15% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

I get an historical median dividend yield of 2.84%. The current yield is 4.80% based on dividends of $1.00 and a stock price of $20.82. The current yield is some 69% 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 0.77. The current P/S Ratio is 0.83 based on 2019 Revenue estimate of $49,199M, Revenue per Share of 24.96 and a stock price of $20.82. The current ratio is 8% 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 mostly that the stock price is relatively cheap. However, you cannot ignore the P/S Ratio testing. It is revenue that pushes the ultimate earnings and cash flow. However, since this is a Life Insurance company Assets under Management also is the pusher of earnings and cash flow for the future. Revenue is not grown well, but AUM is. Price is probably cheap to reasonable.

When I look at analysts’ recommendations, I find Strong Buy (3), Buy (10) and Hold (2). The consensus would be a Buy. The 12 month stock price consensus would be $28.08. This would imply a total return of $39.67% with 4.80% from dividends and 34.87% from capital gains.

See what analysts are saying about this company on Stock Chase. They have mixed feelings. Christopher Liew of Motley Fool likes this stock. Liz Campbell on Simply Wall Street talks about the company’s P/E Ratio. The Canadian Press via CTV News says the company posted record earnings.. Christopher Katsarov on the Globe and Mail discusses an judgement the company is involved with.

Manulife is the largest of the three major Canadian life insurers by market capitalization, ahead of Sun Life and Great-West Life. It provides financial protection and wealth management products and services to individual and group customers in Canada, the United States, and Asia. Its web site is here Manulife Financial Corp.

The last stock I wrote about was about was IGM Financial (TSX-IGM, OTC-IGIFF) ... learn more. The next stock I will write about will be Choice Properties REIT (TSX-CHP.UN, OTC-PPRQF) ... learn more on Wednesday, February 20, 2019 around 5 pm. Today on my other blog I will write about My Budgeting… learn more on Tuesday, February 19, 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, February 15, 2019

IGM Financial Inc

Sound bite for Twitter and StockTwits is: Dividend Paying Financial. The stock is cheap but no one seems to expect any change to the better in the near future. It has not increased its dividend since 2015 and there is no sign of a future increase, so I do not think I can still call it a dividend growth stock anymore. On the other hand, no one is suggesting that they will be cutting the dividend either. See my spreadsheet on IGM Financial Inc.

I do not own this stock of IGM Financial (TSX-IGM, OTC-IGIFF). I originally bought this stock to replace AGF Management (TSX-AGF.B). IGM was known as a dividend growth stock and it was on a lot of lists of good stocks, including Mike Higgs' and Dividend Aristocrats. I sold this 2011 because I had Power Financial, of which this company is partially owned by and I wanted to rationalize my portfolio. So, I sold this stock and bought more of Power Financial. I purposely sold at a low point to reduce taxes and did a buy at a low price also.

When I was updating my spreadsheet, I noticed the performance of this stock has been low to moderate for quite some time. For example, Revenue is up by 3.85% and 1.85% per year over the past 5 and 10 years. Revenue per share is up by 4.82% and 2.72% per year over the past 5 and 10 years. The difference between these growth rates is due to buybacks.

This stock used to be a dividend growth stock. It has had a hard time since the 2008 bear market with low to non-existent dividend growth. There has been no dividend increases since 2015 and analysts do not see any in the near future either

The current dividend yield is good but the yields used to be in the moderate range. The current dividend yield is 6.59% with 5, 10 and historical median yields at 5.58%, 5.20% and 3.43%.

They can still afford their dividends, but payout is on the high side. The Dividend Payout Ratio for 2018 for EPS was 71% with 5 year coverage at 75%. It would probably need to be in the 50% range before the company raises dividends again. The DPR for CFPS for 2018 was a high at 59% with 5 year coverage at 48%. I would prefer to see this at 40% or less.

The debt ratios are fine, but I would like to see some ratios at better points. The long Term Debt/Market Cap Ratio is good at 0.25. The Liquidity Ratio is good also at 1.92 for 2018 with 5 year median also at 1.92. The Debt Ratio is low at 1.42 with 5 year ratio at 1.44. I prefer this at 1.50. The Leverage and Debt/Equity Ratios for 2018 are a bit high at 3.39 and 2.39 with 5 year medians at 2.86 and 1.86. I prefer these to be below 3.00 and 2.00 respectively.

The Total Return per year is shown below for years of 5 to 28 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 charts below.

All stocks were down a lot by the end of December of 2018. However, it would appear that it has not made much for shareholders for a while.

From Years Div. Gth Tot Ret Cap Gain Div.
2013 5 0.91% -6.12% -11.17% 5.05%
2008 10 1.18% 5.09% -1.32% 6.41%
2003 15 5.63% 6.05% -0.02% 6.06%
1998 20 9.30% 6.00% 0.81% 5.19%
1993 25 12.08% 9.68% 4.09% 5.59%
1990 28 11.76% 16.40% 8.46% 7.94%


So far, the stock is up 10% this year and this helps the total return for the last 5 years, but still total returns are really low for the past 15 years.

From Years Div. Gth Tot Ret Cap Gain Div.
2013 5 0.91% 2.12% -3.74% 5.86%
2008 10 1.18% 3.47% -2.14% 5.62%
2003 15 5.63% 5.10% -0.47% 5.57%
1998 20 9.30% 8.57% 2.56% 6.01%
1993 25 12.08% 12.28% 5.63% 6.65%
1990 29 11.76% 16.41% 8.52% 7.89%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 10.74, 12.96 and 15.17. The corresponding 10 year ratios are 12.13, 14.52 and 16.18. The corresponding historical ratios are 13.63, 17.42 and 18.20. The current P/E Ratio is 10.98 based on a stock price of $34.15 and 2019 EPS estimate of $3.11. This stock price testing suggests the stock price is relatively cheap.

I get a Graham Price of $35.96. The 10 year low, median, and high median Price/Graham Price Ratios are 1.11, 1.26 and 1.40. The current P/GP Ratio is 0.95 based on a stock price of $34.15. This stock price testing suggests the stock price is relatively cheap.

I get a 10 year median Price/Book Value per Share Ratio of 2.31. The current P/B Ratio is 1.85 based on Book Value of $4,452M, Book Value per Share of $18.48 and a stock price of $34.15. The current ratio is 20% below the 10 year median ratio. This stock price testing suggests the stock price is relatively cheap.

I get an historical median dividend yield of 3.43%. The current dividend yield is 6.59% based on dividends of $2.25 and a stock price of $34.15. The current yield is 92% above the median historical yield. This stock price testing suggests the stock price is relatively cheap.

The 10 year median Price/Sales (Revenue) Ratio is 4.02. The current P/S Ratio is 2.58 based on 2019 Revenue estimate of $3,185M and Revenue per Share of $13.22 and a stock price of $34.15. The current ratio is some 36% below the 10 year median ratio. This stock price testing suggests the stock price is relatively cheap.

Results of stock price testing is that all the tests are showing that the stock price testing suggests the stock price is relatively cheap.

When I look at analysts’ recommendations, I find Buy (4), Hold (3) and Underperform (1). The consensus would be a Hold. The 12 month stock price consensus is $36.75. This implies a total return of 14.20% with 7.61% from capital gains and 6.59% from dividends.

See what analysts are saying on Stock Chase. A few analysts site their high fees but most think it will do fine. Victoria Hetherington on Motley Fool thinks this might be a stock for your TFSA. Renee Allred on Simply Wall Street seems to miss the fact that this company is largely owned by Power Financial. IGM talks about their fourth quarterly results on Newswire Canada. Mary Kom on Fairfield Current talks about some analyst’s recommendations on this stock.

IGM Financial is the largest non-bank-affiliated asset manager in Canada. The firm is part of the Power Financial group of companies, which includes Great West Life, London Life, Canada Life, and Putnam Investments. IGM has two main operating divisions--Investors Group and Mackenzie Financial--that provide investment management products and services. Its web site is here IGM Financial Inc.

The last stock I wrote about was about was ARC Resources Ltd. (TSX-ARX, OTC-AETUF) ... learn more. The next stock I will write about will be Manulife Financial Corp. (TSX-MFC, NYSE-MFC) ... learn more on Tuesday, February 19, 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, February 13, 2019

ARC Resources Ltd

Sound bite for Twitter and StockTwits is: Dividend Paying Energy stock. The stock price is relatively cheap. The positives are cheap stock and insider buying, the negative is declining Revenue and Earnings. They cannot raise the dividends until the earnings are higher than the dividends. See my spreadsheet on ARC Resources Ltd.

I do not own this stock of ARC Resources Ltd. (TSX-ARX, OTC-AETUF). When TFSA first came out, this stock was recommended for this account as it was an income trust at that point and most of the distributions were taxable. This stock is no longer an income trust and the distributions are now dividends and taxed as normal Canadian dividends.

When I was updating my spreadsheet, I noticed there is relatively a lot of insider buying with NIB at 0.16% where you might expect it around 0.01% to 0.02%. There has been NIB since I started to track this stock in 2014. However, there is lots of red on my spreadsheet as Revenue, Earnings and Cash Flow have been declining.

This company used to be an income trust and therefore had very high yields in the past. They went over 20% at one point. This historical median yield is 9.50%, but since 2011 when the change to a corporation occurred, the median yield is much lower at 4.70%. The 5 and 10 year median yields are 4.06% and 5.01%. The current one is 6.20.%.

Most of the old income trust companies decreased their dividends when they became corporation. That is because I high rate of dividend payments, higher than the earnings, can be paid out under income trust. When the company became a corporation, they had to get their payout ratios in line with earnings. Often companies had time to do this because they had tax pools left to lower the taxes for a while after becoming corporations.

This company reduced their dividends by 50% in the 2008, 2009 time frame and then another 50% in 2016. When you look at dividend growth over the 22 years of this company, it is all negative as shown in the chart below.

They cannot afford their dividends, but the ratios are improving. The Dividend Payout Ratios for EPS for 2018 was 100% with 5 year coverage at 175%. The DPR for CFPS for 2018 was better at 26% with 5 year coverage at 36%. They still are showing DPR using FFO and giving a ratio of 26% with 5 year coverage at 36%.

The Long Term Debt/Market Cap Ratio for 2018 was good at 0.29. The Liquidity Ratios are good with the one for 2018 at 1.97 and 5 year median ratio also at 1.97. The Debt Ratios are good with the one for 2018 at 2.57 with 5 year median at 2.39. The Leverage and Debt/Equity Ratios are quite good also with the ones for 2018 at 1.64 and 0.64 respectively. The 5 year median ratios are 1.69 and 0.69 respectively.

The Total Return per year is shown below for years of 5 to 22 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 charts below.

When this company was an income trust it has a very high dividend. Shareholders have only made money from the dividend payments.

From Years Div. Gth Tot Ret Cap Gain Div.
2013 5 -12.94% -18.16% -22.82% 4.66%
2008 10 -13.87% -1.15% -8.69% 7.54%
2003 15 -7.06% 10.40% -3.66% 14.06%
1998 20 -3.41% 29.61% 1.43% 28.18%
1996 22 -4.41% 12.42% -2.08% 14.49%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 12.95, 19.50 and 26.05. The corresponding 10 year ratios are 19.80, 23.40 and 27.00. The historical ones are 12.22, 14.65 and 16.47. The current P/E Ratio is 22.00 based on a stock price of $9.68 and a 2019 EPS estimate of $0.44. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a Graham Price of $10.13. The 10 year low, median, and high median Price/Graham Price Ratios are 1.32, 1.62 and 1.87. The current P/GP Ratio is 0.95 based on a stock price of $9.68. 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 2.01. The current P/B Ratio is 0.93 based on a Book Value of $3,676M, Book Value per Share of $10.40 and a stock price of $9.68. The current P/B Ratio is some 54% 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 9.50%. The current dividend yield is 6.20% based on a stock price of $9.68 and dividends of $0.60. The current dividend is some 35% below the historical yield. This stock price testing suggests that the stock price is relatively expensive.

However, this company used to be an income trust and income trust corporation have higher dividend yields than corporations. The median dividend yield since this company was a corporation is 4.70%. The current dividend yield of 6.20% is some 32% above this. This stock price testing suggests that the stock price is relatively cheap.

The 10 year median Price/Sales (Revenue) Ratio is 5.03. The current P/S Ratio is 2.60 based on 2019 Revenue estimate of $1,275M, Revenue per Share of $3.61 and a stock price of $9.68. The current ratio is some 47% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

Results of stock price testing is showing that the stock price is relatively cheap. The P/E Ratios are rather high because the EPS has been very volatile and much more so that the stock price. This is not a good test. The other testing is showing that the stock price is cheap. On an absolute basis a P/GP Ratio below 1.00 is showing a cheap price as is a P/B Ratio under 1.00. Certainly, the P/S Ratio and P/B Ratio testing is solid.

When I look at analysts’ recommendations, I find Strong Buy (2), Buy (14) and Hold (1). The stock price consensus is $13.77. This implies a total return of 48.45% with 42.25% from capital gain and 6.20% from dividends based on a current stock price of $9.68.

See what analysts are saying about this company on Stock Chase. Generally, they like the company and management, but one analyst feels that the dividend is not safe. Brian Pacampara on Motley Fool likes this company’s high dividend. Cameron Brookes on Simply Wall Street talks about the dividends not being well covered by earnings. . .

ARC Resources is an independent energy company engaged in the acquisition, exploration, development, and production of conventional oil and natural gas in Western Canada. The company produces light, medium, and heavy crude, condensate, NGLs, and natural gas. Its web site is here ARC Resources Ltd.

The last stock I wrote about was about was Absolute Software Corporation (TSX-ABT, OTC-ALSWF) ... learn more. The next stock I will write about will be IGM Financial (TSX-IGM, OTC-IGIFF) ... learn more on Friday, February 15, 2019 around 5 pm. Tomorrow on my other blog I will write about Ideal Retirement Budget learn more on Thursday, February 14, 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, February 11, 2019

Absolute Software Corporation

Sound bite for Twitter and StockTwits is: Dividend Growth Tech. Dividend increases have stopped and this is probably because lack of growth in Revenue. Revenue has grown only at 2.4% per year over the last 5 years. The P/S Ratio test does suggest that the stock price is reasonable and below the median. See my spreadsheet on Absolute Software Corporation.

I do not own this stock of Absolute Software Corporation (TSX-ABT, OTC-ALSWF). The Motley Fool published an article by Matt DiLallo in December 2014 called The 10 Best Stocks in Canada. It is basically a list of the best-performing Canadian stocks of the past decade.

When I was updating my spreadsheet, I noticed that their book value is still negative, but this is because of deferred revenue. They cannot afford their dividends if you look at their Dividend Payout Ratio for EPS. The DPR for CFPS is also a bit high. However, they do have a lot of cash. The financial year ends in June each year, so the last annual financial statements are dated June 30, 2018. They report in US$.

Even though they report in US$, they are paying dividends in CDN$. They started to pay dividends in 2013 and at first, they were increasing their dividends. The increases stopped last year when they were flat. The increases were at rate of 9.86% per year in CDN$ over the past 5 years.

The dividends are current moderate with a yield at 3.64%. The 5 year median yield is also moderate at 3.92%. The dividend growth is moderate at 9.86% per year.

Can they afford their dividends? is an interesting question. If you look at it from an earnings point of view, they paid out 320% of their earnings over the past 5 years. If you look at cash flow, they paid out 63% of their cash flow where it is generally it is best to pay out 40% for less of CFPS. However, they do have lots of cash on hand. However, with them making the dividend flat suggests that management feels that they have to moderate their dividend policy. The revenue is not growing much these days.

The Debt Ratios look awful, but things are not as bad as they seem. The Liquidity Ratio and Debt Ratios are really low at 0.61 and 0.63 for 2018. This basically means that the current assets cannot cover the current liabilities and that the assets cannot cover the liabilities. The thing is that Deferred Revenue is a large part of the liabilities at some 80% to 90% of the liabilities.

The Total Return per year is shown below for years of 5 to 18 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 charts below.

From Years Div. Gth Tot Ret Cap Gain Div.
2013 5 9.86% 6.21% 2.24% 3.97%
2008 10 11.56% 8.87% 2.69%
2003 15 24.87% 22.25% 2.62%
2000 18 18.83% 16.98% 1.85%


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

From Years Div. Gth Tot Ret Cap Gain Div.
2013 5 5.26% 1.04% -2.66% 3.70%
2008 10 8.22% 5.55% 2.67%
2003 15 22.47% 19.76% 2.71%
2001 17 24.27% 21.76% 2.52%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 11.79, 13.95 and 16.11. The corresponding 10 year ratios are -1.34, -3.02 and -4.71. The corresponding historical ratios are -5.00, - 54 and -16.07. The problem with P/E Ratios is that until 2013, the company had no positive earnings. There were also negative earnings in 2017. The current P/E Ratio is 44.21 based on a stock price of $8.80 and 2019 ESP estimate of $0.20 CDN$ ($0.15 US$). It would appear that the stock price is relatively high as a P/E Ratio of 44.21 is relatively high. This would not be a good test at this time.

I cannot calculate a Graham Price. To be able to calculate a Graham Price you would need both a positive EPS and a positive Book Value. If I muck around a bit, I can come up with one of $2.69. On the same basis I get P/GP Ratios for the past 6 years at 2.39, 3.27 and 3.99. On this basis the current P/GP Ratio is 3.28 based on a current stock price of $8.80. This would suggest that the stock price is reasonable but above the median. It would be debatable how good this test is.

To get a real Price/Book Value Ratio, you really need to have a positive book value. This company has not had a positive book value since 2010. This test cannot be done.

I get an historical median dividend yield of 3.92% CDN$. Here historical is only 5 years. However, the current yield is 3.64% CDN$ based on a stock price of $8.80 CDN$ and dividends of $0.32 CDN$. The current yield is some 7.24% below the historical median 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 2.69 US$. The current P/S Ratio is 2.72 US$, based on 2019 Revenue estimate of $98 US$ and a stock price of $6.62 US$. The current P/S Ratio is 1% below the 10 year median ratio. This stock price testing suggests that the stock price relatively reasonable and below the median.

Results of stock price testing is that the only really clean test is the P/S Ratio test. Since the 10 year median P/E, P/GP and P/B Ratios cannot really be established, says nothing good about this stock. However, what I can establish in other testing suggests that the stock price is reasonable but above the median.

When I look at analysts’ recommendations, I find Strong Buy (1) and Hold (5). The consensus would be a Hold. The 12 month stock price is $9.50 CDN$ ($7.16 US$). This implies a total return of 11.61% CDN$ with 7.97% from capital gains and 3.64% from dividends.

See what analysts are saying about this stock on Stock Chase. Some think it is or will be a takeover target. Karen Thomas on Motley Foolsays why she thinks this is a must have software company. Ben Rossbaum on Simply Wall Street looks at return on capital employed and finds it good. A story filed under Business Week in the Financial Post talks about one of the largest US school boards signing an agreement with Absolute Software.

Absolute Software Corp provides endpoint security and data risk management solutions for commercial, healthcare, education, and government customers. Its products and solutions include endpoint security, industry solutions, application resiliency, endpoint data discovery, professional services, and investigations. The company's products and solutions are powered by its patented persistence technology. It generates the majority of sales in North America. Its web site is here Absolute Software Corporation.

The last stock I wrote about was about was Canadian National Railway (TSX-CNR, NYSE-CNI) ... learn more. The next stock I will write about will be ARC Resources Ltd. (TSX-ARX, OTC-AETUF) ... learn more on Wednesday, February 13, 2019 around 5 pm. Tomorrow on my other blog I will write about Banks and Ratios 2.... learn more on Tuesday, February 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.

Friday, February 8, 2019

Canadian National Railway

Sound bite for Twitter and StockTwits is: Dividend Growth Industrial. The stock price is probably reasonable. There are stock buybacks, which I do not like. However, the buybacks are just under 3%, so not that high. See my spreadsheet on Canadian National Railway.

I have done well on this stock. I bought it in 2005 and 2009 for my trading account and both times below the median price. My total return is 16.68% with 1.94% from dividends and 14.74% from capital gains.

I own this stock of Canadian National Railway (TSX-CNR, NYSE-CNI). In 2005 I was look for good companies to buy at a reasonable price. This stock met by criteria. This is a dividend growth company with a good record of dividend increases. I brought some more in 2009. In my RRSP account, I bought this stock in 2011 and sold in 2013. Reason for sale was to raise money in my RRSP account for future withdrawals. I was looking for something to sell with a low dividend yield.

When I was updating my spreadsheet, I noticed that the revenue per share growth was better than the revenue growth. This is because the company is buying back shares. Revenue over the past 5 and 10 years has grown at 6.25% and 5.38%. Revenue per Share has grown at 9.17% and 8.25%. The true growth are the first figures and the ones to pay attention to.

The dividend yield on this stock is low. The current yield is 1.96% with 5, 10 and historical median yields at 1.67%, 1.75% and 1.58%. The yield has not varied much over time, but has occasionally ventured into the 2% range.

Dividend growth has been in the good range (15% and over) most of the time except for the last 10 year period because growth dipped from 2008 to 2010 inclusive. Because the yield is over 1% and the growth is good, the yield has grown well on original price. The 5, 10, 15 and 20 year yield on original (median) price are 3.01%, 8.89%, 13.51% and 29.02%. This is why you want to buy a stock with a low yield and good growth. This is especially true if you are building a portfolio.

I think that they can afford their dividends. The Dividend Payout Ratio for 2018 for EPS is 31% with 5 year coverage at 28%. The DPR for 2018 for CFPS is 23% and the 5 year coverage is 20%.

Most of the Debt Ratios are good. The Long Term Debt/Market Cap Ratio is very low at 0.16. The Debt Ratio for 2018 is good at 1.75 with 5 year median at 1.74. This is a good ratio. Leverage and Debt/Equity Ratios are normal for this sort of company at 2.34 and 1.34 respectively. The 5 year median is basically the same at 2.35 and 1.35.

The Liquidity Ratio is quite low at 0.78. However, if you added in cash flow after dividends the ratios is quite good at 2.09. This means that the company depends on cash flow to pay for current liabilities. This is typical for companies in certain sectors that have a steady cash flow.

The Total Return per year is shown below for years of 5 to 22 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 charts below.

From Years Div. Gth Tot Ret Cap Gain Div.
2013 5 16.18% 12.70% 10.80% 1.90%
2008 10 14.74% 18.44% 16.27% 2.17%
2003 15 17.24% 16.24% 14.33% 1.91%
1998 20 16.33% 16.38% 14.57% 1.81%
1996 22 16.22% 17.10% 15.21% 1.90%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 15.01, 17.83 and 20.07. The 10 year corresponding ratios are 15.53, 15.45 and 17.52. The historical corresponding ratios are 12.00, 13.62 and 15.18. The current P/E Ratio is 17.54 based on a stock price of $109.79 and 2019 EPS estimate of $6.26. This stock price testing suggests that the stock is relatively expensive.

I get a Graham Price of $58.33. The 10 year low, median, and high median Price/Graham Price Ratios are 1.43, 1.63 and 1.82. The current P/GP Ratio is 1.88 based on a stock price of $109.79. This stock price testing suggests that the stock is relatively expensive.

I get a 10 year median Price/Book Value per Share Ratio of 3.78. The current P/B Ratio is 4.51 based on Book Value of $17641M, Book Value per Share of $24.32 and a stock price of $109.79. The current ratio is 19.5% above the 10 year median ratio. This stock price testing suggests that the stock price is reasonable but above the median.

I get an historical median dividend yield of 1.58%. The current dividend yield is 1.96% based on dividends of $2.15 and a stock price of $109.79. The current dividend is 24% 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 4.79. The current P/S Ratio is 5.11 based on 2019 Revenue of $15,571M, Revenue per Share of $21.47 and a stock price of $109.79. The current ratio is 6.7% above the 10 year ratio. This stock price testing suggest that the stock price is relatively reasonable, but above the median.

With the testing results on P/E Ratio and P/GP Ratio tests showing the stock price as being expensive, the price is just inside the expensive range. The P/B Ratio tests has a stock price as just below the expensive range. The P/S shows it as reasonable but above the median and the Dividend Yield tests show the stock price as cheap. The stock price is probably not cheap, but it is probably reasonable.

When I look at analysts’ recommendations, I find Strong Buy (1), Buy (7) and Hold (14). The consensus would be a Hold. The 12 month stock price consensus is $112.73. This implies a total return of 4.64% with 2.68% from capital gains and 1.96% from dividends.

See what analysts are saying about this stock on Stock Chase. Analysts seem to like this stock. Andrew Walker on Motley Fool thinks this is an attractive stock to buy. Hector Vargas on Simply Wall Street talks about CNR’s ROE. Linda Rogers on What’s on Thorold says analysts are 75% positive on this stock. Canadian Press via The Chronicle Herald says CN Rail infrastructure workers will get a 14% rise over 5 years.

Canadian National's railway spans Canada from coast to coast and extends through Chicago to the Gulf of Mexico. Its web site is here Canadian National Railway.

The last stock I wrote about was about was Exco Technologies Ltd (TSX-XTC, OTC-EXCOF) ... learn more. The next stock I will write about will be Absolute Software Corporation (TSX-ABT, OTC-ALSWF) ... learn more on Monday, February 11, 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, February 6, 2019

Exco Technologies Ltd

Sound bite for Twitter and StockTwits is: Dividend Growth Industrial. A lot is changing in the manufacture of cars and it is hard to know what the outcome for a number of companies, including this one, will be. Price seems reasonable and below the median. See my spreadsheet on Exco Technologies Ltd.

I do not own this stock of Exco Technologies Ltd (TSX-XTC, OTC-EXCOF). This is a stock given as a recommendation by Keystone at the Toronto Money Show of 2012. I decided to check into it as it is a small tech company that is paying dividends. Also, I decided to review this stock because Keystone has recommended some very good stocks in the past.

When I was updating my spreadsheet, I noticed that long term total return is rather mixed with the total return for the past 10 years being exceptional. The stock is already up 9% this year. The financial year ends in September each year, so the last financial year ended September 30, 2018.

They have only had dividends for the past 15 years. Dividend yield is in the low to moderate ranges and it has varied over time. The current dividend is 3.64% with 5, 10 and 15 year median yields at 1.95%, 3.06% and 1.97%. Dividend growth has been in the good range (15% and over) until recently. The most recent increase was late in 2018 (for the 2019 year) and was only at 5.9%.

I believe that they can afford their dividends. The Dividend Payout Ratio for 2018 was 33% with 5 year coverage at 28%. The DPR for CFPS for 2018 was 22% with 5 year coverage at 19%.

I find the Debt Ratios very good. The Long Term Debt/Market Cap Ratio for 2018 is 0.05. The Liquidity Ratio, one of the most important ones, was 2.51 in 2018 with 5 year median at 2.26. The Debt Ratio for 2018 was 3.80 with 5 year coverage at 3.32. The Leverage and Debt/Equity Ratios for 2018 were 1.36 and 0.36.

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 charts below.

From Years Div. Gth Tot Ret Cap Gain Div.
2013 5 14.20% 4.52% 1.46% 3.07%
2008 10 17.37% 28.97% 23.10% 5.87%
2003 15 13.52% 4.25% 2.48% 1.76%
1998 20 8.34% 6.63% 1.71%
1993 25 6.37% 5.14% 1.23%
1992 26 8.79% 7.43% 1.35%


The 5 year low, median, and high median Price/Earnings per Share Ratios are 9.40, 13.17 and 15.68. The corresponding 10 year ratios are 8.50, 10.03 and 12.31. The corresponding historical ratios are 9.40, 13.35 and 15.77. The current P/E Ratio is 9.24 based on a stock price of $9.89 and 2019 EPS estimate of 1.07. This stock price testing suggests that the stock price is relatively cheap.

I get a Graham Price of $14.00. The 10 year low, median, and high median Price/Graham Price Ratios are 0.63, 0.75 and 0.63. The current P/GP Ratio is 0.71 based on a stock price of $9.89. 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 1.28. The current P/B Ratio is 1.21 based on Book Value of $337M, Book Value per Share of $8.14 and a stock price of $9.89. The current ratio is 5% lower than 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 1.97%. The current dividend yield is 3.64% based on dividends of $0.36 and a stock price of $9.89. The current yield is some 84% higher than 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 0.80. The current P/S Ratio is 0.80. The current P/S Ratio is 0.78 based on 2019 Revenue estimate of $527, Revenue per Share of $12.72 and a stock price of $9.89. The current ratio is some 3% lower than the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.

Results of stock price testing is that the stock price is relatively cheap to relatively reasonable and below the median. I did not do testing of the dividend yield against the 5 and 10 year dividends, because they have not been fooling around with the dividends. They started off flat and they have been increasing since 2007. However, the Dividend Payout Ratio has been increasing, but has fluctuated in the past and the dividend yield has fluctuated a lot. Also, the P/S Ratio cannot be ignored.

When I look at analysts’ recommendations, I find Buy (1) and Hold (4). The consensus would be a Hold. This is a small company so there are few analysts following it. The 12 month stock price consensus is $10.90. This implies a total return of $13.85 with 10.21% from capital gains and 3.64% from dividends.

See what analysts are saying on Stock Chase. There is nothing recent but remarks from 2017 note it is not currently doing well. Kris Knutson on Motley Fool thinks this is a small cap that should be on your radar. Kyle Sanford on Simply Wall Street says why he thinks this stock is undervalued.

Exco Technologies Ltd is a designer, developer, and manufacturer of dies, moulds, components and assemblies, and consumable equipment for the die-cast, extrusion, and automotive industries. Its web site is here Exco Technologies Ltd.

The last stock I wrote about was about was AGF Management Ltd (TSX-AGF.B, OTC-AGFMF) ... learn more. The next stock I will write about will be Canadian National Railway (TSX-CNR, NYSE-CNI) ... learn more on Friday, February 8, 2019 around 5 pm. Tomorrow on my other blog I will write about Something to Buy February 2019.... learn more on February 07, 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.