I do not own this stock of AGF Management Ltd (TSX-AGF.B, OTC-AGFMF), but I used to. It used to be a great company. I held it too long after it got into difficulties. I had it from 2001 to 2008 and made a total return of 2.08% per year. I sold because I did not see that the stock would improve. It was raising dividends still but at the expense of DPR. In 2008 I was lucky that I sold before it crashed. It has yet to recover.
When I was updating my spreadsheet, I noticed that this company had astonishingly bad total returns and dividend growth over the last 20 years. I noticed that the Dividend Payout Ratio for EPS has been coming down lately. Last year the DPR was 50% with 5 year coverage at 122%. This year it is 76% with 5 year coverage at 44%. DPR for CFPS is also declining but not quite enough. This Financial year ends in November each year, so the last financial year end was November 30, 2018.
There has not been any dividend growth for some time. See chart below. They decreased dividends by 70% in 2015 so this wiped out all increases going back almost 15 years (to around 2003). They used to have Low to moderate dividend yields (1% to 2% range), until 2008 when they moved up a lot. Currently the dividend is in the good range at 5.93%. The 5, 10 and historical median dividends are 6.86%, 6.90% and 3.07%.
To the question of can they afford their dividends, they can for now DPR for EPS at 35% with 5 year coverage at 76%. However, this DPR for EPS is expected to move back to 63% in 2019. The DPR for CFPS is still a bit high for 2018 at 54% with 5 year coverage also at 54%. I rather have this DPR for CFPS at 40% or less.
Debt Ratios are good at present. The Long Term Debt/Market Cap Ratio at 0.48 is fine. The Liquidity Ratio this year at 1.74 is fine, but past Liquidity Ratios were too low. The Debt Ratios for 2018 at 3.18 is very good and this ratio has always been very good. Leverage and Debt/Equity Ratios for 2018 are good at 1.46 and 0.46 respectively. The 5 year medians are also good 1.50 and 0.50 respectively.
The Total Return per year is shown below for years of 5 to 27 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.
Shareholders have not really been making much over the past 20 years and this is a long time.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | -21.59% | -13.00% | -18.34% | 5.34% |
| 2008 | 10 | -10.31% | 4.60% | -6.56% | 11.16% |
| 2003 | 15 | 0.54% | -0.89% | -8.24% | 7.34% |
| 1998 | 20 | 4.61% | 2.88% | -4.30% | 7.17% |
| 1993 | 25 | 6.27% | 10.47% | 1.49% | 8.98% |
| 1991 | 27 | 6.16% | 17.16% | 5.25% | 11.91% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 8.30, 10.73 and 13.16. The corresponding10 year ratios are 9.54, 12.56 and 16.16. The corresponding historical ratios are 10.21, 15.36 and 18.96. The current P/E Ratio is 10.35 based on a stock price of $5.38 and 2019 EPS estimate of $0.51. It appears that analysts expect EPS to drop from last years 0.92 and 2017 EPS of 0.64. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $11.94. The 10 year low, median, and high median Price/Graham Price Ratios are 0.55, 0.75 and 0.96. The current P/GP Ratio is 0.45 based on a stock price of $5.38. 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 0.99. The current P/B Ratio is 0.43 based on Book Value of $972M, Book Value per share of $12.41 and a stock price of $5.38. The current P/B Ratio is some 56% 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 3.07%. The current dividend yield is 5.95% based on Dividends of $0.32 and a stock price of $5.38. The current dividend yield is some 94% above the historical median. This stock price testing suggests that the stock price is relatively cheap.
It is interesting that the 5 year and 10 year median dividend yields are higher than the current one. They are at 6.86% and 6.90%, respectively. So that are some 13% below the current dividend yield. This stock price testing suggests that the stock price is reasonable but above the median. I did this testing because dividends are decreasing.
The 10 year median Price/Sales (Revenue) Ratio is 1.94. The current P/S Ratio is 1.00 based on 2019 Revenue estimate of $423M, Revenue per Share of $5.40 and a stock price of $5.38. The current ratio is 49% 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 most test show the stock as being relatively cheap. For the P/B Ratio, that 10 year ratio is really low. When it is below 1.00, the stock price is below the potential breakup value of the company. However, I think that this company cheap for a reason.
When I look at analysts’ recommendations, I find Buy (3) and Hold (4). The consensus would be a Hold. The 12 month stock price consensus is $6.61. this implies a total return of 28.81% with 22.86% from capital gains and 5.95% from dividends.
See what analysts are saying about this company on Stock Chase. The latest is a Don’t Buy. Will Ashworth on Motley Fool thinks it is a worthwhile buy under $6.00.. Sean Barnes on Simply Wall Street talks about this stock Beta. LNR Staff on Laken Norman Review says the company has a Piotroski F-Score of 6 where the score is from 0 (low) to 9 (high) for balance sheet strength.
AGF Management is a Canada-based asset manager with operations and investments in Canada, the United States, the United Kingdom, Ireland, and Asia. Its web site is here AGF Management Ltd.
The last stock I wrote about was about was Shaw Communications Inc (TSX-SJR.B, NYSE-SJR) ... learn more. The next stock I will write about will be Exco Technologies Ltd (TSX-XTC, OTC-EXCOF) ... learn more on Wednesday, February 06 around 5 pm. Tomorrow on my other blog I will write about Dividend Stocks February 2019.... learn more on Tuesday, February 5, 2019 around 5 pm.
Also, on my book blog I have put a review of the book The Square and the Tower by Niall Ferguson learn more...
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