I do not own this stock of Shaw Communications Inc (TSX-SJR.B, NYSE-SJR). I am following this stock because it was a stock on Investment Reporter’s list, an MPL Communications Publication.
When I was updating my spreadsheet, I noticed they have not been doing well lately and this is reflected in the fact that the dividends have gone flat. The last dividend increase was in 2015. There is again a lot of insider selling at 0.17% of market cap. Last year it was 0.21%. You expect this value to be in the 0.01% or 0.02% range. The financial year for this company ends in August each year. The last financial statement date is August 31, 2019.
Dividend growth slowed after 2013 and has been flat since 2016. Dividend growth has fluctuated in the past and has gone flat before. The growth in dividends have been quite volatile. The 5 and 10 year periods are low because of the current flat dividend. The last dividend increase occurred in 2015 and it was for 7.7%.
Currently the dividend yield is in the moderate range (2 to 4% range), but it has in the past been in the low range (under2%). The current dividend is 4.37%, with 5, 10 and historical medians at 4.23%, 4.23% and 1.26%.
Because 2018 was such a poor year, the current Dividend Payout Ratio is 1185%, but the 5 year coverage is a more appropriate measure at 72%. The DPR for EPS is expected to drop to 86% next year. Analysts, as they did last year, expect the company to restart increasing dividends. The DPR for CFPS for 2018 is 47%, which is a big high. The 5 year coverage is fine at 37%.
They have a vulnerability with a very low Liquidity Ratio. The Long Term Debt/Market Cap Ratio for 2018 is 0.32. The Liquidity Ratios is low and has always been low. For 2018 it is 0.64. If you add in cash flow after dividends it is still low at 1.10. The 5 year median ratio is also 1.10. This is a vulnerability for the company.
The Debt Ratio is quite good at 1.70 with 5 year median also at 1.70. The Leverage and Debt/Equity Ratios are rather normal for this sort of company at 2.42 and 1.42 respectively. Their 5 year medians are also normal at 2.78 and 1.78.
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.
The stock used to have a decent total return, but it has not been true for the past 5 and 10 years. The 10 year return is quite low. The 5 year return is not surprising as a lot of companies have not done well recently.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 3.56% | 3.63% | -0.90% | 4.52% |
| 2008 | 10 | 5.33% | 5.76% | 1.35% | 4.41% |
| 2003 | 15 | 29.34% | 10.66% | 6.15% | 4.50% |
| 1998 | 20 | 23.46% | 8.97% | 5.80% | 3.17% |
| 1993 | 25 | 18.37% | 12.43% | 9.26% | 3.17% |
| 1990 | 28 | 16.25% | 14.70% | 11.34% | 3.36% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 13.36, 15.53 and 17.68. The corresponding 10 year ratios are 13.71, 15.96 and 17.69. The corresponding historical ratios are 14.58, 16.45 and 17.80. The current P/E Ratio is 19.80 based on a stock price of $27.12 and 2019 EPS estimate of $1.37. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $18.70. The 10 year low, median, and high median Price/Graham Price Ratios are 1.21, 1.32 and 1.49. The current P/GP Ratio is 1.45 based on a stock price of $27.12. This stock price testing suggests that the stock price is reasonable but above the median.
I get a 10 year median Price/Book Value per Share Ratio of 2.65. The current P/B Ratio is 2.39 based on a Book Value of $5775M, Book Value per Share of $11.35 and a stock price of $27.12. The current P/B Ratio is some 9.7% below the 10 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 1.26%. The current dividend yield is 4.37% based on dividends of $1.185 and a stock price of $27.12. The current dividend is 247% above the 10 year yield. This stock price testing suggests that the stock price is relatively cheap.
By the way the 5 and 10 year median dividend yields are a lot higher than the historical one with both at 4.23%. The current dividend is only 3.3% above these median dividend yields. This stock price testing suggests that the stock price is reasonable and below the median.
The 10 year median Price/Sales (Revenue) Ratio is 2.38. The current P/S Ratio is 2.52 based on a stock price of $27.12, 2019 Revenue estimate of $5,478M and Revenue per Share at 10.77. The current ratio is some 5.7% above the 10 year ratio. This stock price testing suggests that the stock price is reasonable but above the median.
I wonder about using the Dividend Yield test as yields have been in the 4% range since 2008, which is a long time. If you use the 10 year dividend yield median, you still get a reasonable price below the median. I do like the P/B Ratio test and that shows the price as reasonable and below the median also. However, the P/S is also good test and that show the price as reasonable but above the median. It would see like the price is in a reasonable range.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (8), Hold (4), Underperform (2), and Sell (1). The consensus would be a Hold. The 12 month stock price consensus is $30.03. This implies a total return of 15.10% with 4.37% from Dividends and 10.73% from capital gains.
See what analysts are saying about this stock on Stock Chase. Some analyst like this stock and some do not. One is worried about the balance sheet. Nelson Smith on Motley Fool thinks you would be better off buying Telus. Peter Morris on Simply Wall Street is concerned about the Liquidity Ratio. Darrell McKinsey on Fairfield Current says this stock has a consensus rating of Buy. The Canadian Press on CBC News says Shaw has beaten analysts estimates for profit and revenue in its fall quarter.
Shaw Communications Inc is a cable TV company in western Canada, serving as one of the biggest providers of Internet, television, and landline telephone services in British Columbia, Alberta, Saskatchewan, Manitoba, and northern Ontario. With its 2016 acquisition of Wind Mobile (subsequently rebranded Freedom Mobile), Shaw is also now a wireless service provider in Ontario, Alberta, and British Columbia--three of Canada's four largest provinces. Its web site is here Shaw Communications Inc.
The last stock I wrote about was about was Valener Inc (TSX-VNR, OTC-VNRCF) ... learn more. The next stock I will write about will be AGF Management Ltd (TSX-AGF.B, OTC-AGFMF) ... learn more on Monday, February 4, 2019 around 5 pm.
Also, on my book blog I have put a review of the book A History of Canada in Ten Maps by Adam Shoalts learn more...
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