Monday, March 18, 2019

Melcor Developments Inc

Sound bite for Twitter and StockTwits is: Dividend Growth Real Estate. The testing is showing the stock price is cheap to reasonable. Stock is not doing particularly well currently, but it is a western Canada Real Estate stock. See my spreadsheet on Melcor Developments Inc.

I own this stock of Melcor Developments Inc (TSX-MRD, OTC-MODVF). This was one of the stocks on Mike Higgs' list of good dividend growth stocks. So, I looked into it and bought it. I bought this stock first in 2008 and then some more in 2009. It is a little followed real estate company from Western Canada.

When I was updating my spreadsheet, I noticed it has not done well in the last 5 years. The thing is that this company is in western Canada and western Canada has not done well lately. Places like Alberta have a boom and bust economy.

The dividend yields are in the moderate zone (2 to 4% ranges). The current yield is 3.87% with the 5, 10 and historical yields at 3.37%, 3.05% and 2.78%. This stock started out in the 1990’s with yields in the 1 and 2% ranges.

The changes in dividends have varied over time. Dividends have gone down as well as up at various points. The dividend growth is poor for the past 5 and 10 years because of a dividend decrease of 20% in 2016.

The Dividend Payout Ratios are good. The DPR for EPS for 2018 is 27% with 5 year coverage at 29%. The DPR for FFO for 2018 is 31% with 5 year coverage at 30%. The DPR for CFPS for 2018 is 32% with 5 year coverage at 33%.

Debt Ratios are quite good except for the Long Term Debt/Market Cap Ratio. The Long Term Debt/Market Cap Ratio is high at 1.61. I think the market cap is depressed. The Liquidity Ratio is very good at 3.07 with the Debt Ratio at 2.12. The Leverage and Debt/Equity Ratios are also good at 1.90 ad 0.90.

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.

I know that this stock has not done well lately, but I am in for the long term and I still have faith in this company. I realize it maybe a while before this company can do well again.

From Years Div. Gth Tot Ret Cap Gain Div.
2013 5 0.79% -6.06% -9.33% 3.27%
2008 10 2.16% 17.63% 10.37% 7.25%
2003 15 10.91% 12.48% 6.77% 5.71%
1998 20 12.42% 17.38% 10.08% 7.30%
1993 25 13.92% 18.27% 9.94% 8.34%
1990 28 15.16% 17.20% 9.79% 7.42%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 6.45, 7.70 and 8.95. The corresponding 10 year ratios are 5.87, 7.51 and 8.69. The corresponding historical ratios are 6.28, 7.25 and 8.40. The current P/E Ratio is 8.18 based on a stock price of $13.42 and 2019 EPS estimate of $1.64. This stock price testing suggests that the stock price is relatively reasonable, but above the median.

I get a Graham Price of $34.37. The 10 year low, median, and high median Price/Graham Price Ratios are 0.36, 0.50 and 0.55. The current P/GP Ratio is 0.39 based on a stock price of $13.42. 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 0.67. The current P/B Ratio is 0.42 based on a stock price of $13.42, Book Value of $1,068M and Book Value per Share of $32.01. The current ratio is some 37% 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 2.78. The current yield is 3.87% based on a stock price of $13.42 and dividends of $0.52. The current yield is 39% 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 1.92. The current P/S Ratio is 1.59 based on 2019 Revenue of $262M, Revenue per Share of $8.46 and a stock price of $13.42. The current ratio is 17% below 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 probably cheap to reasonable. The P/S Ratio test is, of course, a good one and we must pay attention to it. The P/GP ratio, P/B ratio and the yield tests are good test and it is showing stock price as relatively cheap. The P/E Ratio test is my least favourite. The P/E Ratios, P/GP Ratios and P/B Ratios are quite low compared to what would be normal for most stocks.

When I look at analysts’ recommendations, I find one analyst following this stock and has given a recommendation of Hold. The consensus would be a Hold. The 12 month stock price consensus is $16.00. This implies a total return of 23.10% with 3.87% from dividends and 19.25% from capital gains based on a current stock price of $13.42.

See what analysts are saying about this stock on Stock Chase. This stock is not well followed and there are few remarks. Ryan Goldsman on Motley Fool talks about this company being undervalued. A writer on Simply Wall Street says the company can comfortable service its debt. The company talks about their 2018 results on Global News Wire. Richard Conner on What’s on Thorold talks about short selling of shares is down 5%.

Melcor Developments Ltd is a real estate development and asset management company. It develops and manages mixed-use residential communities, business and industrial parks, office buildings, retail commercial centers and golf courses. Its web site is here Melcor Developments Inc.

The last stock I wrote about was Richelieu Hardware Ltd (TSX-RCH, OTC-RHUHF) ... learn more. The next stock I will write about will be Enbridge Inc. (TSX-ENB, NYSE-ENB) ... learn more on Wednesday, March 20, 2019 around 5 pm. Tomorrow on my other blog I will write about Real Estate Stocks.... learn more on Tuesday, March 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.

1 comment:

  1. I continuously continue coming to your website once more simply in case you have posted new contents.

    Accounting Firms in Toronto