I own this stock of WSP Global Inc (TSX-WSP, OTC-WSPOF). In Sept 2011 I rationalized my portfolio. I sold stocks that did not make it into my core and bought stocks that could of the same type. In this case selling Stantec and buying Genivar. In October 2011 I wanted to sell Enerflex because it is not a company I bought, but a distribution from Toromont. I bought more Genivar, now called WSP Global.
When I was updating my spreadsheet, I noticed they still have not increase the dividends. This company used to be an income trust. Income Trust have higher possible distributions available for dividends. As an income trust they increased their dividends. Since becoming a corporation there has been no dividend increases.
So, the dividend has been flat since 2009. In 2009 they were paying more than their EPS in dividends, but the Dividend Payout Ratio have been coming down and for 2018, it was 63% and is expected to be 45% in 2019. On their site they say that dividend is appropriate based on the Company’s current earnings and financial requirements for the Company's operations.
The current dividend yield is moderate. It has mostly been moderate, but as an income trust the yield, in the past, went as high as 7.9%. The current yield is 2.07%. The 5, 10 and historical yields are all moderate at 3.56%, 4.86% and 4.74%. Since becoming a corporation, the median yield is 4.04%. If they do not raise the dividends, the yield will probably continue to drop.
The current Dividend Payout Ratios are fine. The DPR for EPS for 2018 is 63% with 5 year coverage at 79%. The DPR for EPS has been dropping since this company changed into a corporation. The DPR for 2018 for CFPS is 285 with 5 year coverage at 38%. This DPR is dropping also.
Debt Ratios are fine with some vulnerability concerning the Liquidity Ratio. The Long Term Debt/Market Cap Ratio is good at 0.24. The Liquidity Ratio is low at 1.24 with 5 year ratio at 1.26. If you add in cash flow after dividends it is still low at 1.44 with 5 year median ratio at 1.36. I prefer this ratio to be at least 1.50 for the sake of safety. The Debt Ratio is good at 1.72 with a 5 year median at 1.83. Leverage and Debt/Equity Ratios are fine at 2.38 and 1.38 respectively. The 10 year median ratios are 2.04 and 1.04.
The Total Return per year is shown below for years of 5 to 13 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 have made a total return of 21.74% on this stock with 17.62% from capital gains and 4.12% from dividends. The dividend portion of the total return will go down in the future.
|From||Years||Div. Gth||Tot Ret||Cap Gain||Div.|
The 5 year low, median, and high median Price/Earnings per Share Ratios are 20.97, 24.87 and 28.77. The corresponding 10 year median ratios are 16.01, 20.03 and 23.99. The corresponding historical ratios are 15.50, 19.46 and 23.42. The current P/E Ratio is 21.50 based on a stock price of $72.46 and 2019 EPS estimate of $3.37. This stock price testing suggests that the stock price is relatively reasonable and around the median.
I get a Graham Price of $48.64. The 10 year low, median, and high median Price/Graham Price Ratios are 0.95, 1.13 and 1.33. The current P/GP Ratio is 1.49 based on a stock price of $72.46. This stock price testing suggests that the stock is relatively expensive.
I get a 10 year median Price/Book Value per Share Ratio of 1.53. The current P/B Ratio is 2.32 based on a stock price of $72.46, Book Value of $3,259M, and Book Value per Share of $31.20. The current ratio is some 51% higher than the 10 year ratio. This stock price testing suggests that the stock is relatively expensive.
I get an historical median dividend yield of 4.74% and a median yield of $4.04% since it changed to a corporation. The current dividend yield is 2.07% based on dividends of $1.50 and a stock price of $72.46. The current yield is some 56% and 49% below these medians. This stock price testing suggests that the stock is relatively expensive.
The 10 year median Price/Sales (Revenue) Ratio is 1.09. The current P/S Ratio is 1.10 based on a stock price of $72.46, 2019 Revenue estimate of $6,872M and Revenue per Share of $65.80. The current ratio is 1.2% above the 10 year median. This stock price testing suggests that the stock price is relatively reasonable and around the median.
Results of stock price testing is reasonable to expensive. As always, you cannot ignore the P/S Ratio and this is showing that the stock price is relatively reasonable and around the median. This is also showing up in the P/E Ratio test, but the P/E Ratios are rather high. The one to be concerned about is the P/B Ratio. Book Value is basically increased by retained earnings. A good P/B Ratio is 1.50 and this stock has one of 2.32. It is not that high but it is getting high.
When I look at analysts’ recommendations, I find Buy (7) and Hold (5) recommendations. The consensus would be a Buy. The 12 month stock price consensus is $77.79. This implies a total return of $9.43% with 7.36% from capital gains and 2.07% from dividends based on a current stock price of $72.46.
See what analysts are saying on Stock Chase. They like the company but some think the price is currently too high. Christopher Liew on Motley Fool has a positive view of this stock. A writer on Simply Wall Street thinks that the ROCE for this company looks good. There is some interesting information on future trends for this tock on Wallet Investor. The company released its three year Global Strategic Plan on Global Newswire.
WSP Global Inc provides engineering and consulting services for transportation, buildings, energy, and other end markets. It operates in four business areas: transportation and infrastructure (approximately half of total sales), property and buildings; environment; and industrial and energy. The company designs and manages networks for rail, aviation, roads, ports, and other systems related to transportation. Its web site is here WSP Global Inc.
The last stock I wrote about was about was Fortis Inc. (TSX-FTS, OTC-FRTSF) ... learn more. The next stock I will write about will be Thomson Reuters Corp. (TSX-TRI, NYSE-TRI) ... learn more on Wednesday, May 1, 2019 around 5 pm. Tomorrow on my other blog I will write about Dividend Yield Testing.... learn more on Tuesday, April 30, 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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