I do not own this stock of Parkland Fuel Corp (TSX-PKI, OTC-PKIUF). I decided to do a spreadsheet on this stock as it was a stock recommended by Roger Conrad in Money Show 2013.
When I was updating my spreadsheet, I noticed that this company has been doing well lately. Revenue, Earnings and Cash Flow have gone up over the past 2 years as has the stock price.
The company used to be an income trust and converted to a corporation in 2010. In 2011 dividends were cut 19% that year. They started to raise dividends again in 2013 but increases have been quite low. See chart below. The last increase was in 2019 and it was for 1.7%.
The dividend yields have been moderate to good. The current dividend is 2.86%. The 5, 10 and historical dividend yields are 4.37%, 5.48% and 7.44%. Income trust always have higher dividend yields than corporations.
The Dividend Payout Ratios are only good for the first time in 2018. The DPR for EPS for 2018 is 76% with 5 year coverage at 146%. The DPR for EPS has always been too high. You can do this for income trust, but it does not work for corporations. I also looked that the cash dividend paid compared to Net Income for 2018 it was 50%. This is the first year to be below 100%. The DPR for CPFS for 2018 was 27% with 5 year coverage at 53%.
Debt Ratios are fine, but I would like better ones. The long Term Debt/Market Cap Ratio for 2018 is 49. The Liquidity Ratio for 2018 is 0.91. If you add in the Cash Flow less dividends ratio is 1.14 and if you add back in current portion of long term debt it is 1.15. This is low and I like to it 1.40. The Debt Ratio is 1.47 and a little lower than I like. The Leverage and Debt/Equity Ratios are a little high at 3.14 and 2.14 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 chart below.
|From||Years||Div. Gth||Tot Ret||Cap Gain||Div.|
The 5 year low, median, and high median Price/Earnings per Share Ratios are 34.28, 40.43 and 46.39. The corresponding 10 year ratios are 17.42, 21.98 and 26.54. The corresponding historical ratios are 12.55, 16.90 and 22.47. The current P/E Ratio is 21.43 based on a stock price of $41.79 and 2019 EPS estimate of $1.95. This stock price testing suggests that the stock price is relatively reasonable and at the median.
I get a Graham Price of $23.48. The 10 year low, median, and high median Price/Graham Price Ratios are 1.35, 1.70 and 2.04. The current P/GP Ratio is 1.64 based on a stock price of $41.79. 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 2.82. The current P/B Ratio is 2.82 based on a stock price of $41.79, Book Value of $2,166M and Book Value per Share at $14.80. This stock price testing suggests that the stock price is relatively reasonable and at the median.
I get an adjusted historical median dividend yield of 6.02%. The current dividend yield is 2.86% based on dividends of $1.19 and a stock price of $41.79. The current yield is 53% below the adjusted historical median yield. This stock price testing suggests that the stock price is relatively expensive.
The 10 year median Price/Sales (Revenue) Ratio is 0.26. The current P/S Ratio is 0.35 based on a stock price of $41.79, 2019 Revenue estimate of $17,668 and Revenue per share of $86.77. The current ratio is some 35% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
Results of stock price testing is that the stock price is reasonable to expensive. I can ignore the Dividend Yield test as this company was an income trust company and they tend to have very high dividend yields. I cannot ignore the P/S Ratio test which also shows the stock at an expensive price. The rest of the testing shows it to be around the median
Is it a good company at a good price? I think it is a good company, but I would prefer to see better earnings and better dividend growth. I also wonder also about the stock price. The stock went up 28% last year and so far, it has increased by 21% this year. It may be a stock to watch, but now may not be the time to buy.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (5) and Hold (2). The consensus would be a Buy. The 12 month stock price consensus is $48.80. This implies a total return of 19.63% with 16.77% from capital gains and 2.86% from dividends based on a current stock price of $41.79.
See what analysts are saying on Stock Chase. They like to company but one thinks that have hit their price ceiling. Matt Smith on Motley Fool. He says that Parkland is an extremely attractive candidate for investors seeking to maximize their returns and build wealth as quickly as possible. A writer on Simply Wall Street says the intrinsic value estimate is $69.07 CDN$. A writer on Simply Wall Street says that the CEO’s pay is around the median for its industry. .
Parkland Fuel Corp distributes and markets fuels and lubricants. Refined fuels and other petroleum products are among the variety of offerings the company delivers to motorists, businesses, consumers, and wholesalers in the United States and Canada. Its web site is here Parkland Fuel Corp.
The last stock I wrote about was about was Computer Modelling Group Ltd. (TSX-CMG, OTC-CMDXF) ... learn more. The next stock I will write about will be Saputo Inc. (TSX-SAP, OTC-SAPIF) ... learn more on Tuesday, July 2, 2019 around 5 pm.
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