I do not own this stock of Maxar Technologies Ltd (TSX-MAXR, NYSE-MAXR). I read about this stock in MPL Communication's Advice Hotline dated October 10, 2012. CanTech likes it also. It is a Tech stock with dividends. I therefore started to follow this stock in 2013.
When I was updating my spreadsheet, I noticed that there is a big earnings loss for 2018 and it is mostly because of an impairment charge. They started to report in US$ from CDN$ in 2017 The company has moved its headquarters from Richmond BC to Westminster, Colorado in 2018. They also changed their account rules from IFRS to US GAAP in 2018..
Talk about dividends yields and growth. Dividends only were started in 2012. There was only one dividend increase and that was in 2015. The dividends used to be paid in CDN$, but they switch to US$ this year 2019. Dividends were flat from 2015 to 2018. In 2019 the dividends were decreased by probably 97%.
So, because of the dividend cut, the dividend yield went very low to 0.59%. Because the drop in stock prices, the dividend yield got over 10% in 2018. However, the dividend yield has always been low with 5, 6 and historical median yields at 1.89% for all three.
The Dividend Payout Ratios are only good when you look at cash flow. Companies can manage for some time with dividends only covered by cash flow. The DPR for EPS were fine until 2018 when the company had a massive earnings loss. Since analysts expect earnings losses to continue, it is unknown when the company will be able to cover any dividend with earnings. The DPR for CFPS for 2018 was 24% with 5 year coverage at 19%. This coverage is good.
Debt Ratios are not good on any measure. The company recognizes this and is attempting to fix them. Long Term Debt increased massively in 2017 by almost 500%. The current Long Term Debt Ratio is 7.83 US$. Certainly any ratio over 1.00 is too high and some analysts think anything over 0.50 is too high.
The Liquidity Ratio is too low. The one for 2018 is 0.75 with 5 year median of 0.86. If this ratio is not 1.00, it means that current assets cannot cover current liabilities. Even adding back in current portion of the short term debt and cash flow after dividends, the ratio is only 0.86. In the first quarter this ratio improved to 0.83 and adding back in current portion of the short term debt and cash flow after dividends it gets to 1.20.
The debt ratio is low also, with a 2018 ratio of 1.15, and remaining similar at 1.13 in the first quarter. I prefer both the Liquidity Ratio and Debt Ratio to be 1.50 for safety’s sake. The Leverage and Debt/Equity Ratios are very high with the ones for 2018 at 7.78 and 6.78 respectively and the current ones slightly higher at 7.83 and 6.94.
The Total Return per year is shown below for years of 5 to 18 to the end of 2018 in CDN$. 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.
At the moment both Canadian and US investors in this stock is losing money.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 2.63% | -24.01% | -27.65% | 3.64% |
| 2008 | 10 | 2.18% | 2.06% | -2.86% | 4.92% |
| 2003 | 15 | 0.67% | -2.49% | 3.16% | |
| 2001 | 18 | 0.96% | -1.71% | 2.67% |
The Total Return per year is shown below for years of 5 to 16 to the end of 2018 in US$.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | -2.36% | -27.73% | -31.09% | 3.37% |
| 2008 | 10 | -3.05% | 1.94% | -3.43% | 5.37% |
| 2003 | 15 | 0.59% | -2.87% | 3.45% | |
| 2002 | 16 | -6.96% | -1.09% | -5.88% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 18.90, 22.50 and 26.10 CDN$. The corresponding 10 year median ratios are 17.97, 21.71 and 25.39 CDN$. The corresponding historical ratios are 18.04, 22.31 and 26.10 CDN$. The current P/E Ratio is negative as will the next two years of P/E Ratios. Therefore, I cannot do any P/E Ratio testing for this company.
I get a Graham Price of $24.12 CDN$. The 10 year low, median, and high median Price/Graham Price Ratios are 1.44, 1.86 and 2.19 CDN$. The current P/GP Ratios is 0.38 based on a stock price of $9.12 CDN$. 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 3.34 US$. The current P/B Ratio is 0.70 US$ based on a Book Value of $579, Book Value per Share of $10.00 and a stock price of $6.78, all in US$. The current ratio is some 79% 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 1.89% CDN$. The current dividend yield is 0.59% based on dividends of $0.05 CDN$ ($0.04 US$) and a stock price of $9.12 CDN$. The current dividend yield is 69% below the historical dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10 year median Price/Sales (Revenue) Ratio is 1.60 US$. The current P/S Ratio is 0.21 based on 2019 Revenue of $1,960M US$, Revenue per Share of $32.89 US$ and a stock price of $6.78 US$. The current ratio is 87% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
Results of stock price testing is mostly coming up as relatively cheap. If the P/B Ratio is below 1.00, and this stock has a P/B ratio of 0.70 US$, it means that the stock is selling below the theoretical break up value of the company and is therefore very cheap. In this case, the Dividend Yield test is not really invalid even though the test results are because of a dividend cut. Dividends are approved based on how the board expects the company to behave in the new future. The dividend cut shows that they do not expect much in the near future.
When I look at analysts’ recommendations, I find Buy (1), Hold (6) and Underperform (1). The consensus would be a Hold. The 12 month stock price consensus is $11.85 US$. This implies a total return of 75.37% with 74.78% from capital gains and 0.59% from dividends, all in US$.
There is an article on Proactive Investor talking about this company given a contract by NASA. Cestrian Capital Research on Seeking Alpha talks about the company’s problems. There is an interesting article on the Financial Post about the company adopting a tax benefit preservation plan. Jason Phillips on Motley Fool files a positive report on this company saying it is massively oversold. .
The last stock I wrote about was about was Ensign Energy Services (TSX-ESI, OTC-ESVIF) ... learn more. The next stock I will write about will be Husky Energy Inc. (TSX-HSE, OTC-HUSKF) ... learn more on Friday, June 7, 2019 around 5 pm. Tomorrow on my other blog I will write about Something to Buy June 2019.... learn more on Thursday, June 06, 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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