I do not own this stock of Badger Daylighting Ltd (TSX-BAD, OTC-BADFF). I started to follow this stock after reading a couple of articles in February 2012 in the G&M that talked about the company. The first article looked at what the pros who manage small-cap funds are buying. Badger was one of 10 stocks mentioned and it looked like an interesting stock. It is a dividend paying small cap. The second article looked at why stocks might appeal to a conservative investor looking for income.
When I was updating my spreadsheet, I noticed that most values were in green expect for the growth in stock price over the past 5 years. See chart below. However, the stock price has recovered and if you look at the 5 year total return to date, it is 10.75% with 9.35% from capital gains and 1.39% from dividends.
Dividend yields are low (under 2%) to moderate (2% to 4% ranges). The current dividend is low at just 1.28%. The 5 and 10 year median dividend yields are also low at 1.45% and 1.83%. However, the historical median dividend is much higher at 4.18%. Until 2012 the dividend yield was moderate but since then it has been low. The stock used to be an income trust and that is why the dividend yield in the past was higher.
The dividend growth has varied a lot over time. Dividends were cut in 2011 because of the change in the company to a corporation. They were flat for a couple of years and then increases began again. The last increase was for 5.6% and it was in 2019. In 2018 the dividend increase was very good at 18.4%.
The Dividend Payout Ratios are good The DPR for EPS for 2018 was 28% with 5 year coverage at 30%. The DPR for CFPS for 2018 was 12% with 5 year coverage at 13%.
Debt Ratios are good to very good. The Long Term Debt/Market Cap Ratio for 2018 was 0.09. The Liquidity Ratio for 2018 is 2.76 with 5 year median at 3.08. The Debt Ratio for 2018 is 2.54 with 5 year median also at 2.54. The Leverage and Debt/Equity Ratios for 2018 are 1.65 and 0.65 with 5 year median at 1.78 to 0.78.
The Total Return per year is shown below for years of 5 to 21 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 17.31, 23.06 and 28.78. The corresponding 10 year ratios are 10.86, 15.82 and 19.23. The corresponding historical ratios are 9.22, 11.27 and 14.12. The current P/E Ratio is 24.82, based on a stock price of $44.42 and 2019 EPS estimate of $1.79. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $19.52. The 10 year low, median, and high median Price/Graham Price Ratios are 1.04, 1.47 and 1.79. The current P/GP Ratio is 2.28 based on a stock price of $44.42. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median Price/Book Value per Share Ratio of 3.05. The current P/B Ratio is 4.70 based on a Book Value of $338M, Book Value per Share of $9.46 and a stock price of $44.42. The current ratio is 54% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 4.18%. The current dividend yield is 1.28% based on dividends of $0.57 and a stock price of $44.42. The current yield is 69% below the historical median yield. This stock price testing suggests that the stock price is relatively expensive.
The 10 year median Price/Sales (Revenue) Ratio is 1.91. The current P/S Ratio is 2.31 based on 2019 Revenue estimate of $688M, Revenue per Share of $19.25 and a stock price of $44.42. The current ratio is 21% 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? Since this stock used to be an income trust, the dividend yield test is probably not a good one. The best would be the P/S Ratio test and this is showing the stock as relatively expensive, but just in that range. The stock would be considered expensive if the current ratio were 20% above the 10 year median. However, the stock is still in the expensive range.
Is it a good company at a reasonable price? I think that the company is a good one for dividend investing. I do wonder about the price. For the 5 years to the end of 2018 with 3.91% total return, the company started at a P/E Ratio of 26.07. The total return to date of 10.75% started with a P/E Ratio of 18.05. The current P/E Ratio at 24.82 is between these tow ratios but is closer to the ratio of 26.07.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (4) and Hold (1). The consensus would be a Buy. The 12 month stock price consensus is $55.36. This implies a total return of 25.91% with 24.63% from capital gains and 1.28% from dividends.
See what analysts are saying on Stock Chase. They like this stock. Victoria Hetherington on Motley Fool thinks that buying this stock will reduce the risk of your portfolio. A writer on Simply Wall Street says the company has a flawless balance sheet with reasonable growth potential. A writer on Simply Wall Street says the company has a better ROCE than its industry’s average. The company announces its second quarterly results on Global Newswire.
Badger Daylighting is a Canada-based company that provides nondestructive hydrovac excavation services based on its core technology, the Badger Hydrovac System. The Badger Hydrovac System is an excavation unit that is used primarily for digging in areas with buried pipes and cables. Through its hydrovac vacuum truck fleet, the company provides excavation services to its customers across the United States and Canada. Its web site is here Badger Daylighting Ltd.
The last stock I wrote about was about was Andrew Peller Ltd (TSX-ADW.A, OTC-ADWPF) ... learn more. The next stock I will write about will be Chemtrade Logistics Income Fund (TSX-CHE.UN, OTC-CGIFF) ... learn more on Monday, August 26, 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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