I do not own this stock of Granite REIT (TSX-GRT.UN, NYSE-GRP.U). I first bought some of this stock in 2003 when it was called MI Developments (TSX-MIM.A). It was a company connected with Frank Stronach and Magna. TD bank also had an Action Buy Call (Strong Buy) on this stock. The year of 2006 was the last time I did well on this stock. It kept going down and I sold it in 2009; being discourage it would ever do well again.
When I was updating my spreadsheet, I noticed that they gave out more units to the shareholders but then did a consolidation so this did not increase the number of units outstanding. I think that the effect on the number of units of this distribution for shareholders is nil, which is what I am assuming. I wish that they would not do such weird things as it can be hard to tell the exact implications.
The dividend yields are moderate (2 to4% range) to good (5% or over). The current yield is 4.34%, with 5, 10 and historical median dividend yields at 5.50%, 5.55% and 4.47%. There were some big dividend increases when this company became a REIT, but since then, they have slowed down. This last increase was in this year and it was for just 2.6%.
The Dividend Payout Ratios seems to be fine. The DPR for EPS for 2018 was 27% with 5 year coverage of 44% for the calculated EPS. For REITs, generally speaking, the Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO) are used to look at DPR. For 2018 the DPR for FFO is 74% with 5 year coverage at 73%. The DPR for AFFO for 2018 is 91% with 5 year coverage at 79%.
Debt Ratios are all fine. The Long Term Debt/Market Cap ratio is 0.49 for 2018 and this is low and fine. The Liquidity Ratio has varied greatly and is quite high and fine for 2018 at 8.39. The Debt Ratio for 2018 is also high and fine at 2.48. The Leverage and Debt/Equity Ratios are low and fine at 1.68 and 0.68.
The Total Return per year is shown below for years of 5 to 16 to the end of 2018 in CDN$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 5.34% | 12.58% | 6.60% | 5.99% |
| 2008 | 10 | 14.01% | 27.66% | 19.33% | 8.33% |
| 2003 | 15 | 12.50% | 5.68% | 2.63% | 3.05% |
| 2002 | 16 | 7.64% | 4.38% | 3.26% |
The Total Return per year is shown below for years of 5 to 16 to the end of 2018 in US$.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 0.23% | 6.71% | 1.28% | 5.43% |
| 2008 | 10 | 12.78% | 27.41% | 17.95% | 9.45% |
| 2003 | 15 | 13.02% | 5.69% | 2.26% | 3.43% |
| 2002 | 16 | 9.32% | 5.32% | 3.99% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 5.74, 6.73 and 7.71. The corresponding 10 year ratios are 6.53, 7.67 and 7.38. The corresponding historical ratios are 6.53, 7.67 and 8.82. The current P/E Ratio is 7.23 based on a stock price of $64.42 and 12 months ending at the second quarter EPS of 8.91. This stock price testing suggests that the stock price is relatively reasonable and below the median.
Because this is a REIT, the Price/FFO Ratio is often used. The 5 year low, median, and high median P/FFO ratios are 11.34, 12.75 and 14.17. This corresponding 10 year ratios are 11.23, 12.93, and 14.63. The current P/FFO Ratio is 18.25 based on current stock price of $64.42 and 2019 FFO estimate of $3.53. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $66.54. The 10 year low, median, and high median Price/Graham Price Ratios are 0.71, 0.77 and 0.84. The current P/GP Ratio is 0.97 based on a stock price of $64.42. 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 1.05. The current P/B Ratio is 1.16 based on a stock price of $64.42, Book Value of $2756M and Book Value per Share of $55.75. The current ratio is 11% higher than the 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable but above median.
I get an historical median dividend yield of 4.47%. The current yield is 4.34% based on dividends of $2.80 and a stock price of $64.42. The current yield is 3% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above median.
The 10 year median Price/Sales (Revenue) Ratio is 8.76. The current P/S Ratio is 11.71 based on 2019 Revenue estimate of $272M, Revenue per Share of $5.00 and a stock price of $64.42. The current P/S Ratio is 34% above the 10 year ratio. This stock price testing suggests that the stock price is relatively expensive.
Results of stock price testing is that the stock price is probably expensive. The P/S Ratio testing is interesting because it is both an increase in the stock price and an increase in the number of outstanding shares that contributed to this ratio’s testing showing that the stock price is relatively expensive. You have to wonder if the dividend yield test is any good because of the change of this company from a corporation to a REIT. The P/B would seem to point to a reasonable if not cheap stock price. However, P/B Ratios for REIT tend to be low (that is under 1.5) which is considered low for other companies.
Is it a good company at a reasonable price? The changes in 2012 including to a REIT seems to have been very good for this company. It now seems to be a good REIT to own. However, at present, it does seem to be on the expensive side. Interestingly, the Chairman of this company has yet to show up on an INK report and he has been reported to be the chairman for the last 3 years. The INK report shows officers and board members of a company and what they own in shares.
When I look at analysts’ recommendations, I find Strong Buy (4), Buy (2) and Hold (3). The consensus would be a Buy. The 12 months consensus stock price is $67.78. This would imply a total return of 11.12% based on a stock price of $64.42 with 4.35% from dividends and 6.77% from capital gains.
See what analysts are saying on Stock Chase. They think that management is doing an excellent job. Karen Thomas on Motley Fool thinks this is good REIT at an attractive price. A writer on Simply Wall Street says the company has a good interest coverage ratio. Liza Goodheart on The Enterprise Leader says CIBC raised the target price on this stock. Charles Blunt on Mayfield Recorder says the company has an average recommendation of Buy.
Granite Real Estate Investment Trust, or Granite, is a real estate investment trust engaged in the acquisition, development, and management of primarily industrial properties in North America and Europe. Granite's portfolio comprises various manufacturing, corporate office, warehouse and logistics, and product engineering facilities. Its web site is here Granite REIT.
The last stock I wrote about was about was Alcanna Inc (TSX-CLIQ, OTC-LQSIF) ... learn more. The next stock I will write about will be Le Chateau Inc (TSX-CTU, OTC-LCUAF) ... learn more on September 27, 2019 around 5 pm. Tomorrow on my other blog I will write about Money Show 2019 – Nick Bontis.... learn more on Thursday, September 26, 2019 around 5 pm.
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