I do not own this stock of Equitable Group Inc (TSX-EQB, OTC-EQGPF). I had read a glowing report on investing on this company in 2013, so I decided to check it out. It was interesting as it was loaning money to new immigrants, a class of people who generally have a difficult time getting loans and mortgages from our regular banks. It sounded intriguing.
When I was updating my spreadsheet, I noticed that the spreadsheet is filled with green ink because this company has been doing well. The only exception is cash flow and as with banks, the cash flow can be negative. For example, the Revenue per share is up by 13% per year over the past 5 years and the 5 year running average for the latest 5 year period is up by 16% per year. Also, the EPS is up by 11% per year over the past 5 years and the 5 year running average for the latest 5 year period is up by 14% per year.
Dividends are in the low range (below2%). The current dividend is 1.24%, with 5, 10 and historical median dividend yields at 1.50%, 1.65% and 1.50%. The dividends are growing at a moderate rate (8% to 14% range). As shown in the chart below, the dividends growth is increasing. The last dividend increase was for 2019 and it was for 6.5%. However, they generally do more than one increases each year.
The Dividend Payout Ratios are very low. The DPR for EPS for 2018 is 11% with 5 year coverage at 10%.
Debt Ratios are fine. Since this is a bank type stock, you do not look at Long Term Debt/Market Cap Ratio but you look at the Long Term Debt/Long Term Assets Ratio. For this stock the ratio is 0.75 and this is good. I do calculate the Liquidity Ratio, which is 6.60 for 2018 with 5 year median of 4.83. However, this is not an important one for his sort of stock. The Debt Ratio is important and it is 1.05 which is fine for this sort of stock.
The Total Return per year is shown below for years of 5 to 15 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. |
|---|---|---|---|---|---|
| 2013 | 5 | 12.60% | 4.64% | 3.10% | 1.54% |
| 2008 | 10 | 10.13% | 20.11% | 17.54% | 2.58% |
| 2003 | 15 | 9.84% | 7.80% | 6.44% | 1.36% |
Because this stock has gone up 80% this year, it is worthwhile looking at the Total Return to date. This shows much better total returns than the chart above which is to the end of 2018. The stock hit a low at the end of 2018.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 12.60% | 11.37% | 10.20% | 1.17% |
| 2008 | 10 | 10.13% | 19.09% | 17.51% | 1.58% |
| 2003 | 15 | 9.84% | 12.24% | 11.01% | 1.23% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 5.43, 6.43 and 7.70. The corresponding 10 year ratios are 5.46, 6.62 and 7.64. The corresponding historical ratios are 5.67, 6.99 and 8.43. The current P/E Ratio is 9.04 based on a stock price of $106.72 and 2019 EPS estimate of 11.80. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $143.68. The 10 year low, median, and high median Price/Graham Price Ratios are 0.45, 0.53 and 0.62. The current P/GP Ratio is 0.74 based on a stock price of $106.72. 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 0.98. The current P/B Ratio is 1.37 based on a stock price of $106.72, Book Value of $1,287M and a Book Value per Share of $77.73. The current ratio is some 39% 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 1.50%. The current dividend yield is 1.24% based on dividends of $1.32 and a stock price of $106.72. The current yield is 18% below the historical median yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
The 10 year median Price/Sales (Revenue) Ratio is 3.21. The current P/S Ratio is 3.82 based on 2019 Revenue estimate of $463M, Revenue per Share of $27.97 and a stock price of $106.72. The current ratio is 19% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
Results of stock price testing is that the stock price is probably getting or is expensive. Most of the testing shows that the stock price is expensive. The ones that I like best of P/S Ratio and dividend yield show that it is relatively reasonable but above the median. However, the scores do show that the price is close to expensive.
Is it a good company at a reasonable price? This certainly looks like a good long term investment if you are willing to take on the risk. This is considered to be a high risk stock. The stock price is on the pricey side.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (4) and Hold (2). The consensus would be a Buy. The 12 month stock price consensus is $105.29. This implies a loss of 0.10% with a capital loss of 1.34% and dividends of 1.24%.
See what analysts are saying on Stock Chase. They have various view and most like the company. Ambrose O'Callaghan on Motley Fool thinks that the stock is too pricey. A writer on Simply Wall Street talks about what the beta means for this stock. A writer on Simply Wall Street talks about the recent big price increase for this stock. A writer on Market Stock Alerts says the company is showing a weak buy signal.
Equitable Group Inc is a Canadian company that operates business through Equitable Bank, the company's subsidiary. The company also runs a digital bank under the EQ Bank brand. The company operates business across Canada, with the majority of mortgage principal coming from Ontario, Alberta, and Quebec. Its web site is here Equitable Group Inc.
The last stock I wrote about was about was Medtronic PLC (NYSE-MDT) ... learn more. The next stock I will write about will be North West Company (TSX-NWC, OTC-NWTUF) ... learn more on Friday, October 18, 2019 around 5 pm. Tomorrow on my other blog I will write about Money Show 2019 – Steve Hawkins.... learn more on Thursday, October 17, 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.
See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
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