I do not own this stock of Methanex Corp (TSX-MX, NASDAQ-MEOH). I started a spreadsheet in November 2010 as I had read some good reports on the stock at that time. It is also got a solid “C” grade in a 2009 Money Sense review of stocks. Money Sense rated the top 100 Canadian Dividend Paying stocks. Money Sense was looking for stocks that provided generous income at reasonable prices.
When I was updating my spreadsheet, I noticed that revenue estimate for 2019 is lower than for last year. The estimates for 2019 and 2020 were $3,737M and $3,811M US$ and they are now $2,814M and $2,956M US$. There is a matched decline for the last 12 months to the end of September 2019 compared to the last 12 months to the end of December 2018 where revenue has a 22% decline to $3,062 from $3,932M US$.
There is the same decline in EPS. Last year the estimates for 2019 and 2020 were $7.52 and $7.11 for EPS US$. Now the 2019 and 2020 EPS estimates are $1.25 and $1.57 US$. There is a matched decline for the last 12 months to the end of September 2019 compared to the last 12 months to the end of December 2018 where EPS has a 60% decline to $2.80 from $6.92 US$.
The dividends are paid in US$. The dividend yields are in the moderate range (2% to 4% ranges). The current dividend yield is 3.69%, with 5, 10 and historical yields at 2.31%, 2.40% and 2.40%. The dividends are growth currently at a moderate rate (8% to 14% ranges) in US$. Some of the dividend increases are better in CDN$. See charts below. The last increase was in 2019 and it was for 9.1%.
The Dividend Payout Ratios are good The DPR for EPS for 2018 is 14% with 5 year coverage at 33%. The DPR for CFPS for 2018 is 9% with 5 year coverage at 14%. These are in US$. The DPR for Free Cash Flow for 2018 is 17% with 5 year coverage at 40.6%. FCF is in CDN$.
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2018 is 0.29 with 5 year median at 0.36. The Liquidity Ratio for 2018 is 1.20 with 5 year median at 1.69. If you add in cash flow after dividends the rate becomes 2.03 with 5 year coverage at 2.12. The Debt Ratio is 1.65 with 5 year median at 1.66. Leverage and Debt/Equity Ratios are a little high at 3.05 and 1.85 for 2018. The 5 year median ratios are better at 2.64 and 1.50.
The Total Return per year is shown below for years of 5 to 23 to the end of 2018 in CDN$. 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 | 16.62% | 3.17% | 0.89% | 2.28% |
| 2008 | 10 | 9.29% | 20.64% | 16.97% | 3.68% |
| 2003 | 15 | 13.10% | 13.34% | 10.58% | 2.76% |
| 1998 | 20 | 16.43% | 13.50% | 11.10% | 2.40% |
| 1995 | 23 | 10.18% | 8.53% | 1.66% |
The Total Return per year is shown below for years of 5 to 23 to the end of 2018 in US$.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 10.95% | -1.99% | -4.05% | 2.07% |
| 2008 | 10 | 8.11% | 19.81% | 15.66% | 4.15% |
| 2003 | 15 | 12.69% | 13.37% | 10.19% | 3.18% |
| 1998 | 20 | 17.50% | 14.89% | 11.93% | 2.96% |
| 1993 | 25 | 10.45% | 8.54% | 1.91% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 9.95, 12.37 and 15.19. The corresponding 10 year ratios are 9.91, 13.25 and 16.09. The corresponding historical ratios are 8.68, 10.40 and 14.94. The current P/E Ratio is 31.03 based on a stock price of $51.14 and 2019 EPS estimate of $1.65 (1.25 US$). This stock price testing suggests that the stock price is relatively expensive. This is in CDN$.
Because it is near the end of the year, we should also check with P/E Ratio for 2020. This P/E Ratio is 24.71 based on a stock price of $51.14 and 2020 EPS estimate of $2.07 ($1.57 US$). An improvement, but still it shows by this stock price testing suggests that the stock price is relatively expensive. Problem is the drop in EPS for 2019 and later years. This is in CDN$.
Twice this stock has had two years of losses resulting in long term capital gains. For example, the Capital gains portion of the total return for the past 10 years is 16.97% per year. 10 years ago, the 11th year and 10th year capital losses were at 14% and 50%. We just had two years of capital losses of 14% and 22%, so perhaps we are due for another rise in stock prices?
| Yr | Capital Gain | 1st Yr Gain | 2nd Yr Gain | 1st Yr Loss | 2nd Yr Loss |
|---|---|---|---|---|---|
| Now | 14% | 22% | |||
| 5 | 0.89% | 36% | 98% | ||
| 10 | 16.97% | 14% | 50% | ||
| 15 | 10.58% | 51% | 9% | ||
| 20 | 11.10% | 9% | 30% | ||
| 25 | 8.53% |
I get a Graham Price of $49.95. The 10 year low, median, and high median Price/Graham Price Ratios are 1.22, 1.54 and 1.88. The current P/GP Ratio is 1.02 based on a stock price of $51.14. This stock price testing suggests that the stock price is relatively cheap. This is in CDN$.
I get a 10 year median Price/Book Value per Share Ratio of 2.18. The current P/B Ratio is 2.12 based on Book Value of $1834M, Book Value per Share of $24.07 and a stock price of $51.14. The current ratio is some 3% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. This is in CDN$.
I get an historical median dividend yield of 2.40%. The current dividend yield is 3.69% based on dividends of $1.44 and a stock price of $31.09. The current yield is 54% above the historical median yield. This stock price testing suggests that the stock price is relatively cheap. This is in US$. You will get a similar result in CDN$. The 10 year median dividend yield is also 2.40%. So a test using the 10 year median dividend yield will give you the same results.
The 10 year median Price/Sales (Revenue) Ratio is 1.32. The current P/S Ratio is 1.06 based on 2019 Revenue estimate of $2,814M, Revenue per Share of $36.93 and a stock price of $39.01. The current ratio is 20.1% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This is in US$. You will get a similar result in CDN$.
Results of stock price testing is that the stock price is cheap to reasonable. A lot of the testing is coming up with a relatively cheap stock price except for P/B Ratio test which is showing the stock price is reasonable and below the median. The P/S Ratio test is showing cheap, but just into the cheap region.
Is it a good company at a reasonable price? First, the stock price is reasonable. This stock is quite volatile so there is risk here. Risk level is rated High. However, this is the second year for a stock price decline for this stock, so the if you like this stock I think now is a good time to buy.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (4), Hold (6), Underperform (1) and Sell (2). The consensus would be a Hold. The 12 month stock price consensus is $41.10 US$ or $54.18 CDN$. This implies a total return of 9.66% with 5.95% from capital gains and 3.71% from dividends. I must say that the analyst’s recommendations are all over the place. It is cyclical and probably the time to buy is now if you want to own this stock.
See what analysts are saying on Stock Chase. It is cyclical and some think now is the time to buy. Aditya Raghunath on Motley Fool expects sales to pick up and likes the current dividend yield. A writer on Simply Wall Street likes that the dividend is covered and growing. Lee McLain Broch Herald talks about recent analysts ratings. Jean Kramer on Finance Recorder talks about short interest in this stock.
Methanex Corp manufactures and sells methanol. Methanex's customers use methanol as a feedstock to produce end products including adhesives, foams, solvents, and windshield washer fluids. The firm also sells its products to the oil refining industry. Europe generates the most revenue of any geographical segment. Its web site is here Methanex Corp.
The last stock I wrote about was about was Stantec Inc (TSX-STN, NYSE-STN) ... learn more. The next stock I will write about will be Magna International Inc. (TSX-MG, NYSE-MGA) ... learn more on Wednesday, December 20, 2019 around 5 pm. Tomorrow on my other blog I will write about Money Show 2019 – Rob Carrick.... learn more on Thursday, December 19, 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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