I do not own this stock of Sienna Senior Living Inc (TSX-SIA, OTC- LWSCF). When I looked in Stock Chase about Chartwell, Greg Newman; Director & Portfolio Manager, Scotia Wealth Management said he liked Sienna Senior Living better, so I investigated it.
When I was updating my spreadsheet, I noticed that they do not have a history of raising dividends. The dividends have been mostly flat until 2018. In both 2018 and 2019 dividends were increased by 2%.
The current dividend yield is 5.12%. The 5 year and 9 year median dividend yields are 5.55% and 6.98%. The stock only went public in 2010. There was no growth in dividends until 2018 and then another increase in 2019. Both increases were 2%. In the first year of 2010, there were only 10 dividend payments.
The Dividend Payout Ratios are too high in some instances. The DPR for EPS for 2018 is 604% with 5 year coverage at 715%. There has been two many years of EPS losses. The DPR for CFPS for 2018 is 49% with 5 year coverage at 55%. These are too high and I prefer them at 40% or lower. The DPR for FCF for 2018 is 96% with 5 year coverage at 88%. I prefer DPR for FCF to be 60% or less.
The DPR for Funds from Operation (FFO) for 2018 is 65% with 5 year coverage at 64%. The DPR for Funds from Adjusted Funds from Operation (AFFO) for 2018 is 69% with 5 year coverage also at 69%. These payout Ratios are acceptable.
I believe that the Debt Ratios are a problem. The Long Term Debt/Market Cap Ratio for 2018 is 0.87, so it is fine. The Liquidity Ratio, no matter what you do, does not rise to even 1.00. They cannot cover their short term liabilities. If you compare current liabilities to the company’s asset, the ratio is quite high at 8.04. However, I do not like situations where the current liabilities cannot be covered by current assets.
The Debt Ratio at 1.48 is a bit low as I prefer this to be 1.50 or higher. The Leverage and Debt/Equity Ratios for 2018 are 3.09 and 2.09. These are also a bit too high.
The Total Return per year is shown below for years of 5 to 9 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 54.07, 60.09 and 66.11. The 9 year corresponding ratios are negative as are the historical ratios. That is because negative earnings from 2010 to 2014 inclusive. The current P/E Ratio is 182.90 based on a stock price of $18.29 and latest 12 month EPS of $0.10.
This is really sort of a REIT, so the P/FFO ratios can be used. The 5 year P/FFO Ratios are 11.20, 12.45 and 13.70. The corresponding 8 year ratios are 11.20, 12.35 and 13.05. The current P/FFO Ratio is 13.35 based on a stock price of $18.29 and 2019 FFO estimate of $1.37. This stock price testing suggests that the stock price is relatively expensive.
Since it is close to the end of the year, I have also looked at the P/FFO Ratio for 2020. For 2020, the P/FFO Ratio is 12.88 based on 2020 FFO estimate of $1.42 and a stock price of $18.29. This stock price testing suggests that the stock price is reasonable but above the median.
This is really sort of a REIT, so I also looked at the P/AFFO ratios. The 5 year P/AFFO Ratios are 10.24, 11.70 and 12.66. The corresponding 8 year ratios are 9.37, 10.68 and 11.98. The current P/AFFO Ratio is 12.61 based on a stock price of $18.29 and 2019 AFFO estimate of $1.45. This stock price testing suggests that the stock price is relatively expensive.
Since it is close to the end of the year, I have also looked at the P/AFFO Ratio for 2020. For 2020, the P/AFFO Ratio is 12.44 based on 2020 AFFO estimate of $1.47 and a stock price of $18.29. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $5.39. The 10 year low, median, and high median Price/Graham Price Ratios are 2.61, 2.87 and 3.12. The current P/GP Ratio is 4.27 based on a stock price of $18.29. This stock price testing suggests that the stock price is relatively expensive.
If we used a Graham Price based on FFO, we get a Graham Price of $16.51. The 10 year low, median, and high median Price/Graham Price Ratios are 0.94, 1.03 and 1.11. The current P/GP Ratio is 1.15 based on a stock price of $18.29. 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 1.97. The current P/B Ratio is 2.22 based on a Book Value of $539M, Book Value per Share of $8.14 and a stock price of $18.29. The current P/B Ratio is some 14% above the 10 year median. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get an historical median dividend yield of 6.98%. The current dividend yield is 5.12% based on dividends of $0.92 and a stock price of $18.29. The current yield is 27% below the historical yield. This stock price testing suggests that the stock price is relatively expensive.
The 10 year median Price/Sales (Revenue) Ratio is 1.20. The current ratio is 1.82 based on 2019 Revenue estimate of $669M, Revenue per Share of $10.09 and a stock price of $18.29. The current ratio is 52% above the 9 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 reasonable to expensive. Here again, I like the P/S Ratio test and it is showing the stock price as relatively expensive. However, the P/B Ratio test is showing the stock price as relatively reasonable but above the median. This is a fair test. If we use the FFO for 2020 we get the same results.
Is it a good company at a reasonable price? I took a look at this stock because I wanted to buy a Canadian stock in the Health Care sector. I decided again the stock because of the debt ratios. The stock price is on the high, if not expensive side. I might make another decision in the future if it got better debt ratios and continued to raise dividends.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (2) and Hold (6). The consensus would be a Buy. The 12 month stock price is $19.98. This implies a total return of 15.87% with 8.75% from capital gains and 5.12% from dividends based on a stock price of $18.29.
See what analysts are saying on Stock Chase. There are quite mixed views, but most like this stock. Jason Phillips on Motley Fool says that the company is in a good position to take advance of the growing senior population and in the meantime pays a high dividend. A writer on Simply Wall Street thinks that this company which has institutional ownership of 18% give this stock some credibility as an investment. A writer on Simply Wall Street says the ROE at 1.4% is a lot lower than others in the sector which have a ROE average of 8.7%. Matthew Tipps on Slater Sentinel says this company has an average rating of Hold from four analysts.
There is an article about a suit against this company on CTV News. There is also an article on CTV News saying that the Class Action has been discontinued.
Sienna Senior Living Inc is one of the largest owners of seniors' housing, the largest licensed long-term care operator in Ontario, and a provider of services across the full continuum of care. The firm operates solely within Canada. Its web site is here Sienna Senior Living Inc.
The last stock I wrote about was about was Chartwell Retirement Residences (TSX- CSH.UN, OTC- CWSRF) ... learn more. The next stock I will write about will be Bird Construction Inc (TSX-BDT, OTC-BIRDF) ... learn more on Friday, December 27, 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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