I do not own this stock of Shaw Communications Inc (TSX-SJR.B, NYSE-SJR). I am following this stock because it was a stock on Investment Reporter’s list, an MPL Communications Publication.
When I was updating my spreadsheet, I noticed that the Liquidity Ratio for the first quarter was very low at just 0.56 because of the cash asset was down due to payment of long term debt. It will not much longer be considered to be a dividend growth stock as they have not raised the dividends now for 3 years.
Dividends have been in the moderate range (2% to 4% ranges) since around 2006. Before that they were in the low range (Under 2%). The current 4.48%. The 5, 10 and historical median dividend yields are 4.39%, 4.28% and 1.28%.
Basically, the dividend growth is low currently because dividends have been flat since 2016. However, the company does have a very mixed record on dividend increases. I have records going back to 1990 and there were only two increases before 2004 when dividends went up 220%. There were some other big increases after that until 2010 and then increases were low (under 8%) when dividend yields were in the top part of the moderate range.
The Dividend Payout Ratios are currently a bit high in same cases, but the dividends are still covered. The DPR for EPS for 2019 is 84% with 5 year coverage at 78%. The DPR for EPS is expected to be 90% this year. This is high and until it gets lower, no dividend increases should be expected. The DPR for CFPS is 34% with 5 year coverage at 37%. These are good ratios and the one for 2020 is not expected to be any higher. The DPR for Free Cash Flow for 2019 is 93% with 5 year coverage at 83%. Dividend Coverage Ratio is 1.20. Analysts like this ratio to be 2.5 or higher.
Debt Ratios are mostly good, but the Liquidity Ratios is low. The Long Term Debt/Market cap is good at 0.31. The Liquidity Ratio for 2019 is 0.78 with a 5 year median of 0.64. If you add in cash flow after dividends it is 1.12 with 5 year median at 1.10. These are too low. The Debt Ratio for 2019 is 1.67 with 5 year median at 1.70. These ratios are fine. The Leverage and Debt/Equity Ratios for 2019 are 2.49 and 1.49 with 5 year median at 2.63 and 1.63. These are fine.
The Total Return per year is shown below for years of 5 to 29 to the end of 2019. 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. |
|---|---|---|---|---|---|
| 2014 | 5 | 2.25% | 0.60% | -3.42% | 4.02% |
| 2009 | 10 | 3.75% | 6.42% | 1.97% | 4.44% |
| 2004 | 15 | 19.69% | 10.79% | 6.02% | 4.78% |
| 1999 | 20 | 22.64% | 7.05% | 4.05% | 3.00% |
| 1994 | 25 | 18.37% | 14.26% | 10.52% | 3.74% |
| 1990 | 29 | 15.65% | 14.64% | 11.18% | 3.46% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 15.09, 16.38 and 17.69. The corresponding 10 year ratios are 14.23, 15.96 and 17.69. The corresponding historical ratios are 15.09, 16.52 and 17.90. The current P/E Ratio is 2020 based on a stock price of $26.46 and 2020 EPS estimate of $1.31. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $18.48. The 10 year low, median, and high median Price/Graham Price Ratios are 1.21, 1.32 and 1.46. The current P/GP Ratio is 1.43 based on a stock price of $26.46. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10 year median Price/Book Value per Share Ratio of 2.59. The current P/B Ratio is 2.28 based on a Book Value of $5,994M, Book Value per share of $11.58 and a stock price of $26.46. The current ratio is 12% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 1.28%. The current dividend yield is 4.48% based on dividends of $1.185 and a stock price of $26.46. The current yield is 250% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10 year median dividend yield is 4.28%. The current dividend yield is 4.48% based on dividends of $1.185 and a stock price of $26.46. The current yield is 4.8% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10 year median Price/Sales (Revenue) Ratio is 2.38. The current P/S Ratio is 2.50 based on 2020 Revenue estimate of $5,486M, Revenue per Share of $16.60 and a stock price of $26.46. The current ratio is 4.8% above the 10 year median. 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 reasonable and it may be on the expensive side. Most of the testing is showing the stock price as reasonable and above or below the median. The historical median dividend yield test is not a good one as it seems at one time the company intentionally raised the yield with dividend increases. Problem is Sales per Share, EPS, and CF per Share is either up a bit or down a bit over the past 5 years.
Is it a good company at a reasonable price? The stock price is probably reasonable. However, it may not be considered a dividend growth company much longer because of the lack of recent dividend growth. I prefer dividend growth companies. So, I personally would not be interested in buying this company.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (5), Hold (5) and Sell (2). It used to be unusual to have Sell recommendations, but they have been coming up more frequently lately. The consensus would be a Buy. The 12 month stock price is $29.00. This implies 14.08% with 9.60% from capital gains and 4.48% from capital gains.
Last year the 12 month stock price consensus was $30.03. This implies a total return of 15.10% with 4.37% from Dividends and 10.73% from capital gains based on a stock price of $27.12. However, what happened was that the stock price is lower than $27.12 at $26.46. What happened was a total return of 1.94% with a capital loss of 2.43% and dividends of 4.37%. I have a hard time believing this stock is going to very well in the short term.
See what analysts think on Stock Chase. They worry about this stock and all the other telecoms. Chen Liu on Motley Fool has a more positive view and thinks you should buy this stock. A writer on Simply Wall Street says that the company’s debt presents a risk. A writer on Simply Wall Street says earnings are growing. Yes, the EPS for 2019 is substantially higher than in 2018, but you have to go back to 2011 is get a lower EPS than in 2019. William White on Investor Place said that EPS for the first quarter of 2020 came in lower than expect, but stock has gone up .
Shaw Communications is a cable company in western Canada, serving as one of the biggest providers of Internet, television, and landline telephone services in British Columbia, Alberta, Saskatchewan, Manitoba, and northern Ontario. Its web site is here Shaw Communications Inc .
The last stock I wrote about was about was Enghouse Systems Ltd (TSX-ENGH, OTC-EGHSF) ... learn more. The next stock I will write about will be AGF Management Ltd (TSX-AGF.B, OTC-AGFMF) ... learn more on January 31, 2020 around 5 pm. Tomorrow on my other blog I will write about I Buy and Hold Dead .... learn more on January 30, 2020 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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