I own this stock of Transcontinental Inc (TSX-TCL.A, OTC-TCLAF). This is a dividend growth stock. It was on a number of dividend lists. However, it fell on hard times after 2008, but currently seems to be recovering. It is was on the Canadian Dividend Aristocrats Index when I bought it in 2015.
When I was updating my spreadsheet, I noticed that 2019 was not a good year. Same as in 2018. However, I also noticed that in both years there was insider buying. This was true of the CEO and the other officer I was following. However, the CFO decreased his shares. For directors they kept theirs the same.
The dividend yields started off very low (below 1%) but have been increasing over time. The current dividend yield is good (5% or over) at 5.49%. The 5 and 10 year median dividend yields are in the moderate range (2% to 4% ranges) at 3.82% and 3.83%. The historical median is low (below 2%) at 1.31%. The dividend growth is currently low (under8%) at 6.84% per year over the past 5 years. The last dividend increase was lower at 4.8%.
The Dividend Payout Ratios are good. The DPR for EPS for 2019 is 46% with 5 year coverage at 31%. The DPR for CFPS is 16% with 5 year coverage at 18%. The DPR for Free Cash Flow for 2019 is 25% with 5 year coverage at 26%. The FCF Dividend Coverage Ratio is 3.98 for 2019.
I have some issues with the Debt Ratios. The Long Term Debt/Market Cap Ratio for 2019 is 1.05. This is due to both increase in debt and drop in stock price. It is, of course, too high. The Goodwill/Market Cap Ratio is 0.87. However, if you add in intangibles, the Intangibles and Goodwill/Market Cap Ratio is 1.39. This is too high. The Liquidity Ratio for 2019 is 1.49 and if you added in cash flow after dividends it is 1.99. The Debt Ratio is 1.81 and is best of this company’s debt ratios. Leverage and Debt/Equity Ratios at 2.24 and 1.24 respectively are fine.
The Total Return per year is shown below for years of 5 to 27 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 | 6.84% | 3.89% | -0.85% | 4.74% |
| 2009 | 10 | 10.52% | 7.27% | 2.08% | 5.19% |
| 2004 | 15 | 5.90% | 0.45% | -2.53% | 2.98% |
| 1999 | 20 | 12.67% | 5.88% | 2.60% | 3.28% |
| 1994 | 25 | 11.29% | 9.17% | 5.67% | 3.51% |
| 1992 | 27 | 10.83% | 8.03% | 4.93% | 3.10% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 7.03, 8.74 and 10.49. The corresponding 10 year ratios are 6.70, 8.59 and 9.96. The corresponding historical ratios are 9.61, 12.12 and 12.72. The current P/E Ratio is 8.:30 based on a stock price of $16.02 and 2020 EPS estimate of $1.93. This stock price testing suggests that the stock price is relatively reasonable but above the median. However, the P/E Ratios are quite low. A P/E Ratio is a relatively cheap one.
I get a Graham Price of $23.93. The 10 year low, median, and high median Price/Graham Price Ratios are 0.57, 0.75 and 0.89. The current P/GP Ratio is 0.55 based on a stock price of $16.02. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median Price/Book Value per Share Ratio of 1.35. The current P/B Ratio is 0.85 based on a Book Value of $1687M, Book Value per Share of $19.32 and a stock price of $16.02. The current ratio is 39% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. The current P/B Ratio is also below 1.00 which means the stock is sell below its theoretical break-up value.
I get an historical median dividend yield of 1.31%. The current dividend yield is 5.49% based on dividends of $0.88 and a stock price of $16.02. The current yield is 319% above the historical dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10 year median dividend yield is 3.83%. The current dividend yield is 5.49% based on dividends of $0.88 and a stock price of $16.02. The current yield is 43% above the historical dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10 year median Price/Sales (Revenue) Ratio is 0.56. The current P/S Ratio is 0.51 based on Revenue of $2,732, Revenue per Share of $31.28 and a stock price of $16.02. The current ratio is 8.6% below the 10 year ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
Results of stock price testing is that the stock price is probably cheap to reasonable. A lot of the ratios are very low. The dividend yield test counts because they are paying out a reasonable amount of their EPS in dividends (46%). However, Sales talks about the future and this only shows the price as reasonable. Sales count a lot.
Is it a good company at a reasonable price? I still think that the long term prospects of this company are good. However, I am not pleased with some of the debt ratios. The debt ratios are a risk. I think the stock price is reasonable. Not only does the Sales estimates talk to the future, so do dividend increases and the last increase was 4.8% which is lower than the 5 year increases of 6.8% per year.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (4), and Hold (2). The consensus would be a Buy. The 12 month stock price consensus is $20.44. This implies a total return of 33.08% with 5.49% from dividends and 27.39% from capital gains. This is from the site Market Screener with link. My TD WebBroker has started an Analysts section. For this stock they have Buy (3) and Hold (1) with a consensus of Buy. Their 12 month stock price consensus is $18.83. This implies a total return of 23.03% with 5.49% from dividends and $17.54% from capital gains.
See what analysts are saying on Stock Chase. Most talks about their pivot into packaging. Victoria Hetherington on Motley Fool thinks this is solid buy for the passive investor. A writer on Simply Wall Street says in October 2019 that the company was having a tough year. A writer on Simply Wall Street thinks the stock is good for an income portfolio. Marion Hillson on The Enterprise Leader says Colmark decreased their 2020 EPS from $2.21 to $2.17.
Transcontinental Inc known as TC Transcontinental, is a leader in flexible packaging in North America, and Canada's largest printer. The Corporation is also positioned as the leading Canadian French-language educational publishing group. Its web site is here Transcontinental Inc .
The last stock I wrote about was about was Canadian Imperial Bank of Commerce (TSX-CM, NYSE-CM) ... learn more. The next stock I will write about will be Sylogist Ltd (TSX-SYZ, OTC-SYZLF) ... learn more on Friday, January, 24, 2020 around 5 pm. Tomorrow on my other blog I will write about Banks and Ratios 2.... learn more on January, 23, 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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