I own this stock of Home Capital Group (TSX-HCG, OTC-HMCBF). I started reviewing this company in September 2009. It is a dividend growth company and it was coming up on lists of good dividends paying stocks. It is on some dividends paying companies lists that I look at.
When I was updating my spreadsheet, I noticed after the stock price has been going down, it shot up some 128% in 2019. It is down now but so is the market at the present time.
They stopped the dividends in 2017. However, analysts expect them to be restarted soon.
Debt Ratios are fine. The coverage of deposits ratio is 0.75. The deposits are well covered. I did calculate a Liquidity Ratio which is 1.96, but this is not important for financial services companies. The Debt Ratio at 1.10 is fine for a financial services company.
The Total Return per year is shown below for years of 5 to 24 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 | 0.00% | -6.29% | -7.24% | 0.94% |
| 2009 | 10 | 0.00% | 6.48% | 4.65% | 1.84% |
| 2004 | 15 | 0.00% | 6.52% | 4.94% | 1.58% |
| 1999 | 20 | 0.00% | 22.85% | 18.95% | 3.90% |
| 1995 | 24 | 40.76% | 31.06% | 9.71% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 6.32, 9.38 and 11.89. The corresponding 10 year ratios are 7.15, 9.22 and 11.43. The corresponding historical ratios are 7.50, 9.15 and 11.89. The current P/E Ratio is 8.60 based on a stock price of $28.45 and 2020 EPS estimate of $3.31. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $46.73. The 10 year low, median, and high median Price/Graham Price Ratios are 0.66, 0.86 and 1.04. The current P/GP Ratio is 0.61 based on a stock price of $28.45. 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 1.71. The current P/B Ratio is 0.97 based on a Book Value of $1682M, Book Value per Share of $29.33 and a stock price of $28.45. The current ratio is 43% below the 10 year ratio. This stock price testing suggests that the stock price is relatively cheap.
I cannot do any dividend yield testing because they have suspended the dividends.
The 10 year median Price/Sales (Revenue) Ratio is 4.51. The current P/S Ratio is 3.13 based on 2020 Revenue estimate of $522M, Revenue per Share of $9.10 and a stock price of $28.45. The current ratio is 31% below the 10 year ratio. This stock price testing suggests that the stock price is relatively cheap.
Results of stock price testing is that the stock price is probably relatively cheap. All the tests except the P/E Ratio test is showing the stock price as cheap. P/E Ratio of 8.60 is a low one, however, the P/E Ratios have been low on this stock.
Is it a good company at a reasonable price? The stock price is certainly good. I think this company will do well in the future, but this may take time. It is high on risk level. I am not sure yet if I will keep it. The reason is no dividends, and I cannot afford to have a stock in my RRIF account that pays no dividends.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (2), Hold (4) and Sell (1). The consensus would be a Hold. The 12 month stock price consensus is $36.06. This implies a total return of 26.76% all from capital gains.
See what analysts are saying on Stock Chase. Views on this stock is quite mixed. Ambrose O'Callaghan on Motley Fool says our real estate will go into a bull run and this company will profit. A writer on Simply Wall Street talks about this stocks beta and what it means. A writer on Simply Wall Street talks about insider trading. The Canadian Press on Times Colonist talks about the company’s recent results..
Home Capital Group Inc is a specialty finance company that offers residential and commercial mortgage lending, securitization of insured mortgage products, consumer lending, and credit card services. The company also offers deposits via brokers and financial planners, and through its direct-to-consumer deposit brand, Oaken Financial. Its web site is here Home Capital Group.
The last stock I wrote about was about was Bombardier Inc (TSX-BBD.B, OTC-BDRBF) ... learn more. The next stock I will write about will be RioCan Real Estate (TSX-REI.UN, OTC-RIOCF) ... learn more on Friday, March 6, 2020 around 5 pm. Tomorrow on my other blog I will write about Something to Buy March 2020.... learn more on Thursday, March 05, 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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