I own this stock of Alaris Royalty Corp (TSX-AD, OTC-ALARF). This is a stock that Dividends in Hand Blogger has bought in July 2016. I note that his site today says he is still holding this stock. His site is here. It was also recommended by Acumen Capital report in a report by Brian Pow and Oliver Shao via Investor’s Digest.
When I was updating my spreadsheet, I noticed there was a lot of insider buying after the stock sunk to under $15.00. Buying continued as stock fell more. Insider buy is at 1.20% of market cap when you expect it to be closer to 0.01%. Insider buying is over $4M.
The dividend yields are good to high with dividend growth low. Because of the bear market dividend yields are high (over 7%). The current dividend is 21.57%. The other dividend yields I am looking at are from good (5% and 6% ranges) to high (over 7%). The 5, 10 and historical dividend yields are 7.67%, 6.79%and 6.98%.
The Dividend Payout Ratios are currently fine, but dividend could be at risk. The DPR for EPS for 2019 is 168% with 5 year coverage at 125%. The DPR for CFPS is 60% with 5 year coverage at 70%. The DPR for Free Cash Flow for 2019 is 81% with 5 year coverage at 83%. They get cash flow from their partners and pass it along as dividends. They think that their partners have will have business interruptions because of the Covid -19 situation before the second quarterly dividend is due and this will lead to a cut in dividends in the second quarter. See their March 19 News Release.
Debt Ratios are fine. Long Term Debt/Market Cap Ratio for 2019 was 0.35. With this bear market it is currently at 1.02. The Liquidity Ratio for 2019 is 1.87, but has been volatile. The Debt Ratio for 2019 is 2.34 with a 5 year median of 4.20 but this has also been volatile. The Leverage and Debt/Equity Ratios for 2019 are 1.74 and 0.74 with 5 year medians of 1.31 and 0.31. These ratios have not been volatile.
The Total Return per year is shown below for years of 5 to 12 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.|
The 5 year low, median, and high median Price/Earnings per Share Ratios are 13.05, 17.48 and 21.90. The corresponding 10 year ratios are 14.12, 18.34 and 22.35. The corresponding historical ratios are 12.38, 13.66 and 19.54. The current P/E Ratio 5.17 based on a stock price of $7.65 and 2020 EPS estimate of $1.48. This stock price testing suggests that the stock price is relatively cheap.
This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $23.42. The 10 year low, median, and high median Price/Graham Price Ratios are 085, 1.06 and 1.28. The current P/GP Ratio is 0.33 based on a stock price of $7.65. 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 1.32. The current ratio is 0.46 based on a stock price of $7.65, Book Value of $604M, and Book Value per Share of $16.47. The current ratio is 65% below the 10 year ratio. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 6.98%. The current dividend yield is 21.37% based on dividends of $1.65 and a stock price of $7.65. The current yield is 209% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 6.79%. The current dividend yield is 21.37% based on dividends of $1.65 and a stock price of $7.65. The current yield is 217% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10 year median Price/Sales (Revenue) Ratio is 10.81. The current P/S Ratio is 2.78 based on 2020 Revenue estimate of $101M, Revenue per Share of $2.75 and a stock price of $7.65. The current ratio is 74% 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 relatively cheap. The P/S Ratio test confirms the dividend yield tests to say it is cheap. There is not problem with the testing. However, I notice that estimates have not been changing due to the Covid 19 virus. Probably because no one knows what will happen. The other thing is that the company said that the next quarterly dividend maybe cut but they will not know for sure until closer to the time when it is to be announced.
Is it a good company at a reasonable price? I still like the idea of this stock where they invest in private companies. I will probably buy some more in this bear market. It will not be many shares because I do not have a lot of free cash. The stock price is cheap.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (3) and Hold (3). The consensus would be a Buy. The 12 month stock price target is $13.82. This implies a total return of 102.22% with 80.65% from capital gains and 21.57% from dividends. This price is below the price it has been for some time.
See what analysts think of this stock at Stock Chase. Mostly the analysts like this stock. Kay Ng on Motley Fool thinks this is too high a risk for investment. A writer at Simply Wall Street says in June 2018 that the company was trading at 97% of intrinsic value at $16.51. Trapping Value on Seeking Alpha thinks this company is a current buy at $7.92. The company on Newswire announced the sale of its Sandbox Acquisitions. It seems this was a surprise and they lost money on this investment.
Alaris Royalty Corp is engaged in investing in operating entities. Its operations consist primarily of investments in private operating entities, typically in the form of preferred limited partnership interests, preferred interest in limited liability corporations in the United States, loans receivable, or long-term license and royalty arrangements. Its web site is here Alaris Royalty Corp.
The last stock I wrote about was about was Sun Life Financial Inc (TSX-SLF, NYSE-SLF) ... learn more. The next stock I will write about will be Toromont Industries Ltd (TSX-TIH, OTC-TMTNF) ... learn more on Monday, April 6, 2020 around 5 pm.
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