Sound bite for Twitter and StockTwits is: Dividend Paying Industrial. The stock price is relatively expensive. This stock is up 2% year to date. No dividend increases in sight at the moment. See my spreadsheet on WSP Global Inc.
I own this stock of WSP Global Inc (TSX-WSP, OTC-WSPOF). In Sept 2011 I rationalized my portfolio. I sold stocks that did not make it into my core and bought stocks that could of the same type. In this case selling Stantec and buying Genivar. In October 2011 I wanted to sell Enerflex because it is not a company I bought, but a distribution from Toromont. I bought more Genivar, now called WSP Global.
When I was updating my spreadsheet, I noticed that this company was started as an income trust. It was trying to get its dividend under control and so has not increased the dividend since becoming a corporation in 2010. However, I have done well in this stock with a total return of 20.97% per year and 17.10% from capital gains and 3.87% from dividends. I am not disappointed in this stock, but wish they would consider a dividend increase. I do doubt this will happen while we are tied up with Covid 19 and a Lockdown.
The dividend yields are currently low to moderate with dividend growth currently non-existent. This stock was an income trust when those were allowed. Since converting to a corporation, the dividends have been flat. Income trust can afford to pay out a much higher amount than corporations. Currently the dividend yield is low (under 2%) at 1.66%. The 5, 10 and historical dividend yields are moderate (2% to 4% ranges) at 2.09%, 4.04% and 4.61%. The dividends have not grown since 2010.
The Dividend Payout Ratios (DPR) have improved greatly since 2010. I noticed that the payout ratio is higher than the industry average of 41.59% but yield is near the industry average of 1.60%. There will probably be no increase until this company’s DPR is at the industry’s average. Of course, with all averages, some are higher than the average and some lower.
The DPR for 2019 is 55% with 5 year coverage at 67%. The DPR for CFPS for 2019 is 17% with 5 year coverage at 28%. The DPR for Free Cash Flow for 2019 is 12% with 5 year coverage at 20%. Dividend Coverage Ratio for 2019 is 8.57. Unfortunately, analysts do not expect a dividend increase any time in the near future.
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio is good and low at 0.12 for 2019. The Liquidity Ratio for 2019 is low at just 1.07. If you add in Cash Flow after Dividends it is better at 1.29. If you added back in the current portion of the long term debt it is also good at 1.41. The Debt Ratio is good at 1.62. The Leverage and Debt/Equity Ratios are fine at 2.60 and 1.60.
The Total Return per year is shown below for years of 5 to 14 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 20.87, 24.87 and 28.77. The corresponding 10 year ratios are 24.62, 22.77 and 20.98. The corresponding historical ratios are 15.73, 19.70 and 23.68. The current P/E Ratio is 24.93 based on a stock price of $90.51 and 2020 EPS of $3.63. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $50.68. The 10 year low, median, and high median Price/Graham Price Ratios are 1.03, 1.17 and 1.36. The current P/GP Ratio is 1.79 based on a stock price of $90.51. 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 1.64. The current P/B Ratio is 2.88 based on a stock price of $90.51, Book Value of $3,331M and Book Value per Share of $31.45. The current ratio is 76% above the 10 year ratio. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 4.61%. The current dividend yield is 1.66% based on dividends of $1.50 and a stock price of $90.51. The current dividend yield is 64% below the historical dividend yield. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median dividend yield of 4.04%. The current dividend yield is 1.66% based on dividends of $1.50 and a stock price of $90.51. The current dividend yield is 59% below the 10 year dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10 year median Price/Sales (Revenue) Ratio is 1.10. The current P/S Ratio is 1.32 based on 2020 Revenue estimate of $7,244M, Revenue per Share of $68.38 and a stock price of $90.51. The current ratio is 20% above the 10 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 relatively expensive. The Dividend Yield test show the stock as expensive and this is confirmed the P/S Ratio test. There are problems with the dividend yield tests. First this company was an income trust in the past and as such had high dividend yields in the past. Secondly the dividends have been flat for more than 10 year so this does not make a actuate test. There are no problems with the other tests.
Is it a good company at a reasonable price? I do like this company and I will continue to hold my shares. I do not sell stock just because it has become relatively expensive. However, I do not feel that this might be a good time to buy this stock as the price is relatively high. Of course, it is just within the relatively expensive zone with the P/S Ratio test where the relatively expensive zone starts when the current ratio is 20% above the 10 year ratio.
When I look at analysts’ recommendations, I find Strong Buy (5), Buy (5) and Hold (2). The consensus would be a Buy. The 12 month stock price consensus is $94.50. This implies a total return 6.07% with 4.41% from capital gains and 1.66% from dividends.
See what analysts are saying about this stock on Stock Chase. They think well of this stock. Adam Othman on Motley Fool recommends this as a growth stock. A writer on Simply Wall Street thinks this is a dividend stock worthy of closer attention. The company has given their response to handling of Covid 19 event. Ed Hammond on Financial Post talks about a possible deal with Aecon.
WSP Global develops creative, comprehensive, and sustainable engineering solutions for a future where society can thrive. Equipped with an intimate understanding of local intricacies, world-class talent and proactive leadership, they plan, design, manage and engineer long lasting and impactful solutions to uniquely complex problems. Its web site is here WSP Global Inc.
The last stock I wrote about was about was Fortis Inc (TSX-FTS, OTC-FRTSF) ... learn more. The next stock I will write about will be Thomson Reuters Corp (TSX-TRI, NYSE-TRI) ... learn more on Thursday, April 29, 2020 around 5 pm. Tomorrow on my other blog I will write about 5 Small Companies for 2020 .... learn more on Tuesday, April 28, 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.
See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
Post a Comment