I do not own this stock of Parkland Fuel Corp (TSX-PKI, OTC-PKIUF). I decided to do a spreadsheet on this stock as it was a stock recommended by Roger Conrad in Money Show 2013.
When I was updating my spreadsheet, I noticed insiders started to buy when stock fell below $35 and stopped when it was at $22.00. They started selling again when stock rose above $35. However, there has been a lot of insider selling over the past year with Net Insider Selling at 0.12% (where you expect only 0.2% or less).
The dividend yields are moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 3.51%. The 5, 10 and historical median dividend yields are also moderate at 4.12/%, 4.89% and 3.67% respectively. The current increases are very low. The last one was for 2020 and it was for 1.7%. See the chart below also.
The stock started as a corporation, then changed to an income trust and then back to a corporation. Prior to becoming an income trust in 2002, there were little in the way of dividend increases. Dividends were up substantially in 2002 by some 1580%. There were some nice increases after that, but when it changed back to a corporation, dividends were decreased starting in 2011. Dividend increases have been low since.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2019 was 47% with 5 year coverage at 100%. The DPR for EPS was only below 100% last year for the first time since the company became an income trust. Income trust can pay over the EPS, but corporations cannot. The DPR for CFPS for 2019 was 21% with 5 year coverage at 39%. The DPR for Free Cash Flow for 2019 was 29% with 5 year coverage at 41%. Dividend Coverage Ratio for 2019 is 3.58 with 5 year ratio at 2.42.
Debt Ratios could be improved. The Long Term Debt/Market Cap Ratio for 2019 is 0.54. The Liquidity Ratio for 2019 is 1.16. If you add in cash flow after dividends it is good at 1.54. This is good for this stock as the 5 year median for Liquidity with CF after dividends is 1.14. The Debt Ratio is a bit low at 1.33 and a 5 year median of 1.46. I prefer this to be at 1.50 or better. The Leverage and Debt/Equity Ratios are too high at 4.74 and 3.56 with 5 year medians of 3.16 and 2.16.
The Total Return per year is shown below for years of 5 to 31 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 34.28, 40.45 and 46.59. The Corresponding 10 year ratios are 17.42. 21.89 and 26.54. The corresponding historical ratios are 10.57, 13.00 and 15.89. The current P/E Ratio is negative, so I can not use it to in testing for P/E Ratio. The 2021 P/E Ratio is 23.33 based on a stock price of $32.20 and 2021 EPS estimate of $1.38. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a Graham Price of $19.68. The 10 year low, median, and high median Price/Graham Price Ratios are 1.36, 1.70 and 2.04. The current P/GP Ratio is 1.64 based on a stock price of $32.20. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median Price/Book Value per Share Ratio of 2.94. The current P/B Ratio is 2.58 based on a Book Value of $1,849M, Book Value per Share of $12.48 and a stock price of $32.20. The current ratio is 12% below the 10 year median P/B Ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median Price/Cash Flow per Share Ratio of 10.53. The current P/CF Ratio is 9.20 based on a stock price of $32.20, Cash Flow per Share estimate for 2020 of $3.50 and Cash Flow of $519M. The current ratio is 6% 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 3.67%. The current dividend yield is 3.77% based on dividends of $1.21, and a stock price of $32.20. The current yield is 3% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median dividend yield of 4.89%. The current dividend yield is 3.77% based on dividends of $1.21, and a stock price of $32.20. The current yield is 23% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10 year median Price/Sales (Revenue) Ratio is 0.30. The current P/S Ratio is 0.29 based on 2020 Revenue estimate $16,272M, Revenue per Share of $109.79 and a stock price of $32.20. The current ratio is 2% below the 10 year median ratio. 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 reasonable and below the median. My favourite test for this company is the P/S Ratio test which shows that stock price just below the median. There is nothing wrong with the P/GP Ratio Test, P/B Ratio Test nor the P/CF Ratio tests. All these tests show that the stock price is reasonable and below the median.
The historical dividend yield test shows the stock price reasonable and below the median also. The 10 year dividend yield test shows that the stock price is relatively expensive. The problem with the dividend yield tests is that the dividends have varied a lot over time. This is because the company was a corporation, then an income trust and then back to a corporation.
Most the P/E Ratio are quite high. EPS has been quite volatile. When the EPS has dropped significantly, the stock price has not. The stock price will only fall so far with a drop in EPS and this can cause quite high P/E Ratios.
Is it a good company at a reasonable price? The think that the stock price is reasonable. This stock has done well for its shareholders overtime. It is a dividend growth stock, but do not expect much growth from the dividends and probably more of the total return in capital gains.
When I look at analysts’ recommendations, I find Strong Buy (5) and Buy (9). The consensus is a Strong Buy. The 12 month stock price is $40.57. This implies a total return of 29.77% with 25.99% from Capital gains and 3.77% from dividends.
Analysts on Stock Chase like this stock and one says be patient and it will recover. Mat Litalien Motley Fool says the dividend increases are low, but the company is saying money for acquisitions and has done well with this. A writer on Simply Wall Street says that the dividends are well covered but the debt is starting to be of some concern. A writer on Simply Wall Street says the stock is fairly value to slightly undervalued at $45.74 in January of this year. .
Parkland Corp distributes and markets fuels and lubricants. Refined fuels and other petroleum products are among the variety of offerings the company delivers to motorists, businesses, consumers, and wholesalers in the United States and Canada. Its web site is here Parkland Fuel Corp.
The last stock I wrote about was about was Computer Modelling Group Ltd (TSX-CMG, OTC-CMDXF) ... learn more. The next stock I will write about will be Saputo Inc (TSX-SAP, OTC-SAPIF) ... learn more on Monday, June 29, 2020 around 5 pm.
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