I do not own this stock of Artis REIT (TSX-AX.UN, OTC-ARESF). Early in 2013, this company was mentioned as a good REIT to own. A number of people I correspond with mentioned this REIT. However, my first view of it is not positive. It is also not a dividend growth stock.
When I was updating my spreadsheet, I noticed that the dividend yield is still good. After having a flat dividend for 8 years, they have in the last two year, cut their dividends. Insiders are buying and they have been for the last 3 years. Shareholders have made money because of the dividends. There has been little in the way of capital gains. See chart below.
The dividend yields are good with dividend growth non-existent. The current dividend yield is good (5% to 6% ranges) at 6.99%. The 5, 10 and historical median dividend yields are high (7% or higher) at 8.21%, 8.02% and 7.82%. They started to pay dividends in 2005 and there were some increases at first, but then there was 8 years of flat dividends and in 2018 they decreased the dividends by 50%. Analysts do not expect any change in the current dividend over the short term.
The Dividend Payout Ratios (DPR) are much improved with dividend decrease. The DPR for EPS for 2019 is 75% with 5 year coverage at 210%. This DPR has been too high in the past. The DPR for Funds from Operations (FFO) has been better than the DPR for EPS. The DPR for FFO for 2019 is 38% with 5 year average at 38%. The 10 year median for DPR for FFO is 76%. The DPR for CFPS for 2019 is 35% with 5 year coverage at 64%. The DPR for Free Cash Flow for 2019 is 38% with 5 year coverage at 65%. Dividend Coverage Ratio for 2019 is 2.61 with 5 year ratio at 1.54.
Debt Ratios are fine, but would like a better Liquidity Ratio. The Long Term Debt/Market Cap Ratio for 2019 is 0.76 and is fine. The Liquidity Ratio for 2019 is very low at 0.45. If you considered cash flow after dividends and you only consider dividends paid in cash and the current portion of the long term debt, the ratio is still low at 1.39. I prefer it to be 1.50 or higher. The Debt Ratio is good at 2.06. The Leverage and Debt/Equity Ratios are good at 1.94 and 0.94.
The Total Return per year is shown below for years of 5 to 15 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 | -12.94% | 3.87% | -3.45% | 7.32% |
| 2009 | 10 | -6.70% | 9.45% | 0.45% | 9.00% |
| 2004 | 15 | -2.28% | 17.77% | 4.50% | 13.27% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 10.06, 13.19 and 16.33. The corresponding 10 year ratios are 9.27, 10.27 and 11.11. The corresponding historical ratios are 3.85, 4.30 and 4.75. The current P/E Ratio is negative, so I cannot do this test.
I can do a Price/Funds from Operations Ratio test. The 5 year low, median, and high median P/FFO Ratios are 7.25. 9.20 and 9.92. The corresponding 10 year ratios are 8.73, 9.80 and 11.51. The current P/FFO ratio is 5.90. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $15.93. The 10 year low, median, and high median Price/Graham Price Ratios are 0.55, 0.65 and 0.74. The current P/GP Ratio is 0.49 based on a stock price of $7.73. 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 0.86. The current P/B Ratio is 0.49 based on a Book Value of $2,149M, Book Value per Share of $15.66 and a stock price of $7.73. The current P/B Ratio is 43% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median Price/Cash Flow per Share Ratio of 9.57. The current P/CF Ratio is 5.65 based on last 12 month Cash Flow of 188.4M, Cash Flow per Share of $1.37 and a stock price of $7.73. The current ratio is 41% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 7.82%. The current dividend yield is 6.99% based on a stock price of $7.73 and dividends of $0.54. The current yield is 10.7% lower than the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get an historical median dividend yield of 8.02%. The current dividend yield is 6.99% based on a stock price of $7.73 and dividends of $0.54. The current yield is 12.8% lower than the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
The 10 year median Price/Sales (Revenue) Ratio is 3.90. The current P/S Ratio is 2.26 based on 2020 Revenue estimate of $470, Revenue per Share of $3.54 and a stock price of $7.73. The current ratio is 42% below the 10 year median 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 points to this as does the P/GP Ratio test, the P/B Ratio test, and the P/CF Ratio test. The dividend yield does do not this but this is because the dividends were recently cut by 50%.
Is it a good company at a reasonable price? I believe that the stock price is reasonable. I would not buy this REIT because it has never been a dividend growth company. You expect dividend growth for REIT basically at the rate of inflation. But they have not grown the dividend since 2010 and now the dividend has been cut by 50%.
When I look at analysts’ recommendations, I find Buy (3) and Hold (6). The consensus would be a Hold. The 12 month stock price consensus would be $10.46. This implies a total return of 42.30% with 35.32% from capital gains and 6.99% from dividends.
Analysts in the last two entries on Stock Chase say do not buy. Matt Smith on Motley Fool says to buy because it is trading below its NAV of $15.52 per unit. A writer on Simply Wall Street says that the share are down 22% over the past 5 years, but Total Shareholder Return is 13%. A writer on Simply Wall Street talks about insider trading. An article on Real Estate News Exchange says this company may be bought out.
Artis Real Estate Investment Trust is an unincorporated closed-end REIT based in Canada. Artis REIT's portfolio comprises properties located in Central and Western Canada and select markets throughout the United States, including regions such as Alberta, British Columbia, Manitoba, Ontario, Saskatchewan, Arizona, Minnesota, Colorado, New York, and Wisconsin. Its web site is here Artis REIT.
The last stock I wrote about was about was Atlantic Power Corp (TSX-ATP, NYSE-AT) ... learn more. The next stock I will write about will be Dorel Industries Inc (TSX-DII.B, OTC-DIIBF) ... learn more on Wednesday, July 22, 2020 around 5 pm. Tomorrow on my other blog I will write about Dividends Income and Volatility.... learn more on Tuesday, July 21, 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.
Great posst thanks
ReplyDelete