I do not own this stock of TMX Group Ltd (TSX-X, OTC-TMXXF). I looked at this stock in 2008 after I found it on a list of Strongest Dividend Growth stocks. I am interested in such stocks.
When I was updating my spreadsheet, I noticed that the Liquidity Ratios are really low. The one for 2019 is just 1.02. There is no safety margin. It is interesting that this company is expanding beyond Canada’s boarders and is increasing revenue from outside Canada.
I also noticed that the earnings are growing much faster than Revenue. Revenue per Share over the past 5 and 10 years grew at 1.67% and 6.72% per year. EPS over the past 5 and 10 years grew at 18.81% and 12.00% per year. However, looking further into this, I find the same is not for the 5 year running growth. Revenue per Share grew over the past 5 and 10 years for 5 year running at 8.31% and 6.96% per year. EPS per Share grew over the past 5 and 10 years for 5 year running at 7.04% and 11.85% per year. It is the 5 year running figures that count in the long run.
The dividend yields are currently low with dividend growth currently moderate. The current dividend yield is low (below 2%) at 1.98%. The 5, 10 and historical median dividend yields are moderate (2% to 4% ranges) at 2.82%, 3.13% and 3.04%. The dividend growth has varied over time, but it is currently moderate (8% to 14% ranges) at 9.16% per year over the past 5 years. But the last increase was lower in the low range at 6.5% for 2020.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2019 is 57% with 5 year coverage at 53%. The DPR for CFPS for 2019 was 30% with 5 year coverage at 28%. The DPR for Free Cash Flow for 2019 was 53% with 5 year coverage at 41%. The Dividend Coverage Ratio for 2019 is 2.03 with 5 year coverage at 2.43.
Debt Ratios are fine, but I would like to see a better Liquidity Ratio. The Long Term Debt/Market Cap Ratio is good and low at 0.12. The Liquidity Ratio is very low at 1.02. I prefer this to be 1.50 or higher. The Debt Ratio is low at 1.12, but more leeway is given to financials, so it is fine. The Leverage and Debt/Equity Ratios are high at 9.25 and 8.25, but this is financial, so for financials these tend to be rather high.
The Total Return per year is shown below for years of 5 to 17 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 | 9.16% | 20.14% | 17.32% | 2.82% |
| 2009 | 10 | 5.02% | 16.21% | 13.00% | 3.21% |
| 2004 | 15 | 10.17% | 13.28% | 10.02% | 3.26% |
| 2002 | 17 | 13.02% | 22.03% | 14.87% | 7.15% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 10.09, 15.18 and 17.55. The corresponding 10 year ratios are 12.75, 15.39 and 18.91. The corresponding historical ratios are 14.85, 21.36 and 25.02. The current P/E Ratio is 25.43 based on a stock price of $133.51 and 2020 EPS estimate of $5.25. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $85.73. The 10 year low, median, and high median Price/Graham Price Ratios are 0.87, 1.07 and 1.24. The current P/GP Ratio is 1.56 based on a stock price of $133.51. 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 1.14. The current P/B Ratio is 2.15 based on a stock price of $133.51 and Book Value of $3,499M and a Book Value per Share of $62.22. The current ratio is 88% above the 10 year median. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median Price/Cash Flow per Share Ratio of 10.47. The current P/CF Ratio is 19.55 based on 2020 CFPS estimate of $6.83, Cash Flow of $384M and a stock price of $133.51. The current ratio is 87% 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 3.04%. The current dividend yield is 1.98% based on dividends of $2.64 and a stock price of $133.51. The current dividend yield is 35% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median dividend yield of 3.13%. The current dividend yield is 1.98% based on dividends of $2.64 and a stock price of $133.51. The current dividend yield is 37% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10 year median Price/Sales (Revenue) Ratio is 4.80. The current P/S Ratio is 8.67 based on 2020 Revenue estimate of $866, Revenue per Share of $15.40 and a stock price of $133.51. The current ratio is 81% 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 tests show this and it is confirmed by the P/S Ratio test. All the tests show the same thing. I see not a problem with any of the tests.
Is it a good company at a reasonable price? This stock has done well for its shareholders and it is a dividend growth stock. I see the low Liquidity Ratio as a problem, but overall, it is a good stock and it is going international. However, it would seem that this stock is relatively expensive at this time.
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 consensus would be $142.86. This implies a total return o 8.98%, with 7.00% from capital gains and 1.98% from dividends.
The most recent analyst comments on Stock Chase is positive. Brian Paradza on Motley Fool thinks this company has strong wealth creation potential. A writer on Simply Wall Street thinks this company has good dividend prospects. Addison Kliewer on Bloomberg News says the best performing financials in the TSX it is the exchange itself. This stock rated a D score on Money Sense stocks of 2020.
TMX Group Ltd operates global markets and builds digital communities and analytic solutions that facilitate the funding, growth, and success of businesses, traders, and investors. TMX Group operates offices across North America (Montreal, Calgary, Vancouver, and New York), as well as in key international markets including London and Singapore. Its web site is here TMX Group Ltd.
The last stock I wrote about was about was Inter Pipeline Ltd (TSX-IPL, OTC-IPPLF) ... learn more. The next stock I will write about will be Obsidian Energy Ltd (TSX-OBE, NYSE-OBE) ... learn more on Wednesday, July 15, 2020 around 5 pm. Tomorrow on my other blog I will write about Ontario Securities Commission.... learn more on Tuesday, July 14, 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.
No comments:
Post a Comment