I do not own this stock of IBI Group Inc (TSX-IBG, OTC-IBIBF). I have had this stock on my list to investigate for some time before I finally did in 2011. What finally prompted me set up a spreadsheet on this stock was an investment report I read in March of 2011.
When I was updating my spreadsheet, I noticed that this stock has recovered well from March 2020 lows and it is up some over 16% this year. Estimates have increased for this company this year. For example, last year the Revenue given for 2020 was $386M and this year the Revenue for 2020 is expected to be $426M. Also last year the EPS for 2020 was expected at $0.39, and now the expected EPS for 2020 is $0.58. Also, analysts are more interested in this stock. For last year I only got estimates for the current year and one more year. This year, estimates were for the current year and two more years.
This company stopped paying dividends in 2014. The company started off as an income trust (partnership) and became a corporation in 2011. It has good dividends as an income trust, but after becoming a corporation they could not afford to pay dividends at the rate they were paying.
Debt Ratios need improving. The Long Term Debt/Market Cap Ratio for 2019 is 0.50 and is good. The Liquidity Ratio is 2.03 is very good. The Debt Ratio is low at 1.19 and I prefer this to be 1.50 or higher. The Leverage and Debt/Equity Ratios are too high at 6.18 and 5.18. I prefer these ratios to be less than 3.00 and 2.00.
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 | 0.00% | 25.27% | 25.27% | 0.00% |
| 2009 | 10 | 0.00% | -7.29% | -10.19% | 2.90% |
| 2004 | 15 | 0.00% | 5.37% | -4.32% | 9.69% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 8.67, 11.79 and 16.65. The corresponding 10 year ratios are 7.80, 11.34 and 14.53. The corresponding historical ratios are 6.93, 10.50 and 13.88. The current P/E Ratio is 12.74 based on a stock price of $7.39 and EPS estimate for 2020 of $0.58. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a Graham Price of $4.81. The 10 year low, median, and high median Price/Graham Price Ratios are 0.85, 1.22 and 1.75. The current P/GP Ratio is 1.54 based on a stock price of $7.39. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10 year median Price/Book Value per Share Ratio of 1.53. The current P/B Ratio is 4.16 based on a stock price of $7.39, Book Value of $55.46, and Book Value per Share of $1.77. The current ratio is 173% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. One problem is that the company had a negative book Value in years 2013 to 2015 inclusive. This would lower the 10 year median P/B Ratio.
I get a 10 year median Price/Cash Flow per Share Ratio of 5.94. The current P/CF Ratio is 86.94 based on a stock price of $7.39, Cash Flow per Share estimate for 2020 of $0.09 and a Cash Flow of $2.7M. The current ratio is 1365% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
However, the analysts expect that the Cash Flow per Share for 2020 will drop in 2020 by 76%, but be much better in 2021. If we use the Cash Flow per Share estimate for 2021 of $1.34, the Cash Flow would be $41.9M and the P/CF Ratio would be 5.51. This ratio is 7% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I cannot do any dividend yield tests because this stock has suspended its dividend.
The 10 year median Price/Sales (Revenue) Ratio is 0.46. The current P/S Ratio is 0.34 based on Revenue estimate for 2020 of $426M, Revenue per Share of $13.63 and a stock price of $7.39. The current ratio is 18% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
Results of stock price testing is that the stock price is probably reasonable, but above the median. This shown by the P/S Ratio test, the P/E Ratio test, and the P/GP Ratio test. There are problems with the P/B Ratio test and P/CF Ratio test as noted above.
Is it a good company at a reasonable price? The stock price seems relatively reasonable, but on the high side as it is above the 10 year median by a number of measures. The company was having problems in 2012 and 2013 and seems to have recovered but the recovery is quite uneven. Earnings growth was down by 17% in 2019 and Revenue growth by only 2%. This stock would be risky.
When I look at analysts’ recommendations, I find Strong Buy (2) and Buy (5). The consensus would be a Buy. The 12 month stock price is $9.04. This implies a total return of 22.33% all from capital gains.
The last analysts’ reports were in 2019 on Stock Chase. Last year they found it interesting. Adam Othman on Motley Fool thinks this stock will be a buy in the next market dip coming soon. A writer on Simply Wall Street thinks the CEO is paid under the market median for this size of a company. A writer on Simply Wall Street says that the company’s solid accrual ratio indicates strong Free Cash Flow. The company on Global Newswire talks about a strong second quarter in 2020.
IBI Group Inc is a Canada based engineering services provider. The company plans, designs, implements, as well as offer other consulting services and software development for its intelligence, buildings, and infrastructure business streams. Its web site is here IBI Group Inc.
The last stock I wrote about was about was Johnson and Johnson (NYSE-JNJ) ... learn more. The next stock I will write about will be PFB Corp (TSX-PFB, OTC-PFBOF) ... learn more on Monday, November 16, 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.
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