I do not own this stock of Sienna Senior Living Inc (TSX-SIA, OTC- LWSCF). When I looked in Stock Chase about Chartwell, Greg Newman; Director & Portfolio Manager, Scotia Wealth Management said he liked Sienna Senior Living Better, so I investigated it.
When I was updating my spreadsheet, I noticed Revenue is growing nicely, but Revenue per Share is down. For example, Revenue over the past 5 years is up by 8% per year, but Revenue per Share is down 4%. I do not like the Liquidity Ratios and these have never been good.
Liquidity Ratio for 2019 is 0.37 (current assets cannot cover current liabilities). Adding in Cash Flow after dividend does not help much, as ratio just goes to 0.67. You only get as high as 0.85 if you add back the current portion of the long term debt. The problem is in economic hard times, you may not be able to roll over debt.
However, if you use Cash Flow less Working Capital, in the above calculations, the Liquidity Ratio with Cash Flow after dividends is 0.89 and the Liquidity Ratio adding back the current portion of the long term debt gets you a ratio of 1.13. I do not care for manipulating the accounting to get values that are acceptable.
The dividend yields are good with dividend growth very low. The current dividend yield is good (5% to 6% ranges) at 6.75%. The 5 and 9 year median dividend yield are also good at 5.34% and 6.31%. The dividend growth over the past 5 years is 0.53% per year. This is because there was just there was just 2 low increases over the past 5 years. The last dividend increase was in 2020 and it was at 2%. Analysts expect no increase in 2021 and a 1% increase in 2022. There is a tradeoff between dividend growth and yield. If you get a high yield, you should expect a low growth. Another problem with high dividend yields is that these companies often get into financial difficulties.
The Dividend Payout Ratios (DPR) are too high. They certainly cannot cover the dividends with EPS and the DPR for Cash Flow is also high, but not as bad. The DPR for EPS for 2019 is 840% with 5 year coverage at 384%. The DPR for CFPS is 47% with 5 year coverage at 52%. The DPR for 2019 is 74% with 5 year coverage at 83%. The DPR for Free Cash Flow for 2019 is 69% with 5 year coverage at 78%.
This stock is sort of like a REIT, (or at least being treated like a real estate company) with its FFO and AFFO usage but the payouts are dividends not distributions. Analysts seemed to have gone along with DPR for FFO which for 2019 is fine at 67% and with the DPR for AFFO which is also fine at 66%.
Debt Ratios need improving. The Long Term Debt/Market Cap Ratio for 2019 is high at 0.93. What is really high is coverage of Long Term Debt by Cash Flow and this is at 11 years and is high. (However, this score is typical of REITs.) I dealt with the awful Liquidity Ratio above. The Debt Ratio is lower than what I like at 1.46 where I would rather it be at 1.50 or above. The 5 year median Debt Ratio is lower at 1.40. The Leverage and Debt/Equity Ratios are 3.19 and 2.19 and I would like to see them below 3.00 and below 2.00.
The Total Return per year is shown below for years of 5 to 10 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 | 0.53% | 8.02% | 1.75% | 6.26% |
| 2009 | 10 | 2.36% | 12.36% | 4.78% | 7.58% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 69.55, 79.85, 90.15. The corresponding 9 year ratios are 9.47, 9.84 and 10.20. The corresponding historical ratios are 9.47, 9.84 and 10.20. The current P/E Ratio is negative and is based a stock price of $13.87 and EPS loss estimated at $0.25. This test cannot be done.
The EPS for 2021 is expected to positive, but it is low at $0.05. This gives a P/E Ratio for 2021 of 277.40 based on a stock price of $13.87. This stock price testing suggests that the stock price is relatively expensive.
This company does give out Funds from Operations (FFO) values. The 5 year low, median, and high median Price/ Funds from Operations Ratios are 11.42, 13.79 and 13.83. The corresponding 9 year ratios are 11.31, 12.40 and 13.30. The current P/FFO Ratio is 14.01 based on a stock price of $13.87 and FFO estimate for 2020 of $0.99. This stock price testing suggests that the stock price is relatively expensive.
This company does give out Adjusted Funds from Operations (AFFO) values. The 5 year low, median, and high median Price/ Funds from Operations Ratios are 10.74, 11.75 and 12.68. The corresponding 9 year ratios are 9.69, 10.89 and 12.10. The current P/AFFO Ratio is 13.73 based on a stock price of $13.87 and FFO estimate for 2020 of $1.01. This stock price testing suggests that the stock price is relatively expensive.
For both the P/FFO and P/AFFO, if we look at the ratios for 2021, (and we are very close to 2021) we get a slightly different story. For P/FFO, the 2021 P/FFO Ratio is 11.56 based on FFO for 2021 of $1.20 and a stock price of $13.87. This stock price testing suggests that the stock price is relatively reasonable and below the median. For P/AFFO, the 2021 P/AFFO Ratio is 11.19 based on AFFO for 2021 of $1.24 and a stock price of $13.87. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a Graham Price of $12.54. The 9 year low, median, and high median Price/Graham Price Ratios are 0.94, 1.05 and 1.15. The current P/GP Ratio is 1.11 based on a stock price of $13.87. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 9 year median Price/Book Value per Share Ratio of 2.12. The current P/B Ratio is 1.97 based on a Book Value of $472M, Book Value per Share of $7.06 and a stock price of $13.87. The current ratio is 7% below the 9 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 9 year median Price/Cash Flow per Share Ratio of 14.99. The current P/CF Ratio is 13.54 based on last 12 months of Cash Flow of $68.5M, Cash Flow per Share of $1.02 and a stock price of $13.87. The current ratio is 9.7% below the 9 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 6.31%. The current dividend yield is 6.75% based on a stock price of $13.87 and dividends of $0.94. The current dividend yield is 7% above the historical dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 9 year median dividend yield of 6.31%. The current dividend yield is 6.75% based on a stock price of $13.87 and dividends of $0.94. The current dividend yield is 7% above the 9 year dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 9 year median Price/Sales (Revenue) Ratio is 1.26. The current P/S Ratio is 1.40 based on a stock price of $13.87, Revenue estimate for 2020 of $663M and Revenue per Share of $9.92. The current ratio is 11% above the 9 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. (The P/S Ratio for 2021 is 1.39, so this does not change anything.)
Results of stock price testing is that the stock price is probably reasonable. The dividend yield testing is showing the stock price reasonable and below the median and the P/S Ratio testing is showing the stock price as reasonable and above the median. Most of the other testing is showing the stock price to be reasonable and either above and below the median. The P/B Ratio test is a good clear test and shows the stock price reasonable and below the median.
Is it a good company at a reasonable price? The stock price is probably reasonable. However, the combination of a high dividend yield and awful Liquidity Ratios would not be the sort of stock I would like to buy. It is just not the current Liquidity Ratio; the company has a history of awful Liquidity Ratios.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (2), and Hold (5). The consensus would be a Buy. The 12 month stock price consensus is $14.53. This implies a total return of 11.51% with 4.76% from capital gains and 6.75% from dividends.
Analysts on Stock Chase seem to like this stock. Ambrose O'Callaghan on Motley Fool likes the yield on this stock. The executive review on Simply Wall Street gives it 2 stars out of 5 and 3 risks and no positives. A writer on Simply Wall Street says that at least the dividend was covered by FCF but this is not a stock for long-term buy and hold.. A writer on Press Progress certainly does not like this company.
Sienna Senior Living Inc is one of the largest owners of seniors' housing, the largest licensed long-term care operator in Ontario, and a provider of services across the full continuum of care. The firm operates solely within Canada. Its web site is here Sienna Senior Living Inc.
The last stock I wrote about was about was Chartwell Retirement Residences (TSX-CSH.UN, OTC-CWSRF) ... learn more. The next stock I will write about will be Bird Construction Inc (TSX-BDT, OTC-BIRDF) ... learn more on Monday, December 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.
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