I do not own this stock of Shaw Communications Inc (TSX-SJR.B, NYSE-SJR). I am following this stock because it was a stock on Investment Reporter’s list, a MPL Communications Publication.
When I was updating my spreadsheet, I noticed a lot of insider selling. It seems to be mostly by the Shaw family and they are selling some Class A as well as Class B. Insider selling is at 0.30% (where you would expect it to be around 0.01%). This stock had a peak in 2007 for its stock price and it has not done much since. Also, at this peak, dividend yield changed from a low (below 2%) to a moderate (2% to 4% ranges) value.
The dividend yields are currently good with dividend growth currently non-existent. The current dividend yield is good (5% and 6% ranges) at 5.41%. The 5, and 10 dividend yields are moderate (2% to 4% ranges) at 4.36% and 4.35%. The historical median dividend yield is low (below 2%) at 1.20%. Dividend yields were low until 2008 and since then have been mostly moderate. The last dividend increase was in 2015. However, analysts expect the company to start to raise the dividends again in 2023.
The Dividend Payout Ratios (DPR) are high for EPS and need improving. The DPR for 2020 for EPS was 90% with 5 year coverage at 84%. The DPR for CFPS for 2020 is 32% with 5 year coverage at 37%. The DPR for Free Cash Flow for 2020 is 75% with 5 year coverage at 133%. However, none of the sites I looked at agreed on FCF.
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2020 is 0.36 and is a good value. The Liquidity Ratio is low at 0.89. However, if you add in Cash Flow after Dividends it is fine at 1.67. The Debt Ratio is fine at 1.63. The Leverage and Debt/Equity Ratios are fine at 2.59 and 1.59.
The Total Return per year is shown below for years of 5 to 30 to the end of 2020. 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. |
|---|---|---|---|---|---|
| 2015 | 5 | 0.73% | 3.84% | -1.26% | 5.10% |
| 2010 | 10 | 3.26% | 5.43% | 0.45% | 4.97% |
| 2005 | 15 | 15.30% | 9.23% | 3.88% | 5.35% |
| 2000 | 20 | 21.28% | 4.39% | 1.23% | 3.16% |
| 1995 | 25 | 18.37% | 15.32% | 10.45% | 4.86% |
| 1990 | 30 | 16.38% | 14.14% | 10.18% | 3.97% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 15.09, 17.22 and 19.88. The corresponding 10 year ratios are 13.44, 15.96 and 17.69. The corresponding historical ratios are 14.58, 16.33 and 18.46. The current P/E Ratio is 16.71 based on a stock price of $21.89 and EPS estimate for 2020 of $1.31. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a Graham Price of $18.37. The 10 year low, median, and high median Price/Graham Price Ratios are 1.18, 1.31 and 1.46. The current P/GP Ratio is 1.19 based on a stock price of $21.89. 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 2.50. The current P/B Ratio is 1.91 based on a stock price of $21.89, Book Value of $5872M, and a Book Value per Share of $11.45. The current P/B Ratio is 23% 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 7.57. The current P/CF Ratio is 6.24 based on a stock price of $21.89, Cash Flow per Share estimate for 2020 of $3.51 and Cash Flow of $1,801M. The current ratio is 18% 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 1.20%. The current dividend yield is 5.41% based on a stock price of $21.89 and dividends of $1.185. The current dividend yield is 351% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 4.35%. The current dividend yield is 5.41% based on a stock price of $21.89 and dividends of $1.185. The current dividend yield is 24% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10 year median Price/Sales (Revenue) Ratio is 2.34. The current P/S Ratio is 2.05 based on a stock price of $21.89, Revenue estimate for 2020 of $5.485M and Revenue per Share of $10.69. The current ratio is 13% below the 10 year 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. The 10 year dividend yield test says cheap, but the P/S Ratio test does not support this and says the stock price is reasonable and below the median.
The historical dividend yield test is not good as the dividend yield spent half the time at a low value and then at a moderate one. Dividend yields have also been flat since 2016. These dividend yield tests work best on dividend growth stock. There are no other problems that I see with the stock price testing.
Is it a good company at a reasonable price? The stock price is reasonable. It was a dividend growth stock prior to 2016. However, dividends have been flat before, prior to 1997. I have 30 years of dividend data and in those 30 years dividends have increased 17 times and have never declined. Analysts expect dividends to start to go up again in 2022 or 2023. So, it might become and dividend growth stock again. It might be time to look at this stock. You can collect over 5% in dividends while waiting for the stock to again become a dividend growth one.
When I look at analysts’ recommendations, I find Strong Buy (4), Buy (5) and Hold (5). The consensus would be a Buy. The 12 month stock price consensus is $27.46. This implies a total return of $30.86% with 25.45% from capital gains and 5.41% from dividends.
Mostly analysts feel this stock is a buy on Stock Chase. Daniel Da Costa on Motley Fool thinks you should buy this stock because its wireless business has growth potential. The executive summary on Simply Wall Street gives this stock 3 stars out of 5 and list two risks. A writer on Simply Wall Street talks about ownership of shares of this company. Jayson MacLean on CanTech Letter talks about this stock. The Blogger Dividend Earner recently reviewed this company.
Shaw Communications is a Canadian cable company that is one of the biggest providers of Internet, television, and landline telephone services in British Columbia, Alberta, Saskatchewan, Manitoba, and northern Ontario. Its web site is here Shaw Communications Inc.
The last stock I wrote about was about was Enghouse Systems Ltd (TSX-ENGH, OTC-EGHSF) ... learn more. The next stock I will write about will be Exco Technologies Ltd (TSX-XTC, OTC-EXCOF) ... learn more on Monday, February 1, 2021 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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