I do not own this stock of AGF Management Ltd (TSX-AGF.B, OTC-AGFMF). I used to own this stock. I bought it in 2001 and sold half in 2006 and the rest in 2008. It used to be a dividend growth stock, but has not been one for some time now. I sold because I did not see that the stock would improve. It was raising dividends still but at the expense of DPR. In 2008 I was lucky that I sold before it crashed. It has yet to recover.
When I was updating my spreadsheet, I noticed that EPS was up by 270%. They had higher sales and lower expenses. Sales were up 25% and expenses were down by 8% for a difference in net income of 240%. Income taxes were higher, but diluted shares were down almost 2%. The income for this stock was up some 24%. This is because of two onetime items connected to Smith & Williamson sale, one of almost $46M and another of $104M. See the press release here. However, analysts expect both sales and EPS to go back to where they were in 2019 in 2021. This stock high stock price highs of over $39 in 2007 which it has never seen again.
The dividend yields are Moderate with dividend growth non-existent. The current dividend yield is moderate (2% to 4% range) at 4.55%. The 5 and 10 year median dividend yield is good (5% to 6% ranges) at 6.17% and 6.71%. The historical median dividend range is moderate at 3.87%. The dividend yield is high because this stock is beaten down because it has not been doing well for a while. The dividends have been cut by 70% in 2015 because they could not afford them. Since then, the dividends have been flat.
The Dividend Payout Ratios (DPR) are fine, but DPR for EPS could still be improved. The DPR for EPS for 2020 is 14% with 5 year coverage at 33%. The DPR for EPS has been coming down but 2020 has exceptionally high EPS which analysts do not expect to be repeated. The DPR for 2021 is expected to be 56%. The DPR for CFPS for 2020 is 21%, with 5 year coverage at 38%. The DPR for 2020 for Free Cash Flow is 70% with 5 year coverage at 48%. Analysts expect DPR for FCF to be 55% in 2021.
Debt Ratios are good. The Long Term Debt was reduced to 0 in 2020. The Liquidity Ratio for 2020 is 1.66. The Debt Ratio for 2020 is 4.07. The Leverage and Debt/Equity Ratios for 2020 are 1.33 and 0.33.
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 | -8.90% | 8.98% | 3.18% | 5.81% |
| 2010 | 10 | -11.03% | -5.91% | -11.01% | 5.09% |
| 2005 | 15 | -3.66% | -2.71% | -8.30% | 5.59% |
| 2000 | 20 | 2.92% | -1.93% | -6.73% | 4.80% |
| 1995 | 25 | 3.83% | 12.12% | 2.59% | 9.53% |
| 1990 | 30 | 5.74% | 16.10% | 5.47% | 10.63% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 7.38, 8.65 and 9.92. The corresponding 10 year ratios are 8.46, 11.70 and 14.94. The corresponding historical ratios are 10.21, 14.32 and 18.96. The current P/E Ratio is 12.35 based on a stock price of $7.04 and EPS estimate for 2021 of $0.57. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a Graham Price of $13.65. The 10 year low, median, and high median Price/Graham Price Ratios are 0.41, 0.56 and 0.72. The current P/GP Ratio is 0.52 based on a stock price of $7.04. 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 0.61. The current P/B Ratio is 0.48 based on a stock price of $7.04, Book Value of $1016M and Book Value per Share of $14.53. The current P/B Ratio is 21% 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 8.63. The current P/CF Ratio is 5.32 based on last 12 month’s Cash Flow of $92.5M, Cash Flow per Share of $1.32 and a stock price of $7.04. The current P/CF Ratio is 38% 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 3.87%. The current dividend yield is 4.55% based on dividends of $0.32 and a stock price of $7.04. The current yield is 14% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median dividend yield of 6.71%. The current dividend yield is 4.55% based on dividends of $0.32 and a stock price of $7.04. The current yield is 32% 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 1.26. The current P/S Ratio is 1.16 based on Revenue estimate for 2021 of $424M, Revenue per Share of $6.06 and a stock price of $7.04. The current P/S Ratio is 8% below the 10 year median 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. This is shown by the P/S Ratio. The dividend yield testing works when we have growing dividends which is not the case with the stock. Dividends are down over the past 10 years and have been flat since 2016. Besides the dividend yield tests, there is nothing wrong with any of the other tests which show the stock price as either reasonable or cheap. It could be cheap.
Is it a good company at a reasonable price? The stock price is reasonable. This company has not done well for shareholders for quite some time until very recently. It is not a dividend growth stock. It would not be on my radar to buy.
When I look at analysts’ recommendations, I find Buy (2), Hold (4) and Underperform (2). The consensus would be a Hold. There is a lot of negativity in the recommendations. The 12 month stock price is $7.25. This implies a total return of 7.53% with 2.98% from capital gains and 4.55% from dividends
There is nothing recent on this stock at Stock Chase. Also, entries think that the Asset management business has not much of a future. This stock is given one star out of 5. Nikhil Kumar on Motley Fool likes this because it is cheap and has attractive growth prospects. The executive summary on Simply Wall Street gives this stock 4 stars out of 5 and lists 2 risks. A writer on Simply Wall Street likes this stock as a dividend paying stock.
AGF Management is a Canadian-based asset manager with operations and investments in Canada, the United States, the United Kingdom, Ireland, and Asia. AGF Management has a more meaningful portion of its business tied to institutional clients than its peers, with 32% of AUM derived from institutional and subadvised accounts. The company also derives 16% of its managed assets from high-net-worth clients. Its web site is here AGF Management Ltd.
The last stock I wrote about was about was Exco Technologies Ltd (TSX-XTC, OTC-EXCOF) ... learn more. The next stock I will write about will be Absolute Software Corporation (TSX-ABT, OTC-ALSWF) ... learn more on Monday, February 05, 2021 around 5 pm. Tomorrow on my other blog I will write about Something to Buy February 2021.... learn more on Thursday, February 04, 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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