I do not own this stock of Allied Properties Real Estate Investment Trust (TSX-AP.UN, OTC-APYRF). Since several stocks that I followed in 2015 were deleted from the stock exchange, I was looking for other stocks to follow. I am sure that I got this from a Canadian Dividend site called Think Dividends, but I cannot find it at present.
When I was updating my spreadsheet, I noticed that although there is net insider selling in the past year, insiders have been buying since the low in March 2020. I also noticed that although Revenue is going up nicely, Revenue per share is not. Revenue for the past 5 and 10 years is up by 8.9% and 11.8%, but Revenue per share is down by 1.1% and up by just 0.06%. This is not sustainable.
The dividend yields are moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 4.60%. The 5 and 10 median dividend yields are also moderate at 3.68% and 4.05%. The historical dividend yield is higher at a good level (5% and 6% ranges) at 5.19%. The dividend increases are low (less than 8% per year) with the dividend increases for the past 5 years at 2.43% per year. The last dividend increase was in 2021 and it was for 2.55%.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2020 is 41% with 5 year coverage at 34%. Since this is a REIT, we need to look also at the DPRs for Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO). The DPR for FFO for 2020 is 72% with 5 year coverage at71%. The DPR for AFFO for 2020 is 83% with 5 year coverage at 87%. The DPR for CFPS for 2020 is 50% with 5 year coverage at 54%. The DPR for Free Cash Flow for 2020 is 58% with 5 year coverage at 63%.
Debt Ratios are fine except for the Liquidity Ratio and it is a problem. The Long Term Debt/Market Cap Ratio for 2020 is 0.56. The Liquidity Ratio is too low. For 2020 it is 0.36. If you add in Cash Flow after dividends and the add back the current portion of the long term debt, it is only 92. Current assets cannot coverage current liabilities. The Debt Ratio for 2020 is fine at 1.92. Leverage and Debt/Equity Ratios are also good at 1.32 and 0.32.
The Total Return per year is shown below for years of 5 to 17 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 | 2.43% | 8.32% | 3.68% | 4.64% |
| 2010 | 10 | 2.23% | 11.22% | 5.79% | 5.42% |
| 2005 | 15 | 2.30% | 11.47% | 5.50% | 5.97% |
| 2003 | 17 | 4.15% | 13.48% | 6.56% | 6.92% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 7.76, 8.77 and 9.88. The corresponding 10 year ratios are 7.85, 9.01 and 9.98. The corresponding historical ratios are 9.10, 11.23 and 13.76. The current ratio is 26.23 based on stock price of $36.99 and ESP estimate for 2021 of $1.41. This stock price testing suggests that the stock price is relatively expensive. This EPS estimate says that the EPS is expected to drop by 65% this year. You have to wonder about this.
Because it is a REIT, I am also looking Funds from Operations (FFO). The 5 year low, median, and high median Price/FFO are 15.67, 19.56 and 20.94. The corresponding 10 year ratios are 15.24, 16.74 and 18.71. The current P/FFO Ratio is 15.67 based on a stock price of $36.99 and FFO estimate for 2021 of $2.36. This stock price testing suggests that the stock price is relatively reasonable and below the median.
Because it is a REIT, I am also looking Adjusted Funds from Operations (AFFO). The 5 year low, median, and high median Price/AFFO are 20.99, 23.67 and 26.57. The corresponding 10 year ratios are 17.80, 20.98 and 23.25. The current P/AFFO Ratio is 18.50 based on a stock price of $36.99 and AFFO estimate for 2021 of $2.00. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $39.24. The 10 year low, median, and high median Price/Graham Price Ratios are 0.55, 0.64 and 0.71. The current P/GP Ratio is 0.94 based on a stock price of $39.99. This stock price testing suggests that the stock price is relatively expensive. Since the Graham Price calculation uses the EPS estimate for 2021, you have to wonder about this test also.
I get a 10 year median Price/Book Value per Share Ratio of 1.05. The current P/B Ratio is 0.76 based on a stock price of $39.66, Book Value of $6,177M and a Book Value per share of $48.54. The current ratio is 28% 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 17.11. The current P/CF Ratio is 13.21 based on last 12 month Cash Flow of $356M, Cash Flow per Share of $2.80 and a stock price of $39.66. The current ratio is 23% 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 5.19%. The current dividend yield is 4.60% based on dividends of $1.70 and a stock price of $36.99. The current dividend yield is 11% below the historical dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10 year median dividend yield of 4.05%. The current dividend yield is 4.60% based on dividends of $1.70 and a stock price of $36.99. The current dividend yield is 14% above the historical dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10 year median Price/Sales (Revenue) Ratio is 7.78. The current P/S Ratio is 7.97 based on Revenue estimate for 2021 of $591M, Revenue per Share of $4.64 and a stock price of $39.66. The current ratio is 2% 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. I say this because of the 10 year median dividend yield test and the P/S Ratio. The P/S Ratio test has the difference between the 10 year median ratio and the current ratio only at 2%. A number of the other tests point to a reasonable stock price.
Is it a good company at a reasonable price? I think the stock price is probably reasonable. REITs and any real estate companies are beaten up at the moment, but at some point, we will get past the current crisis and these companies should do better. This company has done well for shareholders in the past and I am sure that it will recover and do fine in the future.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (7) and Hold (2). The consensus is a Buy. The 12 month stock price consensus is $45.23. This implies a total return of 26.87%, with 22.28% from capital gains and 4.60% from dividends.
Analysts on Stock Chase said don’t buy in November, but in December one analyst thought the time to buy had come. Adam Othman on Motley Fool thinks that this dividend growth REIT can do well in 2021. The Executive Summary on Simply Wall Street gives this stock 4 stars out of 5 and lists 4 risks. A writer on Simply Wall Street talks about insider buying and selling. Michael Emory, president and CEO of Allied Properties on BNN talks about the future of work. I have talked to people who are working from home and they are getting very tired of it. So, he might be right about people coming back to the office.
Allied Properties Real Estate Investment Trust is a real estate investment trust engaged in the development, management, and ownership of primarily urban office environments across Canada's major cities. Most of the total square footage in the company's real estate portfolio is located in Toronto and Montreal. Its web site is here Allied Properties Real Estate Investment Trust.
The last stock I wrote about was about was Richelieu Hardware Ltd (TSX-RCH, OTC-RHUHF) ... learn more. The next stock I will write about will be Intact Financial Corp (TSX-IFC, OTC-IFCZF) ... learn more on Wednesday, February 17, 2021 around 5 pm. Tomorrow on my other blog I will write about Working Capital.... learn more on Tuesday, February 16, 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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