Friday, April 30, 2021

Fortis Inc

Sound bite for Twitter and StockTwits is: Dividend Growth Utility. The stock price is probably still reasonable. They do have a lot of debt. Dividend Payout Ratios are mostly fine. It is one of my big stock holdings and I have done well with it for a long time. See my spreadsheet on Fortis Inc.

I own this stock of Fortis Inc (TSX-FTS, OTC-FRTSF). I bought this stock as Newfoundland Light and Power Co. Ltd. Class A shares in 1987. I bought more in 1995 and 1998. In 2005 I sold some Fortis from my RRSP account as I needed to get $20,000 in this account and I was concerned about the debt liquidity of this stock. However, this stock continues to be one of my big stock holdings.

When I was updating my spreadsheet, I noticed I have had this stock since 1987 (almost 34 years), although I did buy more in later years. I have made a total return of 12.78% per year with 7.76% from capital gains. This is great for a long term return. On my original investment in 1987, I have a dividend yield of 43%. This is the value of buying a good dividend stock and keeping it.

The dividend yields are moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 3.65%. The 5, 10 and historical dividend yields are also moderate at 3.34%, 3.34% and 3.84%. The dividend increases are low (under 8% per year). The dividend increases for the past 5 years is 6.8% per year. The last dividend increase was in 2020 and it was for 5.8%. There is a trade off between dividend yield and growth and I believe in having stocks with different yield/growth characteristics. They have raised their dividends 39 times in the last 39 years.

The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2020 is 75% with 5 year coverage at 71%. The DPR for CFPS is 29% with 5 year coverage at 28%. I cannot calculate the DPR for Free Cash Flow as FCF has been negative over the past 10 years.

Debt Ratios are fine, but I wish they were better. The Long Term Debt/Market Cap Ratio is high, but still under 1.00 at 0.95 and moving to a current 0.89. The Liquidity Ratio is 0.63 and if you add in Cash Flow after dividends it is 1.06 and still low. The Debt ratio is 1.58. The Leverage and Debt/Equity Ratios are fine at 2.74 and 1.74. Utility companies tend to carry a lot of debt.

The Total Return per year is shown below for years of 5 to 39 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 6.79% 10.84% 6.81% 4.04%
2010 10 5.63% 7.90% 4.35% 3.56%
2005 15 8.27% 8.81% 5.21% 3.60%
2000 20 7.45% 14.11% 9.17% 4.94%
1995 25 6.28% 13.35% 8.47% 4.89%
1990 30 5.78% 12.78% 7.84% 4.94%
1985 35 5.85% 12.37% 7.35% 5.02%
1981 39 6.21% 13.43% 7.65% 5.78%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 17.65, 19.36 and 21.03. The corresponding 10 year ratios are 17.43, 19.04 and 20.59. The corresponding historical ratios are 12.48, 14.05 and 15.50. The current P/E Ratio is 19.92 based on a stock price of $55.37 and EPS estimate for 2021 of $2.78. The current ratio is between the low and median 10 year ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a Graham Price of $47.36. The 10 year low, median, and high median Price/Graham Price Ratios are 1.00, 1.00 and 1.20. The current P/GP Ratio is 1.17 based on a stock price of $55.37. The current ratio is between the median and high median 10 year ratios. 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 1.41. The current P/B Ratio is 1.54 based on a stock price of $55.37, Book Value of $16,738M, and Book Value per Share of $35.86. The current ratio is 9% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get a 10 year median Price/Cash Flow per Share Ratio of 7.41. The current P/CF Ratio is 8.34 based on a stock price of $55.37, Cash Flow per Share estimate for 2021 of $6.64 and Cash Flow of $3,100M. The current ratio is 12.6% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get an historical median dividend yield of 3.84%. The current dividend yield is 3.65% based on dividends of $2.02 and a stock price of $55.37. The current dividend yield is 5% 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 3.34%. The current dividend yield is 3.65% based on dividends of $2.02 and a stock price of $55.37. The current dividend yield is 9% above the 10 year median 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 2.01. The current P/S Ratio is 2.76 based on a stock price of $55.37, Revenue estimate for 2021 of $9,353M, and Revenue per Share of $19.49. The current ratio is 37.6% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.

Results of stock price testing is that the stock price is probably still reasonable. I do like the dividend yield tests and both come out with a reasonable result. However, it would be nice if it were confirmed by the P/S Ratio test. The problem is that this company has been issuing lots of shares lately and outstanding shares are up 10.35% per year over the past 10 years. Revenue has been going up, but not Revenue per Share. All the other tests are showing the stock price as reasonable and above or below the median.

Is it a good company at a reasonable price? The stock price could still be reasonable. This is a utility stock and I am pleased with my results. However, it does have a lot of debt and is diluting the shares. I note that Money Sense has been giving this stock a C rating for the last two years. Before that it has a B rating.

When I look at analysts’ recommendations, I find Strong Buy (6), Buy (3) and Hold (8). The consensus would be a Buy. The 12 month stock price consensus is $58.56. This implies a total return of 9.41% with 5.76% from capital gains and 3.65% from dividends.

This stock has been the top pick of the last 3 analysts to comment on Stock Chase. Stock Chase gives this stock 5 starts out of 5. Sneha Nahata on Motley Fool lists this stock as one of four Canadian utility stocks that consistently raised their dividends. The executive summary on Simply Wall Street lists one risk and gives this stock 3 stars out of 5. A writer at Simply Wall Street says this stock has a fair market value of $52.57. Chris MacDonald on Baystreet, Canada says this is a stock every income-oriented investor ought to consider.

Fortis owns and operates utility transmission and distribution assets in Canada and the United States, serving more than 2.5 million electricity and gas customers. The company has smaller stakes in electricity generation and several Caribbean utilities. Its web site is here Fortis Inc.

The last stock I wrote about was about was SNC-Lavalin Group Inc (TSX-SNC, OTC-SNCAF) ... learn more. The next stock I will write about will be WSP Global Inc (TSX-WSP, OTC-WSPOF) ... learn more on Monday, May 3, 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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Wednesday, April 28, 2021

SNC-Lavalin Group Inc

Sound bite for Twitter and StockTwits is: Dividend Paying Industrial. The stock price is reasonable to cheap. They might in the future become a dividend growth company, but they have their difficulties and this stock is currently risky. They need to improve some Debt Ratios. See my spreadsheet on SNC-Lavalin Group Inc.

I do not own this stock of SNC-Lavalin Group Inc (TSX-SNC, OTC-SNCAF). This stock was one from Mike Higgs' list of dividend growth stocks. I liked the idea of low dividends and high dividend increases. When you are building up a portfolio, low dividends are good for tax reasons. High dividend increases are attractive for the future.

When I was updating my spreadsheet, I noticed that I sold this stock in 2019 because I lost hope of it recovering. However, I sold at a relatively low. If I still had this stock, the stock would be worth 44% more than what I sold it at. You can just never tell what will happened. They have done a lot of dividend cutting since I sold.

The dividend yields are low with lots of recent dividend cuts. The current dividend yield is low (below 2%) at 0.29%. The 5 year dividend yield is just into the moderate range (2% to 4%). The 10 and historical dividend yields are low at 1.98% and 1.48%. Dividends were cut over 93% in 2019.

The Dividend Payout Ratios (DPR) need to improve and it looks like they will. I cannot calculate the DPR for EPS for either 2020 or 5 year coverage because of EPS losses. Analysts expect the DPR for EPS to be 4.5% in 2021. I cannot calculate the DPR for CFPS for 2020 because of negative cash flows. The 5 year coverage is 55%. Analysts expect the DPR for CFPS to be 3.8% in 2021 with a 5 year coverage of 34%. The DPR for Free Cash flow for 2020 is 31%. I cannot calculated the 5 year coverage due to negative FCFs.

Debt Ratios need improving. The Long Term Debt/Market Cap Ratio for 2020 is fine at 0.46. The Liquidity Ratio is very low. For 2020 it is 0.95. If you added in cash flow after dividends and add back in the current portion of the long term debt it rises to 1.02. You need a margin of safety and that is usually with a ratio of 1.50 or above. The Debt Ratio is also low at 1.33. Here you also want a ratio of 1.50 or above. The Leverage and Debt/Equity Ratios are too high at 4.03 and 3.03. Generally, you like to see these under 3.00 and 2.00 respectively.

The Total Return per year is shown below for years of 5 to 32 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 -39.66% -9.88% -11.98% 2.10%
2010 10 -19.27% -7.53% -9.62% 2.10%
2005 15 -6.80% 1.92% -1.04% 2.96%
2000 20 -0.20% 13.05% 8.01% 5.04%
1995 25 2.18% 12.65% 8.33% 4.33%
1990 30 2.53% 13.43% 9.32% 4.11%
1988 32 5.25% 19.29% 12.96% 6.33%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 8.29, 17.11, and 25.16. The corresponding 10 year ratios are 14.88, 18.80 and 25.05. The corresponding historical ratios are 13.69, 17.73 and 22.88. The current P/E Ratio of 15.32 based on a stock price of $27.43 and EPS estimate for 2021 of $1.79. The current ratio is between the low and median 10 year ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a Graham Price of $24.27. The 10 year low, median, and high median Price/Graham Price Ratios are 1.24, 1.46 and 1.73. The current P/GP Ratio is 1.13 based on a stock price of $27.43. The current ratio is below the low P/GP 10 year ratios. This stock price testing suggests that the stock price is relatively cheap.

I get a 10 year median Price/Book Value per Share Ratio of 2.06. The current P/B Ratio is 1.88 based on a stock price of $27.43 and Book Value of $2,567M and a Book Value per Share of $14.62. The current ratio is 9% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a 10 year median Price/Cash Flow per Share Ratio of 17.01. The current P/CF Ratio is 13.06 based on CFPS estimate for 2021 of $2.10, Cash Flow of $368.67M and a stock price of $27.43. The current P/CF 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 1.48%. The current dividend yield is 0.29% based on dividends of $0.08 and a stock price of $27.43. The current yield is 80% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. However, dividends have been cut by over 90% in the last two years.

I get a 10 year median dividend yield of 1.98%. The current dividend yield is 0.29% based on dividends of $0.08 and a stock price of $27.43. The current yield is 85% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively expensive. However, dividends have been cut by over 90% in the last two years.

The 10 year median Price/Sales (Revenue) Ratio is 0.86. The current P/S Ratio is 0.66 based on a stock price of $27.43, Revenue estimate for 2021 of $7,304M and Revenue per Share of $41.61. The current ratio is 23% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

Results of stock price testing is that the stock price is probably reasonable to cheap. You cannot use the dividend yield tests because the dividends have been reduced some 93%. The P/S Ratio test says that the stock is cheap, other tests show the same thing for that the stock price is reasonable and below the median.

Is it a good company at a reasonable price? The stock price is probably reasonable to cheap. It could be a turn around situation, but such situations are always risky. Some analysts feel that it is worth the risks. However, I am not anxious to own this at the present time.

When I look at analysts’ recommendations, I find Strong Buy (5), Buy (6) and Hold (3). The consensus would be a Buy. The 12 month stock price consensus is $33.96. This implies a total return of 24.10%, with 23.81% from capital gains and 0.29% from dividends.

Analysts do not think this is the time to buy SNC on Stock Chase . One analyst says he likes WSP better. Nikhil Kumar on Motley Fool says that the company delivers quality projects on budget and on time and this should benefit long term shareholders. The Executive Summary on Simply Wall Street lists one risk gives it two stars out of 5. A writer on Simply Wall Street talks about the company having debt, but no earnings.

Based in Montreal, SNC-Lavalin is a fully integrated professional services and project management firm that offers a wide range of services, including financing, consulting, engineering and construction, procurement, and operations and maintenance. Its web site is here SNC-Lavalin Group Inc.

The last stock I wrote about was about was Barclays PLC ADR (LSE-BARC, NYSE-BCS) ... learn more. The next stock I will write about will be Fortis Inc (TSX-FTS, OTC-FRTSF) ... learn more on Friday, April 30, 2021 around 5 pm. Tomorrow on my other blog I will write about Best Stocks for 2021 by Hardbacon .... learn more on Thursday, April 29, 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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Monday, April 26, 2021

Barclays PLC ADR

Sound bite for Twitter and StockTwits is: Dividend Paying Bank. It will probably a dividend growth bank in the future, it is just hard to see when. The stock price seems reasonable, if a but on the high side. See my spreadsheet on Barclays PLC ADR.

I do not own this stock of Barclays PLC ADR (LSE-BARC, NYSE-BCS). I bought this stock when Barrett took over in 2000. Barrett used to run Bank of Montreal in Canada. At that time, it was a good dividend paying stock and I thought it would give me some geographical diversifications.

When I was updating my spreadsheet, I noticed if I have kept my shares, I would have currently done slightly better than how I did. I bought shares in 2000 and sold them in 2017. I had a total return of 1.25% per year with a capital loss of 4.92% per year. If I had kept the shares, I would have had a loss of 3.89% per year to date. At this point it would seem I did the right thing to sell in 2017.

The dividend yields are currently low with dividend growth varying a lot. The current dividend yield is low (below 2%) at just 0.53%. The 5, 10 and historical dividend yields are moderate (2% to 4% ranges) at 2.46%, 2.47% and 3.25%. Of 27 years of data I have, dividends were increased 20 times and decreased 4 times (and were flat the other years). The dividends were suspended for the year of 2020. They have been restarted in 2021.

The Dividend Payout Ratios (DPR) are fine. Since no dividends were paid in 2020 there is no DPR for EPS for 2020. However, the 5 year coverage is at 59%. The 5 year coverage for DPR for CFPS in 2020 is 3.6%. For DPR for 2020 for Free Cash Flow, Barclays posts the dividend granted in one year, but paid in the next. So, the DPR for FCF for 2020 is 10% with 5 year coverage at 18%.

Debt Ratios are fine. Because this is a bank, I am looking at a Long Term Debt/Covering Assets Ratio. The ratio for 2020 is good at 0.76. Because it is a bank, Liquidity Ratio is not important and I did not calculate one. The Debt Ratio is 1.05 and this is fine for a bank.

The Total Return per year is shown below for years of 5 to 27 to the end of 2020 in UK Pounds. 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 0.00% -5.85% -7.85% 2.00%
2010 10 0.00% -3.17% -5.62% 2.45%
2005 15 0.00% -6.44% -9.08% 2.65%
2000 20 0.00% -2.11% -6.15% 4.04%
1995 25 0.00% 7.97% -0.60% 8.58%
1993 27 0.00% 8.58% -0.01% 8.58%

The Total Return per year is shown below for years of 5 to 27 to the end of 2020 in US$. 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 0.00% -7.40% -9.22% 1.82%
2010 10 0.00% -4.61% -7.01% 2.40%
2005 15 0.00% -7.84% -10.48% 2.65%
2000 20 0.00% -2.24% -6.73% 4.49%
1995 25 0.00% 7.57% -1.38% 8.95%
1993 27 0.00% 9.27% -0.32% 9.59%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 8.88, 14.48 and 20.78. The corresponding 10 year ratios are 6.95, 10.68 and 14.06. The corresponding historical ratios are 8.38, 10.51 and 13.00. The current P/E Ratio is 11.17 based on a stock price of $10.50 and EPS estimate for 2021 of $0.94. The current ratio is between the median and high median 10 year ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$. In UK Pounds the results suggest that the stock price is reasonable and below the median. Problem is years of EPS losses.

I get a Graham Price of $19.18 US$. The 10 year low, median, and high median Price/Graham Price Ratios are 0.53, 0.72 and 0.85. The current P/GP Ratios is 0.55 based on a stock price of $10.50. The current ratio is between the low median and median ratios of 0.53 and 0.72. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$. You get a similar result in UK Pounds.

I get a 10 year median Price/Book Value per Share Ratio of 0.59. The current P/B Ratio is 61 based on a stock price of $10.50, Book Value of $74,659M, Book Value per Share of $17.18. The current ratio is 4.3% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$. You get a similar result in UK Pounds.

I get a 10 year median Price/Cash Flow per Share Ratio of 0.47. The current P/CF Ratio is 0.57 based on a stock price of $10.50, Cash Flow per Share for last 12 months of $18.31 and Cash Flow of $79,466M. The current ratio is 23% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. In UK Pounds the results suggest that the stock price is reasonable but above the median. This is using CFPS of last 12 months as no estimates are given.

I get an historical median dividend yield of 2.84%. The current dividend yield is 0.53% based on dividends of $0.06. The current dividend is 84% below the historical dividend yield. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. In UK Pounds you get a similar result. Problem here is dividend cuts.

I get a 10 year median dividend yield of 2.40%. The current dividend yield is 0.53% based on dividends of $0.06. The current dividend is 78% below the 10 year dividend yield. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. In UK Pounds you get a similar result. Problem here is dividend cuts.

The 10 year median Price/Sales (Revenue) Ratio is 1.50. The current P/S Ratio is 1.58 based on Revenue estimate of $28,760M, Revenue per Share of $6.68 and a stock price of $10.50. The current ratio is 5.5% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$. You get a similar result in UK Pounds.

Results of stock price testing is that the stock price is probably reasonable, if a bit high. This is showing up in the P/S Ratio test. There are problems in the tests due to declining dividends and EPS losses. Even though the stock price is lower than it has been for quite a few years, there is little to point to a current cheap price.

Is it a good company at a reasonable price? The price might be reasonable if a bit high considering the risk of investing. This bank seems to be the best UK bank. However, long term shareholders have mostly lost big on this bank. I would not be interested at this point in having shares in this bank.

When I look at analysts’ recommendations, I find Strong Buy (11), Buy (5) and Hold (7). The consensus would be a Buy. The 12 month stock price consensus is $11.27 (203.96 GBX). This implies a total return of $7.90% with 7.37% from capital gains and 0.53% from dividends.

The most recent analyst says on Stock Chase that Barclay’s is a weak buy. Manika Premsingh on Motley Fool, UK says this bank has recovered better than other UK banks. She thinks the stock price is being held back by the low dividend yield. The executive summary on Simply Wall Street, UK gives this stock 4 stars out of 5 and only one risk. A writer on Simply Wall Street says there is insider selling. Lucy White of the Daily Mail has an article in the This is Money Co, UK.

Barclays PLC operates in commercial and investment banking, insurance, financial and other related services. Barclay’s subsidiary, Barclays Bank PLC maintains 2500 branches in the United Kingdom and 1000 branches in over 75 other countries. Its web site is here Barclays PLC ADR.

The last stock I wrote about was about was Canadian Natural Resources (TSX-CNQ, NYSE-CNQ) ... learn more. The next stock I will write about will be SNC-Lavalin Group Inc (TSX-SNC, OTC-SNCAF) ... learn more on Wednesday, April 28, 2021 around 5 pm. Tomorrow on my other blog I will write about Money Sense Roundup.... learn more on Tuesday, April 27, 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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Friday, April 23, 2021

Canadian Natural Resources

Sound bite for Twitter and StockTwits is: Dividend Growth Resource. The stock price is probably cheap. DPR for EPS is high, but is expected to improve. Since this is a resource stock, it is risky and not for everyone. See my spreadsheet on Canadian Natural Resources.

I own this stock of Canadian Natural Resources (TSX-CNQ, NYSE-CNQ). I first bought CNQ in September 2012 because the dividend yield was relatively high. The 5 and 10 year median dividend yields were 0.73% and 0.75%. The current one was at 1.31% and I got it with a yield of 1.32%. In April 2013 I bought more shares of this stock because the yield is now at 1.54%. I bought another 100 shares in 2020 because the yield was 11.63%.

When I was updating my spreadsheet, I noticed that I am doing much better than last year on total return. Last year at this time my investment had a negative return. This year my total return is 8.59% per year with 5.61% from capital gains and 2.98% from dividends. There was an earnings loss because of lower Revenue.

The dividend yields are currently moderate with dividend growth moderate. I have 19 years of data on this company and during that time they have not decreased dividends in any year. The current dividend is moderate (2% to 4% range) with a current dividend yield of 4.95%. The 5 and 10 median dividend yields are also moderate at 3.38% and 2.66%. The historical median dividend yield is low (below 2%) at 1.00%. Before 2011, the dividend yield was often low at below 1%.

The dividend increases for the last 5 years is moderate (8% to 14% ranges) at 12.5%. The last dividend increase was in 2021 and it was for 10.6%. In prior periods the dividend growth was good (15% and over). The dividend was increased in 2021 and this points to the fact that management thinks times will get better.

The Dividend Payout Ratios (DPR) need improving and analyst think this will happen. The DPR for EPS in 2020 cannot be calculated because of the earnings loss. Analysts expect the DPR to EPS to improve over the next few years. The DPR for EPS for 5 year coverage is 80%. The DPR for CFPS for 2020 is 38% with 5 year coverage at 21%. The DPR for Free Cash Flow for 2020 is 91% with 5 year coverage at 48%.

Debt Ratios are fine. The Long Term Debt/Market Cap for 2020 is 0.56 and improving currently to 0.45. The Liquidity Ratio for 2020 is 0.86. Adding in cash flow after dividends it is 1.40. The Debt Ratio is 1.75. The Leverage and Debt/Equity Ratios 2.32 and 1.32 respectively.

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 12.52% 4.45% 0.24% 4.21%
2010 10 19.51% -1.09% -3.65% 2.56%
2005 15 19.56% 2.51% 0.33% 2.18%
2000 20 21.62% 12.14% 9.28% 2.87%
1995 25 12.94% 10.54% 2.41%
1990 30 21.16% 17.88% 3.28%

Another way to look at this stock is to use past data, and look at dividend yield on original investments after 5 to 25 years. I am also looking at how much of the stock cost is covered by dividends after 5 to 20 years. In the chart below I show the numbers for this stock. For example, if you bought this stock 10 years ago at the median price, you would have a current yield on your original investment of 4.67% and 27.94% of your original cost would have now been paid by dividends.

Years Yield Cost Cov
5 5.34% 21.48%
10 4.67% 27.94%
15 6.16% 40.82%
20 33.27% 229.31%
25 50.06% 346.14%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 6.63, 7.96 and 9.29. The corresponding 10 year ratios are 10.47, 13.43 and 15.51. The corresponding historical ratios are 10.88, 15.34 and 17.28. The current P/E Ratio is 12.10 based on a stock price of $37.98 and EPS estimate for 2021 of $3.14. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a Graham Price of $43.96. The 10 year low, median, and high median Price/Graham Price Ratios are 0.80, 1.02 and 1.30. The current P/GP Ratio is 86 based on a stock price of $37.98. This ratio is between the 10 year low median and median ratios. 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 1.47. The current P/B Ratio is 1.39 based on Book Value of $32,380M, Book Value per Share of $27.35, and a stock price of $37.98. The current ratio is 5.6% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a 10 year median Price/Cash Flow per Share Ratio of 6.20. The current ratio is 4.01 based on Cash Flow per Share estimate of $9.47, Cash Flow of $11,200M and a stock price of $37.98. The current ratio is 35% 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 1.00%. The current dividend yield is 4.95% based on dividends of $1.88 and a stock price of $37.98. The current yield is 395% 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 1.00%. The current dividend yield is 2.66% based on dividends of $1.88 and a stock price of $37.98. The current yield is 86% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap.

The 10 year median Price/Sales (Revenue) Ratio is 2.19. The current P/S Ratio is 1.73 based on a stock price of $37.98, Revenue estimate for 2021 of 23,862M, and Revenue per Share of $21.97. The current P/S Ratio is 21% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

Results of stock price testing is that the stock price is probably cheap. Both dividend yield tests point to this as does the P/S Ratio test. Some of tests mostly show the stock price this and others show a stock price that is reasonable but below the median.

Is it a good company at a reasonable price? I think that this stock price is reasonable, if not cheap. The is in the oil and gas industry, so is high risk and not for everyone. If you want exposure to this industry, this might be a good stock to buy.

When I look at analysts’ recommendations, I find Strong Buy (8), Buy (10) and Hold (4). The consensus would be a Buy. The 12 month stock price consensus is $47.40. This implies a total return of 29.75% with 4.95% from dividends and 24.80% from capital gains.

A number of analysts on Stock Chase think this is a good time to buy this stock. Karen Thomas on Motley Fool thinks Canadian Natural Resources is a high quality energy stock and trading at a bargain price. The executive summary on gives this stock 3 stars out of 5 on Simply Wall Street and list 3 risks with this stock. A writer on Simply Wall Street does not like the fact that the company paid a dividend last year that it could not afford. Jonathan Weber on Seeking Alpha thinks this company is a cash flow monster.

Canadian Natural Resources is one of the largest oil, and natural gas producers in western Canada, supplemented by operations in the North Sea and Offshore Africa. The company's portfolio includes light and medium oil, heavy oil, bitumen, synthetic oil, natural gas liquids, and natural gas. Its web site is here Canadian Natural Resources.

The last stock I wrote about was about was Pembina Pipelines Corp (TSX-PPL, NYSE-PBA) ... learn more. The next stock I will write about will be Barclays PLC ADR (LSE-BARC, NYSE-BCS) ... learn more on Monday, April 26, 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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Wednesday, April 21, 2021

Pembina Pipelines Corp

Sound bite for Twitter and StockTwits is: Dividend Growth Utility. The stock price is probably reasonable. Both the Dividend Payout Ratios and Debt Ratios could be improved. I have had this stock for 19 years and have make a total return of 15.67% per year. They had an earnings loss in 2020 because they wrote off some investments. See my spreadsheet on Pembina Pipelines Corp.

I own this stock of Pembina Pipelines Corp (TSX-PPL, NYSE-PBA). This is a dividend growth utility Stocks. In December 2001 I thought it would be a good time to purchase this stock as the market was relatively low. Pipeline stocks are conservative and the return on this one was good at 9.7%. When I purchased this stock, it was an Income Trust company.

When I was updating my spreadsheet, I noticed I have done quite well with this stock over the years. I have had it for 19 years and my total return is 15.67% with 6.84% from capital gains and 8.83% from dividends. The company declared an EPS loss for 2020 because it wrote off some investments.

The dividend yields are good with dividend growth low. The current dividend yield is good (5% to 6% ranges) at 6.75%. The 5 and 10 year median dividend yields are also good at 5.19% and 5.18%. The historical median dividend yield is High (over 6%) at 7.20%. This stock used to be an income trust and this explains the high dividend yield for the historical median dividend yield.

The Dividend Payout Ratios (DPR) need to be improved. The DPR for EPS for 2020 is non-calculable because an EPS loss in 2020. The 5 year coverage is high at 158%. The DPR for EPS is expected to decline over the next few years and be around 110% in 2021. The DPR for CFPS for 2020 is 46% with 5 year coverage at 49%. This is a bit high as I prefer this to be around 40%. The DPR for 2020 for Free Cash Flow is 125% with 5 year coverage at 244%. The DPR for FCF for 2021 is expected to be better at 68%.

Debt Ratios could be improved. The Long Term Debt/Market Cap ratio for 2020 is fine at 0.62%. It has to a current one of 0.50 because of the rising stock price. The Liquidity Ratio for 2020 is 0.56 and if you add in cash flow after dividends it is still low at 1.04. If you add back the current portion of the loan it is 1.57. The Leverage and Debt/Equity Ratios for 2020 are 2.09 and 1.09.

The Total Return per year is shown below for years of 5 to 23 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 7.05% 7.20% -0.03% 7.23%
2010 10 4.71% 10.93% 3.37% 7.55%
2005 15 5.92% 12.37% 4.32% 8.05%
2000 20 4.94% 16.80% 6.46% 10.34%
1997 23 6.76% 20.02% 7.30% 12.71%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 16.88, 18.86 and 20.84. The corresponding 10 year ratios are 23.47, 27.90 and 32.33. The corresponding historical ratios are 19.82, 22.66 and 24.95. The current P/E Ratio is 16.31 based on a stock price of $37.36 and EPS estimate for 2021 of $2.29. This P/E is low than the 10 year low median P/E and in fact lower than all the low median P/E Ratios. This stock price testing suggests that the stock price is relatively cheap.

If you look at P/E Ratios compared to Total Returns for the 5, 10, 15, and 20 year periods, I find the following. For example, total return over the past 15 years is 12.37% per year, the starting P/E Ratio (the one from 15 years ago) was 24.54. From the point of view of this chart, a P/E Ratio of 16.31 would be fine.

Year Tot Return Start P/E
5 7.20% 29.56
10 10.93% 18.95
15 12.37% 24.54
20 16.80% 10.75

I get a Graham Price of $33.53. The 10 year low, median, and high median Price/Graham Price Ratios are 1.33, 1.52 and 1.70. The current P/GP Ratio is 1.11 based on a stock price of $37.36. This ratio is low than the 10 year low median ratio. This stock price testing suggests that the stock price is relatively cheap.

I get a 10 year median Price/Book Value per Share Ratio of 1.79. The current P/B Ratio is 1.71 based on Book Value of $11,999M, Book Value per share of $21.82 and a stock price of $37.36. The current ratio is 4.3% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a 10 year median Price/Cash Flow per Share Ratio of 14.74. The current P/B Ratio is 8.36 based on Cash Flow per Share estimate for 2021 of $4.47, Cash Flow of $2,459M and a stock price of $37.36. The current ratio is 43% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get an historical median dividend yield of 7.20%. The current dividend yield is 6.75% based on dividends $2.52 and a stock price of $37.36. The current dividend yield is 6% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median. This problem with this test is that the company was an income trust. Income Trusts always had very high dividend yields.

I get a 10 year median dividend yield of 5.18%. The current dividend yield is 6.75% based on dividends $2.52 and a stock price of $37.36. The current dividend yield is 30% 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 2.93. The current P/S Ratio is 3.03 based on Revenue estimate for $6,787M, Revenue per Share of $12.34 and a stock price of $37.36. The current ratio is 3.4% 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. The dividend yield is 30% below the 10 year median dividend yield. The P/S Ratio test shows the current ratio slightly above the 10 year median test. Most of the tests show the stock price as cheap or reasonable and below the median.

Is it a good company at a reasonable price? I think that the stock price is currently reasonable. I think it is a good company. It has lots of debt, but so do most pipeline companies. A low Liquidity Ratio is common with pipeline companies. They have not cut their dividends so Management seems to feel this is not necessary at this time. analyst below the dividend will start increasing again next year and in 2023.

When I look at analysts’ recommendations, I find Strong Buy (6), Buy (5) and Hold (8). The consensus would be a Buy. The 12 months stock price if $39.26. This implies a total return of 11.83% with 6.75% from dividends and 5.09% from capital gains. This is pretty normal for this company.

Analyst on Stock Chase think this stock is a Buy. Rajiv Nanjapla on Motley Fool says that even though this stock has gone up by 23.7%, it is still 22.7% lower than its January 2020 levels. The Executive Summary on Simply Wall Street gives this stock 3 stars out of 5 and lists 3 risk. A writer on Simply Wall Street does not like the fact that the company paid out in dividends more than it could afford. A writer on Simply Wall Street says the fair value for this stock is $55.86 CDN$. Sure Dividend provides an analysis of this stock last year.

Pembina Pipeline is an integrated midstream energy infrastructure company in western Canada and North Dakota, highlighted by its regional pipeline network. Its web site is here Pembina Pipelines Corp.

The last stock I wrote about was about was Barrick Gold Corp (TSX-ABX, NYSE-GOLD) ... learn more. The next stock I will write about will be Canadian Natural Resources (TSX-CNQ, NYSE-CNQ) ... learn more on Friday, April 23, 2021around 5 pm. Tomorrow on my other blog I will write about 3 REITs to Buy.... learn more on Thursday, April 22, 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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Tuesday, April 20, 2021

Barrick Gold Corp

Sound bite for Twitter and StockTwits is: Dividend Growth Materials. Stock price is probably reasonable. Dividends are currently increasing. Dividend Payout Ratios are good as it the Debt Ratios. Long Term investors have low total returns. See my spreadsheet on Barrick Gold Corp.

I own this stock of Barrick Gold Corp (TSX-ABX, NYSE-GOLD). This is a big gold mining company that I have followed for years. It was on some dividend growth lists at different times and covered by the Investment Reporter. It is a resource stock, so it is probably not a long term hold.

When I was updating my spreadsheet, I noticed my total return is low at 8.40% with 7.27% from capital gains and 1.13% from dividends for this stock I have had for 8 years. I have not invested much into this stock and I do not expect much. I invested a bit for diversification purposes. I have some 30 years of data on this stock. The revenue peaked in 2012 at $14,547M and it has not yet got back to this peak. Revenue for 2020 was $12,595M. Also, if you look at the charts below you will see that total return has not been very good for long term investors.

The dividend yields are low with dividend growth is recently good. The current dividend yield is low (below 2%) at 1.63%. The 5, 10 and historical dividend yields are also low at 1.01%, 1.27% and 1.07%. The dividends have increased a lot in the past few years after 4 years of dividend declines. The dividends were increase by 55% in 2020. The 5 year dividend growth is 17.23% per year. However, the 10 year growth is negative at 3.4%.

The Dividend Payout Ratios (DPR) are good. The DPR for EPS for 2020 is 24% with 5 year coverage at 21%. The DPR for CFPS for 2020 is 8% with 5 year coverage at 5%. The DPR for Free Cash Flow for 2020 is 16% with 5 yar coverage at 20%. Sites seem to agree on FCF.

Debt Ratios are good. The Long Term Debt/Market Cap Ratio is currently good at just 0.13. It has varied in the past. The Liquidity Ratio is good at 3.67 and has always been good. The Debt Ratio is also good at 3.14. The Leverage and Debt/Equity Ratios are good at 1.99 and 0.63.

The Total Return per year is shown below for years of 5 to 34 to the end of 2020 in CDN$. 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 15.28% 24.41% 23.15% 1.26%
2010 10 -1.05% -5.09% -5.87% 0.78%
2005 15 2.92% 0.39% -0.74% 1.13%
2000 20 0.73% 2.10% 0.82% 1.28%
1995 25 3.58% 0.13% -0.86% 0.99%
1990 30 7.13% 4.27% 2.79% 1.48%
1986 3 10.90% 10.24% 7.30% 2.94%

The Total Return per year is shown below for years of 5 to 34 to the end of 2020 in US$. 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 17.23% 26.58% 25.29% 1.30%
2010 10 -3.44% -7.38% -8.13% 0.75%
2005 15 2.31% -0.11% -1.34% 1.23%
2000 20 1.73% 3.20% 1.66% 1.54%
1995 25 3.87% 0.50% -0.59% 1.08%
1990 30 7.06% 3.93% 2.49% 1.44%
1986 34 10.97% 10.50% 7.60% 2.90%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 11.24, 14.31 and 17.37. The corresponding 10 year ratios are 2.01, 2.42 and 2.83. The corresponding historical ratios are 16.93, 25.34 and 29.62. The current P/E Ratio is 17.09 based on a stock price of $27.65 and EPS estimate for 2021 of $1.62 ($1.29 US$). The 10 year ratios are very low because of 5 years of EPS losses, so I am using the 5 year P/E Ratios. The current P/E Ratio is between the median and high median 5 year P/E Ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in CDN$.

I get a Graham Price of $24.42. The 10 year low, median, and high median Price/Graham Price Ratios are 0.80, 0.99 and 1.33. The current P/GP Ratio is 1.13 based on a stock price of $27.65. The current P/GP Ratio is between the median and high median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in CDN$.

I get a 10 year median Price/Book Value per Share Ratio of 1.85. The current P/B Ratio is 1.68 based on a stock price of $22.06, Book Value of $23,341M and a Book Value per Share of $13.13. The current ratio is 9.29% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$, but you will get a similar result using CDN$.

I get a 10 year median Price/Cash Flow per Share Ratio of 7.74. The current P/CF Ratio is 7.23 based on Cash Flow per Share estimate for 2021 of $3.04 and a stock price of $22.06. The current ratio is 6.5% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$, but you will get a similar result using CDN$.

I get an historical median dividend yield of 0.95%. The current dividend yield is 1.63% based on a stock price of $27.65 and dividends of $0.45. The current dividend yield is 72% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap. This testing is in CDN$.

I get a 10 year median dividend yield of 1.26%. The current dividend yield is 1.63% based on a stock price of $27.65 and dividends of $0.45. The current dividend yield is 30% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap. This testing is in CDN$.

The 10 year median Price/Sales (Revenue) Ratio is 2.34. The current P/S Ratio is 3.15 based on Revenue estimate for 2021 of $12,471M, Revenue per Share of $7.01 and a stock price of $22.06. The current ratio is 35% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$, but you will get a similar result using CDN$.

Results of stock price testing is that the stock price is? The dividend yield tests say it is cheap, but this is not confirmed by the P/S Ratio testing which says the stock is expensive. The stock price is probably reasonable. Most of the test support a reasonable stock price.

Is it a good company at a reasonable price? This is a gold company, so you would buy it for diversification. It would also be high risk and not for everyone. I find that having a gold company, I pay for attention to the price of gold.

When I look at analysts’ recommendations, I find recommendations of Strong Buy (11), Buy (9), Hold (3) and Underperform (1). The consensus would be a Strong Buy. The 12 month stock price consensus is $36.65 ($29.22 US$). This implies a total return of 34.20% with 1.63% from dividends and 32.56% from capital gains based on a stock price of $27.65 (22.09 US$).

The last two recommendations on Stock Chase are a Sell and a Buy. Andrew Walker on Motley Fool thinks you should buy this company if you like the long term gold story. The Executive Summary on Simply Wall Street gives this stock 3 stars out of 5 and list 3 risks. Trefis Team and Great Speculations are contributors to an interesting Forbes article on this company. A writer on Simply Wall Street analyses the company’s debt and doesn’t think that Barrick’s use of debt is risky. Vladimir Zernov on FXEmpire thinks the price is reasonable when P/E Ratio is less than 15.

Based in Toronto, Barrick Gold is one of the world's largest gold producers, operating mines in North America, South America, Australia, and Africa. Its web site is here Barrick Gold Corp.

The last stock I wrote about was about was Leon's Furniture Ltd (TSX-LNF, OTC-LEFUF) ... learn more. The next stock I will write about will be Pembina Pipelines Corp (TSX-PPL, NYSE-PBA) ... learn more on Wednesday, April 21, 2021 around 5 pm. Today on my other blog I will write about "The 1970s Never Ended".... learn more on Tuesday, April 20, 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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Friday, April 16, 2021

Leon's Furniture Ltd

Sound bite for Twitter and StockTwits is: Dividend Growth Consumer. The stock price is probably reasonable. This company is on the small size. Both the Dividend Payout Ratios are Debt Ratios are fine. It has mostly done a total return of above 8% per year. See my spreadsheet on Leon's Furniture Ltd.

I own this stock of Leon's Furniture Ltd (TSX-LNF, OTC-LEFUF). I had some money in 2006 and this stock has been on MPL Communication's Investor Reporter list for some time. It was also on Mike Higgs' Dividend Growth Stock list. I bought some in 2006 and then some more in 2008, 2009 and 2010.

When I was updating my spreadsheet, I noticed that I am doing better in this stock than I had for a couple of years. My total return to date is 8.59% with 5.69% from capital gains and 2.90% from dividends. In 2020 my total return was 4.64% and 2019 was 5.26%. I bought it at the wrong time as I bought in 2006. In 2008 we had a recession and a very long recovery. This affected this company. However, when I bought, I could not have known that there would be such a recession in 2008.

The dividend yields are moderate with dividend growth low. The current dividend yield is moderate (2% to 4%) range at 2.88%. The 5, 10 and historical median dividend yields are also moderate at 2.95%, 2.82% and 2.17%. The dividend increases have been low with increases at 7% per year over the past 5 years. The last dividend increase was in 2021 and it was for 14.3%. Dividend growth has varied a lot over the years.

The Dividend Payout Ratios (DPR) are fine. The DPR for 2020 for EPS was 28% with 5 year coverage at 36%. Analysts expect the DPR for EPS for 2021 to be 54% then declining to 34% in 2022. The DPR for 2020 for CFPS was 19% with 5 year coverage at 30%. Analysts expect the DPR for CFPS to be around 34% in 2021. The DPR for 2020 for Free Cash Flow was 9.3% with 5 year coverage at 17%. Analysts expect the DPR for FCF for 2021 to be 44%, then falling to 23% in 2021.

Debt Ratios are fine. The Long Term Debt Market Cash is low at 0.06. the Liquidity Ratio for 2020 is 1.20. If you add in Cash Flow after dividends, the ratio becomes 1.77. The Debt Ratio for 2020 is 1.72. The Leverage and Debt/Equity Ratios for 2020 are 2.38 and 1.38.

The Total Return per year is shown below for years of 5 to 32 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 6.96% 11.16% 7.94% 3.22%
2010 10 5.76% 6.04% 3.38% 2.66%
2005 15 7.11% 8.90% 5.65% 3.26%
2000 20 9.00% 10.88% 7.36% 3.52%
1995 25 10.15% 12.07% 8.09% 3.98%
1990 30 9.43% 12.18% 8.51% 3.67%
1988 32 8.82% 12.17% 8.58% 3.59%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 11.01, 12.67 and 14.32. The corresponding 10 year ratios are 13.43, 12.67 and 16.83. The corresponding historical ratios are 12.15, 14.56 and 16.28. The current P/E Ratio is 12.83 based on a stock price of $22.20 and EPS estimate for 2021 of $1.73. The current P/E Ratio is between the median and high median 10 year ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.

If you look at P/E Ratios compared to Total Returns for the 5, 10, 15, 20, 25, and 30 year periods, I find he following. For example, total return over the past 15 years is 8.90% per year, the starting P/E Ratio (the one from 15 years ago) was 13.87. From the point of view of this chart, a P/E Ratio of 12.83 would be fine. The one year of low total return of 6.04% was for the past 10 years and the start P/E was 17.01.

Year Tot Return Start P/E
5 11.16% 14.52
10 6.04% 17.01
15 8.90% 13.87
20 10.88% 11.27
25 12.07% 14.04
30 12.18% 11.30

I get a Graham Price of $22.42. The 10 year low, median, and high median Price/Graham Price Ratios are 0.97, 1.10 and 1.24. The current P/GP Ratio is 0.99 based on a stock price of $22.20. The current ratio is below the median ratio of 1.10. 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 1.81. The current P/B Ratio is 1.72 based on a stock price of $22.20, Book Value of $1,016M and Book Value per Share of $12.92. The current ratio is 5% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a 10 year median Price/Cash Flow per Share Ratio of $7.98. The current P/CF Ratio is 8.07 based on a stock price of $22.20, Cash Flow per Share estimate for 2021 of $2.75 and Cash Flow of $216M. The current ratio is 1% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. Since it is only 1% above, it is close to the median.

I get an historical median dividend yield of 2.08%. The current dividend yield is 2.88% based on dividends of $0.64 and a stock price of $22.20. The current dividend yield is 39% 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 2.82%. The current dividend yield is 2.88% based on dividends of $0.64 and a stock price of $22.20. The current dividend yield is 2% above the historical median 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 0.57. The current P/S Ratio is 0.73 based on a stock price of $22.20, Revenue estimate for 2021 of $1,388M, and Revenue per Share of $30.36. The current ratio is 29% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.

Results of stock price testing is that the stock price is probably reasonable. I know a number of people that like the 10 year median dividend yield test compared to the historical median yield test. Revenue has not grown much since the 2008 recession, especially in the last 5 years. Most tests, except for the P/S Ratio test is showing the stock price as reasonable. However, caution is probably called for as it is a consumer stock and it is a small cap company because its Market Cap is under $2B at $1.7B. However, in Canada, sometimes a Mid-Cap size company is considered to be from $1.5B to $5B.

Is it a good company at a reasonable price? The price is probably reasonable. I still like this company and I expect to continue to hold my shares. I do not expect a total return of more than 8% per year, which is a reasonable amount. It has a reasonable Return on Equity with a 5 year average of 12.8% per year and the debt ratios are fine.

When I look at analysts’ recommendations, I find a Hold (1) Recommendation. The Consensus would be a Hold. The 12 month stock price consensus is $23.00. This implies a total return of $9.04% with 6.16% from capital gains and 2.88% from dividends.

The last analyst’s recommendation in January 2021 on Stock Chase said this stock was their top pick. Aditya Raghunath on Motley Fool called this stock a long-term investment option. The Executive Summary on Simply Wall Street gave this stock 4 stars out of 5 and list 2 risks. A writer on Simply Wall Street feels the company’s debt use is not risky.

Leon's Furniture Ltd is a Canada-based retailer that operates in two main segments, both involved in the sale of home furnishing, mattresses, appliances, and electronics. Leon's segment includes the 86 physical stores nationwide and the leons.ca website. The Brick segment includes The Brick, The Brick Mattress, and the Brick Outlet stores, as well as the website thebrick.com. Its web site is here Leon's Furniture Ltd.

The last stock I wrote about was about was Supremex Inc (TSX-SXP, OTC-SUMXF) ... learn more. The next stock I will write about will be Barrick Gold Corp (TSX-ABX, NYSE-GOLD) ... learn more on Tuesday, April 20, 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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Wednesday, April 14, 2021

Supremex Inc

Sound bite for Twitter and StockTwits is: Small Materials Company. The stock price is cheap. The company has suspended their dividends. They have been inconsistent with dividends. A director and the chairman are buying shares. The Goodwill Intangible/Market Cap Ratio is far to high at 1.30 for 2020. See my spreadsheet on Supremex Inc.

I own this stock of Supremex Inc (TSX-SXP, OTC-SUMXF). I read about it in Money Sense article of 15 Stocks to help investors ride market swings by Michael Pe of Mar 4, 2018. They were an envelope company, but are diversifying into packaging. I investigated this stock for buying for my TFSA.

When I was updating my spreadsheet, I noticed I have lost money on this stock. I have had it for 2 years and my total return of a loss of 9.49% with a capital loss of 13.39% and dividends of 3.90%. I see that a director and the Chairman are buying stocks. The other thing is that Intangibles/Market Cap Ratio for 2020 is 0.43 going to 0.39 currently. The Goodwill/Market Cap Ratio for 2020 is 0.87 going down to 0.78 currently. This gives a total for Intangibles Goodwill/Market Cap for 2020 at 1.30 for 2020 and going down to 1.17 currently. These values are too high.

The dividend has recently been suspended and dividends have gone down as well as up. Over the past 14 years, dividends were increased 7 times and decreased 4 times and rest of the time flat. The company started out as an income trust. Income Trusts have had a hard time adjusting their dividends after becoming corporations. I expect that the company will restart dividends in the future, but it is unknown at this time when.

The Dividend Payout Ratios (DPR) too high before the dividend cut in 2020. The DPR for 2020 was 49% with 5 year coverage at 86%. The DPR for CFPS for 2020 was 15% with 5 year coverage at 26%. The DPR for Free Cash Flow for 2020 was 11% with 5 year coverage at 40%.

Debt Ratios are fine, but it would be better if Long Term Debt was lower. The Long Term Debt/Market Ratio for 2020 was quite high at 0.93 but has moved down to 0.84 with the increase in market value. The Liquidity Ratio for 2020 was 1.65. The Debt Ratio for 2020 was 1.73. The Leverage and Debt/Equity Ratios for 2020 were 2.36 and 1.36.

The Total Return per year is shown below for years of 5 to 14 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 -8.25% -10.09% -16.38% 6.29%
2010 10 -2.05% 6.14% -1.65% 7.79%
2006 14 -14.42% -2.42% -9.67% 7.25%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 9.15, 10.55 and 11.62. The corresponding 10 year ratios are 4.95, 7.10 and 9.47. The corresponding historical ratios are 5.29, 7.49 and 9.69. The current P/E Ratio is 4.96 based on a stock price of $2.33 and EPS estimate for 2021 of $0.47. The current ratio is just above the low median 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a Graham Price of $5.48. The 10 year low, median, and high median Price/Graham Price Ratios are 0.49, 0.68 and 0.86. The current P/GP Ratio is 0.43 based on a stock price of $2.33. The current ratio is below the low median 10 year P/GP Ratio. This stock price testing suggests that the stock price is relatively cheap.

I get a 10 year median Price/Book Value per Share Ratio of 1.21. The current P/B Ratio is 0.82 based on a book Value of $78.96M, Book Value per Share of $2.84 and a stock price of $2.33. The current ratio is 32% 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 3.94. The current P/CF Ratio is 1.75 based on last 12 month Cash Flow of $37M, Cash Flow per Share of $1.33 and a stock price of $2.33. The current ratio is 56% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

I cannot do the dividend yield test because the dividend has been suspended.

The 10 year median Price/Sales (Revenue) Ratio is 0.48. The current P/S Ratio is 0.30 based on Revenue estimate for 2021 of $215.5M, Revenue per Share of $7.74 and a stock price of $2.33. The current ratio is 37% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

Results of stock price testing is that the stock price is probably cheap. Dividend yield tests cannot be done because dividend is suspended. The P/S Ratio test shows that the stock is relatively cheap as does the P/B Ratio test. I know that the P/E Ratio test does not say it is cheap, but the P/E Ratio are really low. A P/E Ratio test below 10.00 is showing a cheap price.

Is it a good company at a reasonable price? I still have hope for this company. I understand the risks as it is a small company that has gotten into problems. I will continue to hold my shares. The stock is cheap.

When I look at analysts’ recommendations, I find only one recommendation of Buy. The Consensus would be a buy. The 12 month stock price consensus is $3.50. This implies a total return of $50.21%, all from capital gains.

There are only old entries on Stock Chase and this stock is not well covered. There is also nothing recent on Motley Fool. The executive summary on Simply Wall Street list 4 risks and gives this stock 3 stars out of 5. A writer on Simply Wall Street looks at this company’s debt. A writer on Simply Wall Street says this company is cheap, but wonders about its growth prospects.

Supremex Inc is engaged in manufacturer and marketer of a broad range of custom envelopes and packaging products. The company operates in two business segments that are Manufacturing and Sale of Envelopes, and the manufacturing and sale of paper-based packaging solutions and specialty products. Its web site is here Supremex Inc.

The last stock I wrote about was about was Toromont Industries Ltd (TSX-TIH, OTC-TMTNF) ... learn more. The next stock I will write about will be Leon's Furniture Ltd (TSX-LNF, OTC-LEFUF) ... learn more on Friday, April 16, 2021 around 5 pm. Tomorrow on my other blog I will write about Long Live Debtism.... learn more on Thursday, April 15, 2021around 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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.