I own this stock of Mullen Group Ltd (TSX-MTL, OTC-MLLGF). I like to look at recommended small cap dividend paying stock to see if they would be a possible good investment now or in the future. The other thing to mention about this stock is that it converted from an income trust and decreased it dividends. The reduction in dividend brought the Dividend Payout Ratios down to a place that would allow for the company to begin growing dividends again. But they also did a dividend decrease in 2014.
When I was updating my spreadsheet, I noticed that last year I had a total loss of 15.86%. This year the total loss is 2.69% which includes a capital loss of 6.13% and dividends of 8.82%. This company services the oil and gas industry, but it is expanding to other industries.
The dividend yields are moderate with dividend growth restarted. The current dividend yield is moderate (2% to 4% ranges) at 3.72%. The 5, 10 and historical dividend yields are moderate at 4.13%, 4.60% and 4.13%. The dividends reached a high in 2013 and then went down for a couple of years. There was another increase in 2018 and then a decrease in 2020 and finally another increase in 2021.
The Dividend Payout Ratios (DPR) are currently fine. The DPR for EPS for 2020 is 55% with 5 year coverage at 122%. They had trouble for a few years to pay dividends because of low EPS. That is why there was a number of dividend cuts starting in 2014. However, they got their DPR now under control and they raised the dividend in 2021. The DPR for CFPS for 2020 was 16% with 5 year coverage at 26%. The DPR for Free Cash Flow for 2020 was 39% with 5 year coverage at 51%.
Debt Ratios are quite good. The Long Term Debt/Market Cap Ratio for 2020 is 0.44 and is low and therefore good. The Liquidity Ratio for 2020 is high and good at 3.25. The Debt Ratio is high and good at 2.09. The Leverage and Debt/Equity Ratios are low and good at 1.92 and 0.92.
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 | -21.84% | -0.93% | -4.90% | 2.88% |
| 2010 | 10 | -3.50% | 1.57% | -4.30% | 2.15% |
| 2005 | 15 | -4.28% | -2.38% | -7.06% | 2.53% |
| 2000 | 20 | 4.94% | 8.52% | 0.78% | 2.21% |
| 1997 | 23 | 8.95% | 1.94% | 2.21% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 10.75, 14.67 and 15.58. The corresponding 10 year ratios are 12.51, 15.23 and 18.72. The corresponding historical ratios are 11.38, 14.78 and 18.45. The current P/E Ratio is 18.70 based on a stock price of $12.90 and EPS estimate for 2021 of $0.69. The current ratio is just under the high median 10 year ratio 18.72. This stock price testing suggests that the stock price is relatively reasonable but above the median and close to expensive.
I get a Graham Price of $11.91. The 10 year low, median, and high median Price/Graham Price Ratios are 1.06, 1.30 and 1.54. The current P/GP Ratio is 1.08 based on a stock price of $12.90. The current ratio is between the low and median 10 year 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 1.93. The current P/B Ratio is 1.41 based on a stock price of $12.90, Book Value of $885M, and a Book Value per Share of $9.14. The current ratio is 27% 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 6.28. The current P/CF Ratio is 6.65 based on Cash Flow per Share estimate for 2021 of $1.94, Cash Flow of $187.9M and a stock price of $12.90. The current ratio is 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 4.13%. The current dividend yield is 3.72% based on dividends of $0.48 and a stock price of $12.90. The current dividend yield is 9.9% below the historical median 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 4.60%. The current dividend yield is 3.72% based on dividends of $0.48 and a stock price of $12.90. The current dividend yield is 19% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median and close to expensive.
The 10 year median Price/Sales (Revenue) Ratio is 1.33. The current P/S Ratio is 0.95 based on Revenue estimate for 2021 of $1,318M, Revenue per Share of $13.61, and a stock price of $12.90. The current ratio is 29% 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 and may be cheap. The P/S Ratio testing is showing the stock price as cheap. The problem with the dividend yield test is that dividends have been raised and lowered in the past 10 years and over the life of the payment of dividends. Even through the dividends have been unstable, the testing of dividend yields show the stock price as reasonable if above the median. I like the P/B Ratio test and this shows the stock as cheap also. However, the testing is a mixed bag.
Is it a good company at a reasonable price? I own this company and I still like it. I like it even better as it is expanding is transportation business beyond just for the oil and gas industry. I bought some more shares yesterday. I think it is a good company at a reasonable price, but there is risk with it because it services the oil and gas industry and in its expansion plans.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (7) and Hold (3). The consensus would be a Buy. The 12 month stock price is $15.09. This implies a total return of $20.70%, with 16.98% from capital gains and 3.72% from dividends.
One analyst says it is successfully transforming from oil to general trucking on Stock Chase. This stock is not well followed. Aditya Raghunath on Motley Fool says the CEO is quite clear on getting future growth outside Canada. The executive summary on Simply Wall Street gives this stock 4 stars out of 5. In this case they are right about unstable dividend track record. The site lists 2 risks. A writer on Simply Wall Street likes the company’s current DPR and growing EPS. The Mullen Group is talked about on BNN Bloomberg. He thinks it will do well over the long term.
Mullen Group is one of Canada’s largest logistics providers. Our network of independently operated businesses provides a wide range of service offerings including less-than-truckload, truckload, warehousing, logistics, transload, oversized and specialized hauling transportation. In addition, we provide a diverse set of specialized services related to the energy, mining, forestry, and construction industries in western Canada, including water management, fluid hauling and environmental reclamation. The corporate office provides the capital and financial expertise, legal support, technology and systems support, shared services, and strategic planning to its independent businesses. Its web site is here Mullen Group Ltd.
The last stock I wrote about was about was Hammond Power Solutions Inc (TSX-HPS.A, OTC-HMDPF) ... learn more. The next stock I will write about will be Canadian Utilities Ltd (TSX-CU, OTC-CDUAF) ... learn more on Friday, May 21, 2021 around 5 pm. Tomorrow on my other blog I will write about Buying for Capital Gains.... learn more on Thursday, May 20, 2021 around 5 pm.
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