I own this stock of WSP Global Inc (TSX-WSP, OTC-WSPOF). This company used to be called Genivar. Genivar was in an article I read so I investigated it and decided to buy.
When I was updating my spreadsheet, I noticed that this company used to be an income trust. Because income trust can pay higher dividends, a lot cut their dividends when they because corporations. This company handled it differently. They have left the dividend flat. The Dividend Yield has been coming down over the years. It used to be in the 5% to 7% ranges, but currently it is 1.18%. They have yet to say when they might again rise the dividends.
The dividend yields are low with dividend growth non-existent. Dividend yields are low (below 2%) at 1.18%. The 5, 10 and historical dividend yields are moderate (2% to 4% ranges) at 2.26%, 3.66% and 4.47%. As mentioned above, they have not raised the dividend since 2008 when they had to become a corporation. The company says that the dividend is currently expected to remain at this level subject to the Board’s ongoing assessment.
The Dividend Payout Ratios (DPR) are improving. The DPR for EPS for 2020 is 60% with 5 year coverage at 64%. The DPR for CFPS is 19% with 5 year coverage at 24%. The DPR for Free Cash Flow is 8.6% with 5 year coverage of 14%.
Debt Ratios are mostly good. The Long Term Debt/Market Cap Ratio for 2020 is 0.02 and is very low and very good. The Liquidity Ratio for 2020 is 1.04. If you add in cash flow after dividends, it is still a bit low at 1.35. The Debt Ratio at 1.86 is good. The Leverage and Debt/Equity Ratios are fine at 2.17 and 1.17.
The Total Return per year is shown below for years of 5 to 15 to the end of 2020. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2015 | 5 | 0.00% | 25.63% | 23.19% | 2.88% |
| 2010 | 10 | 0.00% | 17.82% | 14.76% | 2.15% |
| 2005 | 15 | 7.91% | 23.66% | 18.06% | 2.53% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 20.97, 27.12 and 31.62. The corresponding 10 year ratios are 19.52, 23.12 and 26.73. The corresponding historical ratios are 15.95, 19.95 and 23.95. The current P/E Ratio is 31.95 based on a stock price of $127.15 and EPS estimate for 2021 of $3.98. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $56.73. The 10 year low, median, and high median Price/Graham Price Ratios are 1.10, 1.30 and 1.50. The current P/GP Ratio is 2.24 based on a stock price of $127.15. The current ratio is above the high median ratio of 1.50. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median Price/Book Value per Share Ratio of 1.64. The current P/B Ratio is 3.54 based on a stock price of $127.15, Book Value of $4,080M, and Book Value per Share of $35.93. The current ratio is 116% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median Price/Cash Flow per Share Ratio of 11.79. The current P/CF Ratio is 21.05 based on Cash Flow per Share estimate for 2021 of $6.04, Cash Flow of $686M, and a stock price of $127.15. The current ratio is 79% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 4.47%. The current dividend yield is 1.18% based on dividends of $1.50 and a stock price of $127.15. The current yield is 74% below the historical dividend yield. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year dividend yield of 3.66%. The current dividend yield is 1.18% based on dividends of $1.50 and a stock price of $127.15. The current yield is 68% below the 10 year dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10 year median Price/Sales (Revenue) Ratio is 1.14. The current P/S Ratio is 1.85 based on a stock price of $127.15, Revenue estimate for 2021 of $7,813M and Revenue per Share of $68.82. The current ratio is 62% 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 expensive. First, we should exclude the dividend tests because this company was an income trust that converted to a corporation. Income trusts could pay out higher dividends. The dividends have been flat since 2009. However, all the tests come back with a stock price that is expensive, including a favourite of mine of the P/S Ratio test.
Is it a good company at a reasonable price? First, I own this company and I do like it and will continue to hold it. I would feel more comfortable with it, if it would rise their dividends. However, the current pandemic rises uncertainty and it may be better to wait before they do any increases. Analysts do not see any dividend increase happening in the near term. The company is doing well. However, it would appear that the stock price is high so now may not be a good time to buy.
When I look at analysts’ recommendations, I find Strong Buy (4), Buy (6) and Hold (3). The consensus would be a Buy. The 12 month stock price consensus is $134.92. This implies a total return of 7.29% with 6.11% from capital gains and 1.18% from dividends.
Analysts like this stock on Stock Chase. Vineet Kulkarni on Motley Fool says this stock is a safe bet. Executive Summary on Simply Wall Street gives it 4 stars out of 5 and 1 risk. A writers on Simply Wall Street says the fair value of the stock is $106.74 CDN$, so the stock is currently a bit overvalued.
WSP Global Inc provides engineering and design services to clients in the Transportation & Infrastructure, Property and Buildings, Environment, Power and Energy, Resources, and Industry sectors. It also offers strategic advisory services. The firm operates through four reportable segments namely, Canada, Americas ( US and Latin America), EMEIA (Europe, Middle East, India and Africa), and APAC (Asia Pacific, comprising Australia, New Zealand and Asia). Its web site is here WSP Global Inc.
The last stock I wrote about was about was Fortis Inc (TSX-FTS, OTC-FRTSF) ... learn more. The next stock I will write about will be Thomson Reuters Corp (TSX-TRI, NYSE-TRI) ... learn more on Wednesday, May 5, 2021 around 5 pm. Tomorrow on my other blog I will write about Dividend Stocks May 2021.... learn more on Tuesday, May 05, 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.
No comments:
Post a Comment