I do not own this stock of CI Financial Corp (TSX-CIX, NYSE-CIXX). I started to follow this stock originally because it was a Mutual Fund company. People talked about it being easier to make money from buying a Mutual Fund company than buying Mutual Funds. When they became a Unit Trust in 2006, dividends were significantly increased, but these dividends proved to be unsustainable. They changed back to a corporation in 2009 and dividends were decreased in 2010. In June 2014, MPL communications called this stock a Buy and advised that they were adding it to their list of Key Stock for the Investment reporter.
When I was updating my spreadsheet, I noticed that they changed slightly the value of the Assets under management and Revenue for 2019 in the 2020 statements and make no mention of this. I find this annoying. For example, in the 2019 report, Revenue was 2,119,227 and in the 2020 report, Revenue for 2019 is shown as 2,122,466.
They made some acquisitions in 2020. On February 19, 2020, CI acquired 100% of the outstanding shares and debt obligations of CI ETF Investment Management Inc. [“CI ETF”], formerly WisdomTree Asset. Management Canada, Inc. On October 19, 2020, CI acquired a controlling interest in Aligned Capital Distributions Inc. During the year ended December 31, 2020, CI acquired controlling interests in some registered investment advisory firms.
The dividend yields are moderate with dividend growth currently non-existent. The current dividend yield is moderate (2% to 4% ranges) at 3.19%. The 5, 10 and historical dividend yields are also moderate at 4.77%, 4.03% and 3.69%. The dividends have declined over the past 5 years by 11% per year. The dividends have been flat since 2019. Most analysts do not expect this to change in the near future. However, they do have a past history of dividend rises. Over the past 25 years they have increased dividends 16 times and decreased them 4 times.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2020 is 33% with 5 year coverage at 50%. The DPR for CFPS for 2020 is 29% with 5 year coverage at 43%. The DPR for Free Cash Flow for 2020 is 30% with 5 year coverage at 48%.
Debt Ratios need improving. Long Term Debt/Market Cap for 2020 is 0.68 and declining to 0.50 currently. The Liquidity Ratio for 2020 is 0.99. If you add in cash flow after dividends it is still low at 1.21. I prefer this to be 1.50 or high. The Debt Ratio is also low at 1.34 and I prefer this also to be 1.50 or higher. The Leverage and Debt/Equity Ratios are too high at 3.93 and 2.93. I prefer these to be below 3.00 and 2.00, respectively.
The Total Return per year is shown below for years of 5 to 26 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 | -11.08% | -8.00% | -12.41% | 4.41% |
| 2010 | 10 | 14.05% | 2.02% | -3.49% | 5.51% |
| 2005 | 15 | 0.95% | 7.23% | -0.74% | 7.97% |
| 2000 | 20 | 18.30% | 7.87% | 1.17% | 6.70% |
| 1995 | 25 | 18.66% | 21.34% | 10.31% | 11.03% |
| 1994 | 26 | 19.33% | 9.62% | 9.71% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 7.48, 9.87 and 12.64. The corresponding 10 year ratios are 14.12, 15.55 and 17.46. The corresponding historical ratios are 14.88, 17.26 and 19.91. The current P/E Ratio is 8.27 based on a stock price of $22.59 and EPS estimate of $2.73. the current ratio is below the low 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $21.76. The 10 year low, median, and high median Price/Graham Price Ratios are 1.46, 1.65 and 1.85. The current P/GP Ratio is 1.04 based on a stock price of $22.59. The current ratio is below 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 3.92. The current P/B Ratio is 2.96 based on a Book Value of $1,554M, Book Value per Share of $7.62 and a stock price of $22.59. The current ratio is 24% 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 11.89. The current P/CF Ratio is 29.72 based on Cash Flow per Share estimate for 2021 of $0.76, Cash Flow of $155M and a stock price of $22.59. The current ratio is 150% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. However, analysts are showing a drop of 70% in CFPS for 2021. You have wonder about that.
If I look at the Cash Flow per Share for 2022 the Cash Flow per Share Ratio is $2.23, a more reasonable value. The P/CF Ratio for 2022 is 10.13. This is based on Cash Flow per Share estimate for 2022 at $2.23, Cash Flow of $455M, and a stock price $22.59. This P/CF Ratio is 15% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 3.69%. The current dividend yield is 3.19% based on Dividends of $0.72 and a stock price of $21.76. The current dividend yield is 14% 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 4.03%. The current dividend yield is 3.31% based on Dividends of $0.72 and a stock price of $21.76. The current dividend yield is 20% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
The 10 year median Price/Sales (Revenue) Ratio is 3.89. The current P/S Ratio is 1.71 based on a Stock Price of $22.59, Revenue estimate for 2021 of $2,697M and Revenue per Share of $13.22. The current ratio is 56% 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. There is a problem with the Dividend yield tests because dividends were cut by 48% in 2018. This really invalidates the dividend yield tests. Most of the rest of the testing is showing the stock price as cheap also.
Is it a good company at a reasonable price? The stock price is reasonable if not cheap. It is not currently a dividend growth company, but it will probably be that again. Dividend yield is still in the moderate range and this is good. The company has paid a lot in dividends over the years and will continue to do so. However, in buying this company you are taking a risk as there is always the possibilities the new acquisitions will not work out as the company expects and you may not get increased dividends in the future
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (6) and Hold (3). The consensus would be a Buy. The 12 month stock price consensus is $25.05. this implies a total return of 14.08% with 10.89% from capital gains and 3.19% from dividends.
The most recent entry on Stock Chase says to watch this company because it might have a bright future. Nikhil Kumar on thinks that buying this stock you can benefit from the boom in asset management services. The executive summary on Simply Wall Street gives this stock 3 stars out of 5 and lists 3 risks. A writer on Simply Wall Street says the company looks good from a dividend perspective. Analysts expect EPS to increase and dividend payments are the same as 10 years ago. A writer on Simply Wall Street likes this stock because analysts expect good increases in Revenue and EPS in the near future.
CI Financial is a diversified provider of wealth management products and services, primarily in the Canadian market. Its web site is here CI Financial Corp.
The last stock I wrote about was about was Intertape Polymer Group Inc (TSX-ITP, OTC-ITPOF) ... learn more. The next stock I will write about will be Computer Modelling Group Ltd (TSX-CMG, OTC-CMDXF) ... learn more on Friday, June 25, 2021 around 5 pm. Tomorrow on my other blog I will write about Dividend Investing.... learn more on Thursday, June 24, 2021 around 5 pm.
Also, on my book blog I have put a review of the book Your Money or Your Life by Vicki Robin learn more...
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