I do not own this stock of Maxar Technologies Ltd (TSX-MAXR, NYSE-MAXR). I read about this stock in MPL Communication's Advice Hotline dated October 10, 2012. CanTech likes it also. It is a Tech stock with dividends. So, I investigated this stock.
When I was updating my spreadsheet, I noticed that even though it is doing better than last year, the debt ratios are still not good. The Long Term Debt/Market Cap for 2020 is not that bad at 1.02, but debt was increase in the first quarter and the ratios is now 1.40. The Liquidity Ratio is very low at 0.71 and it is still low if you add in cash flow after dividends at 1.06. The Debt Ratio is also low at 1.26. I prefer these last two ratios be at 1.50 or better. The Leverage and Debt/Equity Ratios are better than last year, but are still too high at 4.79 and 3.79, respectively. I like these ratios to be under 3.00 or under 2.00, respectively.
The dividend yields are currently very low with dividend growth non-existent. The dividend was cut by over 96% in 2019. The current yield is low (less than 2%) at just 0.11%, which is very low. The 5, 10 and historical dividend yields are low all at 1.85%. Analysts do not expect any change in the dividends in the near term.
The Dividend Payout Ratios (DPR) are fine currently. The DPR for EPS for 2020 is 0.8%. The 5 year coverage cannot be calculated because of the big EPS loss of 2018. The last time I could calculate a 5 year coverage was 2017 and it was 48%. The DPR for CFPS for 2020 is .9% with 5 year coverage at 12.3%. The DPR for Free Cash Flow cannot be calculated for 2020 because of a negative FCF. The DPR for FCF for 2021 is expected to be around 10%. The next time I can calculate a 5 year coverage for FCF is 2022 and it is expected to be 228%. The DPR for FCF has tended to be very high.
Debt Ratios are not good. The Long Term Debt/Market Cap Ratio for 2020 is too high at 1.02 and the current one is even higher at 1.19 because an increase in debt. When this ratio is higher than 1.00 it means that the stock’s market value is lower than the outstanding long term debt. The Liquidity Ratio for 2020 is 0.71. If you add in cash flow after dividends it is 0.99. It you include current portion of long term debt it is just 1.00. You want this to be at 1.50 or better. The current Liquidity Ratio with Cash Flow after dividends is better, but still low at 1.12.
The Debt Ratio is too low at 1.26 for 2020 and a current one of 1.39. This should also be 1.50 or higher. The Leverage and Debt/Equity Ratios for 2020 are too high at 4.79 and 3.79. The current ones are still too high at 3.55 and 2.55. I like to see these ratios below 3.00 and below 2.00.
The Total Return per year is shown below for years of 5 to 20 to the end of 2020 in CDN$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2015 | 5 | -49.03% | -8.74% | -9.98% | 1.24% |
| 2010 | 10 | -33.30% | 1.72% | -0.27% | 2.00% |
| 2005 | 15 | 3.28% | 1.83% | 1.45% | |
| 2000 | 20 | 5.26% | 4.05% | 1.21% |
The Total Return per year is shown below for years of 5 to 18 to the end of 2020 in US$. 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 | -48.16% | -7.48% | -8.74% | 1.26% |
| 2010 | 10 | -35.32% | -1.05% | -2.84% | 1.79% |
| 2005 | 15 | 2.70% | 1.23% | 1.48% | |
| 2002 | 18 | 7.26% | 5.69% | 1.57% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 2.27, 5.46 and 8.66. The corresponding 10 year ratios are 15.95, 19.77 and 23.59. The corresponding historical ratios are 17.96, 21.10 and 24.68. The current P/E Ratio is negative and therefore unusable. This is CDN$ terms.
The P/E Ratio for 2022 is 30.39 based on a stock price of $43.33 and EPS estimate for 2022 of $1.43 ($1.18 US$). The P/E Ratio for 2023 is 12.63 based on a stock price of $43.33 and EPS estimate for 2023 of $3.43 ($2.84 US$). The 2022 P/E Ratio is higher than the 10 year high ratio and is showing a stock price that is expensive. The last one is showing a P/E Ratio lower than the 10 year low ratio and shows a stock price that is cheap. However, the further you go out in estimates, the more likely that they are very wrong. This testing is CDN$ terms.
I estimate a Graham Price of $25.96. The 10 year low, median, and high median Price/Graham Price Ratios are 1.33, 1.75 and 2.06. The current P/GP Ratio is 1.67 based on a stock price of $43.33. The current ratio is just above the median 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. This is CDN$ terms.
I get a 10 year median Price/Book Value per Share Ratio of 3.23 based on Book Value of $1,246M, Book Value per Share of $17.38 and a stock price of $35.78. The current ratio is 36% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This is US$ terms. You will get a similar result in CDN$.
I get a 10 year median Price/Cash Flow per Share Ratio of 15.56. The current P/CF Ratio is 10.22 based on Cash Flow per Share estimate for 2021 of $3.51, Cash Flow of $252M and a stock price of $35.78. The current ratio is 34% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This is US$ terms. You will get a similar result in CDN$.
I get an historical median dividend yield of 1.85%. The current dividend yield is 0.11% based on a stock price of $43.33 and dividends of $0.05 ($0.04 US$). The current yield is 94% below the historical dividend median dividend yield. This stock price testing suggests that the stock price is relatively expensive. This is CDN$ terms. Dividends have only been paid for 8 years and the 5 and 8 year median dividend yields are the same as the historical one.
The 10 year median Price/Sales (Revenue) Ratio is 1.53. The current P/S Ratio is 1.44 based on Revenue estimate for 2021 of $1,780M, Revenue per Share of $24.83 and a stock price of $35.78. The current ratio is 85% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This is US$ terms. You will get a similar result in CDN$.
Results of stock price testing is that the stock price is probably cheap. The P/S Ratio says this. A number of other tests says the same thing. Dividends have just been cut some 96%, so the stock could not be cheap with a dividend yield test.
Is it a good company at a reasonable price? The stock price is probably at a reasonable price. However, this company does have problems, so this is a high risk turn-around situation.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (2), and Hold (5). The consensus would be a Buy. The 12 month stock price consensus is $58.47 ($48.39 US$). This implies a total return of 35.06% with 0.11% from dividends and 34.95% from capital gains.
There is a Business Wire article about the company inflating its intangibles. The most recent entry on Stock Chase says to hold for the longer term. Rich Smith on Motley Fool says it is unlikely that the company will turn a profit this year after Q1 results. The executive summary on Simply Wall Street gives this stock 2 stars out of 5 and list 3 risks. A writer on Simply Wall Street is uncomfortable with this company’s debt level.
Maxar Technologies Inc is an integrated space and geospatial intelligence company with a full range of space technology solutions for commercial and government customers including satellites, Earth imagery, geospatial data, and analytics. Its web site is here Maxar Technologies Ltd.
The last stock I wrote about was about was Ensign Energy Services (TSX-ESI, OTC-ESVIF) ... learn more. The next stock I will write about will be Algonquin Power & Utilities Corp (TSX-AQN, NTSE-AQN) ... learn more on Friday, June 11, 2021 around 5 pm. Tomorrow on my other blog I will write about My Investing.... learn more on Thursday, June 10, 2021 around 5 pm.
Also, on my book blog I have put a review of the book The Beleaguered by Lynne Golding learn more...
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