I do not own this stock of Parkland Fuel Corp (TSX-PKI, OTC-PKIUF). I decided to do a spreadsheet on this stock as it was a stock recommended by Roger Conrad in Money Show 2013.
When I was updating my spreadsheet, I noticed that for a company in the oil and gas business they have continued to do well for their shareholders. They have delivered a total return of 15.72% per year over the past 5 years. Of course, they deliver products, they do not service the oil and gas industry. This company has been raising their dividends, but only by slightly over 1% for the last few years. They cannot afford to do any more. This kept them on the Dividend Aristocrat list.
The dividend yields are moderate with dividend growth low. The current dividend yield is moderate (2% to 4%) at 3.15%. The 5, 10 and historical dividend yields are also moderate at 3.51%, 4.47% and 3.51%. The dividend growth over the past 5 years is low (below 8%) at just 2.4% per year. The last dividend increase was for 2021 and was for 1.7%. Analysts expect the low dividend growth to continue in the near future.
The Dividend Payout Ratios (DPR) for EPS is too high, but is expected to drop. The other DPRs are fine. The DPR for EPS for 2020 was 224% with 5 year coverage at 101%. Analysts expect this DPR to drop to 70% in 2021 and then 47% in 2022. The DPR for CFPS for 2020 was 24%, with 5 year coverage at 32%. The DPR for Free Cash Flow for 2020 is 23% with 5 year coverage at 36%.
Some Debt Ratios need to be improved. The Long Term Debt/Market Cap is 0.64 and this is fine. The Liquidity Ratio for 2020 low at 1.16. However, if you add in cash flow after dividends, it is good at 1.62. The Debt Ratio at 1.33 is low and I like that to be 1.50 or higher. The Leverage and Debt/Equity Ratios for 2020 are 4.75 and 3.57 and are too high. I like them to be below 3.00 and below 2.00.
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 | 2.38% | 15.72% | 11.64% | 4.08% |
| 2010 | 10 | -0.41% | 19.36% | 13.40% | 5.97% |
| 2005 | 15 | 4.71% | 24.33% | 12.80% | 11.53% |
| 2000 | 20 | 19.67% | 25.54% | 13.73% | 11.82% |
| 1995 | 25 | 18.69% | 17.79% | 11.60% | 6.20% |
| 1990 | 30 | 15.35% | 16.21% | 11.41% | 4.80% |
| 1988 | 32 | 14.33% | 13.71% | 9.90% | 3.81% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 34.28, 40.43 and 46.59. The corresponding 10 year ratios are 22.03, 27.21 and 32.38. The corresponding historical ratios are 10.65, 13.12 and 16.02. The current P/E Ratio is 22.04 based on a stock price of $39.23 and EPS estimate for 2021 of 1.78. This 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 $22.63. The 10 year low, median, and high median Price/Graham Price Ratios are 1.43, 1.84 and 2.20. The current P/GP Ratio is 1.73 based on a stock price of $39.23. 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 10 year median Price/Book Value per Share Ratio of 2.82. the current P/B Ratio is 3.07 based on a Book Value of $1919M, Book Value per Share of $12.79 and a stock price of $39.23. The current ratio is 8.9% 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 9.71. The current P/CF Ratio is 6.12 based on Cash Flow per Share estimate for 2021 of $6.41, Cash Flow of $961.8M and a stock price of $39.23. The current ratio is 37% 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 3.51%. The current dividend yield is 3.15% based on dividends of $1.2348 and a stock price of $39.23. The current dividend yield is 10% below the historical dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get an historical median dividend yield of 3.51%. The current dividend yield is 3.15% based on dividends of $1.2348 and a stock price of $39.23. The current dividend yield is 10% 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 4.47%. The current dividend yield is 3.15% based on dividends of $1.2348 and a stock price of $39.23. The current dividend yield is 30% below the historical dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10 year median Price/Sales (Revenue) Ratio is 0.33. The current P/S Ratio is 0.34 based on Revenue estimate for 2021 of $17,466M, Revenue per Share of $116.40 and a stock price of $39.23. The current ratio is 0.6% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and at the median.
Results of stock price testing is that the stock price is probably reasonable. First the P/S Ratio testing says the stock price is reasonable and at the median. The problem with the dividend yield tests is that this stock spent time before 2010 as an income trust. When it became a corporation in 2010, it did decrease the dividends, but not enough and it has had low dividend increases since. Some of the other tests vary in results, but it is nice that the P/CF says the stock price is relatively cheap.
Is it a good company at a reasonable price? I think that the stock price is reasonable. It has done well for the shareholders in total return. They used to be an income trust so they have had a hard time getting the DPR for EPS at a reasonable level. The Debt Ratios need improving so this makes the stock risky. However, if you are willing to accept the risks, the company will probably do fine. They have provided solid returns for investors in the past.
When I look at analysts’ recommendations, I find Strong Buy (6) and Buy (9) recommendations. The consensus would be a Strong Buy. The 12 month stock price consensus is $49.60. This implies a total return of $29.58% with 26.43% from capital gains and 3.15% from dividend.
Most analysts like this stock on Stock Chase. One said it was a good long term hold. Joey Frenette on Motley Fool thinks this stock is cheap and it is time to buy it. The executive summary on Simply Wall Street gives this stock 4 stars out of 5 and lists two risks. A writer on Simply Wall Street is uncomfortable with the high dividend payout ratio for EPS and says dividends are where they were 10 years ago. A writer on Simply Wall Street says the intrinsic value of this stock is $29.37 CDN$.
Parkland Fuel Corp distributes and markets fuels and lubricants. Refined fuels and other petroleum products are among the variety of offerings the company delivers to motorists, businesses, consumers, and wholesalers in the United States and Canada. Its web site is here Parkland Fuel Corp.
The last stock I wrote about was about was Computer Modelling Group Ltd (TSX-CMG, OTC-CMDXF) ... learn more. The next stock I will write about will be Saputo Inc (TSX-SAP, OTC-SAPIF) ... learn more on Wednesday, June 29, 2021 around 5 pm. Tomorrow on my other blog I will write about Best Renewable Energy Stocks.... learn more on Tuesday, June 29, 2021 around 5 pm.
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