I do not own this stock of TMX Group Ltd (TSX-X, OTC-TMXXF). I looked at this stock in 2008 after I found it on a list of Strongest Dividend Growth stocks. I am interested in such stocks.
When I was updating my spreadsheet, I noticed that although the stock price does fluctuate a lot, shareholders have done well in recent years. The total return for the last 5 years is 32.60% with 28.85% from capital gains and 3.75% from dividends. Revenues are increasing at a much lower rate of 3.8% and 4% and over the past 5 and 10 years. Revenue per Share has increased by 3% and 7% over the past 5 and 10 years. (There has been share buy-backs over the past 10 years so Revenue per Share is higher than Revenue. It is the Revenue that counts.)
The dividend yields are moderate with dividend growth moderate. The current dividend yield is moderate (2% to 4% ranges) at 2.37%. The 5, 10 and historical median dividend yields are also moderate at 2.69%, 2.99% and 2.99%.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2020 is 55% with 5 year coverage at 45%. The DPR for CFPS for 2020 is 31% with 5 year coverage at 28%. The DPR for Free Cash Flow for 2020 is 41% with 5 year coverage at 42%.
Debt Ratios needs to be improved. The Long Term Debt/Market Cap Ratio for 2020 is 0.10 and this is low and good. The Liquidity Ratio for 2020 is 1.00 and this is low. It does not improve much when adding in Cash Flow after dividends as it is just 1.01. The Debt Ratio is also low at 1.11. Leverage and Debt/Equity Ratios are high at 10.00 and 9.00
The Total Return per year is shown below for years of 5 to 18 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 | 11.20% | 32.60% | 28.86% | 3.75% |
| 2010 | 10 | 5.85% | 16.15% | 13.15% | 3.00% |
| 2005 | 15 | 7.65% | 9.22% | 6.86% | 2.36% |
| 2002 | 18 | 12.82% | 21.78% | 14.77% | 7.01% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 13.65, 15.60 and 20.27. The Corresponding 10 year ratios are 14.85, 18.62 and 22.53. The corresponding historical ratios are 16.06, 21.64 and 25.05. The current P/E Ratio is 21.52 based on a stock price of $130.18 and EPS estimate for 2021 of $6.05. The current ratio is between the median and high 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.
If you look at P/E Ratios compared to Total Returns for the 5, 10, 15, and 18 year periods, I find the following. For example, total return over the past 10 years is 16.15% per year, the starting P/E Ratio (the one from 15 years ago) was 14.00. From the point of view of this chart, the highest returns are with quite low starting P/E Ratio.
| Year | Tot Return | Start P/E |
|---|---|---|
| 5 | 32.60% | -37.28 |
| 10 | 16.15% | 14.00 |
| 15 | 9.22% | 31.13 |
| 18 | 21.78% | 13.34 |
I get a Graham Price of $93.63. The 10 year low, median, and high median Price/Graham Price Ratios are 0.87, 1.07 and 1.24. The current P/GP Ratio is 1.39 based on a stock price of $130.18. This ratio is above the high 10 year median ratio. 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 1.14. The current P/B Ratio is 2.02 based on a stock price of $130.18, Book Value of $3,611M and Book Value per Share of $64.41. The current P/B Ratio is 77% 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 11.29. The current P/CF Ratio is 16.97 based on Cash Flow per Share estimate for 2021 of $7.67, Cash Flow of $430M and a stock price of $130.18. The current ratio is 50% 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 2.99%. The current dividend yield is 2.37% based on a stock price of $130.18 and dividends of $3.08. The current dividend yield is 21% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median dividend yield of 2.99%. The current dividend yield is 2.37% based on a stock price of $130.18 and dividends of $3.08. The current dividend yield is 21% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. (Yes, both the historical and median dividend yields are the same at 2.99%.)
The 10 year median Price/Sales (Revenue) Ratio is 5.07. The current P/S Ratio is 7.54 based on Revenue estimate for 2021 of $968M, Revenue per Share of $17.26 and a stock price of $130.18. The current ratio is 49% 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 would seem to be on the expensive side currently. Both the dividend yield tests say this and it is confirmed by the P/S Ratio test. All the other tests say the same thing except for the P/S Ratio test which says the stock price is still reasonable, but above the median.
Is it a good company at a reasonable price? The stock price seems to be on the expensive side currently. This stock has done well by shareholders over the years in producing nice capital gains and dividend returns. However, I would prefer it improve its debt ratios.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (2), and Hold (4) recommendations. The consensus would be a Buy. The 12 months stock price consensus is $150.00. This implies at total return of 17.59% with 15.23% from capital gains and 2.37% from dividends.
Analysts on Stock Chase thinks that this is a good stock and a current buy. Stephanie Bedard-Chateauneuf on Motley Fool talks about this company’s solid earnings for May. The Executive Summary on Simply Wall Street gives this stock 4 stars out of 5 and lists one risk. TMX Group talk about new issues on Newswire Canada. Paul Bagnell talks about this company on Bloomberg.
TMX Group Ltd is a company that operates several global markets to provide investment opportunities for its clients. TMX Group's key operations include Toronto Stock Exchange, TSX Venture Exchange, TSX Alpha Exchange, The Canadian Depository for Securities, Montreal Exchange, Canadian Derivatives Clearing Corporation, and Trayport, which provides listing markets, trading markets, clearing facilities, depository services, technology solutions, data products, and other services to the global financial community. TMX Group operates offices across North America (Montreal, Calgary, Vancouver, and New York), as well as in key international markets including London and Singapore. Its web site is here TMX Group Ltd .
The last stock I wrote about was about was LifeWorks Inc (TSX-LWRK, OTC-MSIXF) ... learn more. The next stock I will write about will be Obsidian Energy Ltd (TSX-OBE, OTC-OBELF) ... learn more on Wednesday, July 14, 2021 around 5 pm. Tomorrow on my other blog I will write about Fund for Retirement .... learn more on Tuesday, July 13, 2021 around 5 pm.
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