I do not own this stock of Telus Corp (TSX-T, NYSE-TU). I started to follow this stock because of a list of stock John Sartz talked about in 2008. At the Toronto Money Shows in 2009 and 2010 Aaron Dunn from KeyStone Financial Publishing Corp talked about having recommended this stock. Aaron Dunn says he likes companies with resilient business models, which are profitable and are growing their earnings. He also like companies with strong management teams, health balance sheets and compelling valuations. They look at the P/E and the Price/Cash Flow ratios. Telus Corp (TSX-T) was one of three stocks he recommended in 2009.
When I was updating my spreadsheet, I noticed that the revenue went up, but earnings were down. The problem was extra expenses. They also only are giving values only in the millions. This annoys me. For example, last they said the number of outstanding shares in 2019 was 655M. They did a 2 for 1 split in 2020. My spreadsheet gives the current outstanding shares as 1210M. However, their statements for 2020 says that the outstanding shares for 2019 was 1209M. So, my calculation of shares is 1M out? What about other previous years?
The dividend yields are moderate with dividend growth moderate. The current dividend yield is moderate (2% to 4% ranges) at 4.33%. The 5, 10 and historical dividend yields are also moderate at 4.48%, 4.22% and 3.96%. The dividend growth over the past 5 years is moderate (below 8%) at 7.28% per year. The last dividend increase was in 2021 and it was for 7.3%. Dividend growth has varied a lot over the past 30 years. See chart below.
The Dividend Payout Ratios (DPR) need improving. The DPR for EPS for 2020 is 124% with 5 year coverage at 86%. Analysts do not expect the DPR will be below 100% until 2023 and some analysts think this will happen later. The DPR for Cash Flow per Share is 35% with 5 year coverage at 32%. Any DPR for CFPS at or below 40% is good. The DPR for Free Cash Flow for 2020 is 53% with 5 year coverage at 130%. There is disagreement among the sites as to what the FCF is.
Debt Ratios could be improved, but probably fine. The Long Term Debt/Market Cap Ratio for 2020 is 0.58. The Liquidity Ratio for 2020 is 0.79. If you add in cash flow after dividends it is still low at 1.31. The Debt Ratio for 2020 is 1.41. For both these ratios I prefer them to be at 1.50 or higher. However, they have been lower than what I like for a long time and in the case of the Liquidity Ratio it has seldom been at or above 1.50. The Leverage and Debt/Equity Ratios for 2020 are 3.44 and 2.44. I prefer these to be lower than 3.00 and 2.00, but again these have been too high for a while, since 2014.
The Total Return per year is shown below for years of 5 to 30 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 | 7.28% | 10.50% | 5.67% | 4.82% |
| 2010 | 10 | 19.14% | 13.36% | 8.29% | 5.07% |
| 2005 | 15 | 12.47% | 8.90% | 5.10% | 3.81% |
| 2000 | 20 | 6.20% | 7.61% | 4.53% | 3.07% |
| 1995 | 25 | 5.47% | 9.83% | 5.95% | 3.88% |
| 1990 | 30 | 10.71% | 9.69% | 5.68% | 4.01% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 17.20,18.51 and 19.83. The corresponding 10 year ratios are 16.15, 17.37 and 18.82. The corresponding historical ratios are 13.87, 16.76 and 18.69. The current P/E Ratio is 28.33 based on a stock price of $29.18 and EPS estimate of $.1.03. The current ratio is above the high of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $16.28. The 10 year low, median, and high median Price/Graham Price Ratios are 1.40, 1.52 and 1.65. The current P/GP Ratio is 1.79 based on a stock price of $29.18. The current ratio is above the high of the 10 year median ratios. 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 2.76. The current P/B Ratio is 2.55 based on a stock price of $29.18, Book Value of $14,756M and Book Value per Share of $11.43. The current P/B Ratio is 7% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median Price/Cash Flow per Share Ratio of 6.88. The current P/CF Ratio is 8.82 based on Cash Flow per Share estimate for 2021 of $3.31, Cash Flow of $4,273M and a stock price of $29.18. The current ratio is 28% above the 10 year median ratio. This stock price testing suggests that the stock price is expensive.
I get an historical median dividend yield of 3.96%. The current dividend yield is 4.33% based on dividends of $1.2548, and a stock price of $29.18. The current yield is 9.5% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median dividend yield of 4.22%. The current dividend yield is 4.33% based on dividends of $1.2548, and a stock price of $29.18. The current yield is 2.7% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10 year median Price/Sales (Revenue) Ratio is 1.97. The current P/S Ratio is 2.23 based on Revenue estimate for 2021 of $16,901M, Revenue per Share of $13.09 and a stock price of $29.18. The current ratio is 13% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
Results of stock price testing is that the stock price is probably reasonable. The dividend yield tests say it is below the median and the P/S Ratio test says it is above the median. The P/B Ratio test says it is reasonable, but other tests say it is expensive.
Is it a good company at a reasonable price? The stock price would seem to be reasonable. I do wonder about the telecom sector on whether there might be future disruptions due new technology. This business has changed a lot over the past few years and I do not expect this to stop. I have no plans to buy in this sector, but I will retain the BCE shares that I have.
When I look at analysts’ recommendations, I find Strong Buy (5), Buy (7) and Hold (5). This stock price testing suggests that the stock price is relatively reasonable and below the median. The consensus would be a Buy. The 12 month stock price consensus is $30.18. This implies a total return of 7.76% with 3.43% from capital gains and 4.33% from dividends.
Analysts on Stock Chase have very different opinions on this stock. Nicholas Dobroruka on Motley Fool says this company offers growth and passive income. The executive summary on Simply Wall Street gives this stock 3 stars out of 5 and list 3 risks. A Canadian Press article in the Moose Jaw Today is interesting as this company with BCE is complaining about Quebecor’s purchase of 5G spectrum in Western Canada . Kwhen Finance Editors via the Nasdaq site talks about some indicators on this stock.
Telus Corp is one of the big three wireless service providers in Canada. It is also the ILEC (incumbent local exchange carrier; the legacy telephone provider) in the western Canadian provinces of British Columbia and Alberta, where it provides Internet, television, and landline phone services. It also has a small wireline presence in eastern Quebec. Telus' other businesses participate in the international business services, health, security, and agriculture industries. Its web site is here Telus Corp.
The last stock I wrote about was about was Accord Financial Corp (TSX-ACD, OTC-ACCFF) ... learn more. The next stock I will write about will be Wajax Corp (TSX-WJX, OTC-WJXFF) ... learn more on Friday, September 10, 2021 around 5 pm. Tomorrow on my other blog I will write about Something to Buy September 2021.... learn more on Thursday, September 09, 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.
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