Friday, October 29, 2021

Keyera Corp

Sound bite for Twitter and StockTwits is: Dividend Growth Utility. The stock price could be currently reasonable. The DPRs need improving, but this is was an income trust stocks and all these stocks are having a hard time getting the DPR for EPS under control. It is part of the oil and gas energy industry and there is a push towards renewable energy but this could take some time. See my spreadsheet on Keyera Corp.

I do not own this stock of Keyera Corp (TSX-KEY, OTC-KEYUF). I started to review some of the stock recommended by Jennifer Dowty from a column she wrote and I reviewed in February 2010 on Dividends and Special Dividends. The title of the article in Investor’s Digest was Dividend Stocks: Buy, Hold and Collect. Jennifer is now a Portfolio Manager for Manulife Asset Management Limited.

When I was updating my spreadsheet, I noticed EPS was down 86% and was expected to be down 49%. Reason is higher expenses, especially impairment expenses. The EPS is expected to improve this year. By 514%. The EPS is up 54% for the second quarter of 2021.

The dividend yields are good with dividend growth low. The current dividend yield is good (5% to 6% ranges) at 6.09%. The 5 and historical median dividend yields are also good at 5.41%, and 5.68%. The 10 median dividend yield is moderate (2% to 4% ranges) at 4.37%. The dividend growth is low (below 8%) at 6.56% per year for the last 5 years. The last dividend increase was in 2020 and it was for 6.7%. There has been no increase so far in 2021. In past years, there have been increases in September each year.

The Dividend Payout Ratios (DPR) need improving. The DPR for EPS for 2020 is 686% with 5 year coverage at 124%. Analysts expect the DPR for EPS to be above 100% over the next three years. The DPR for EPS for 2021 is expected to be 112%. The DPR for CFPS for 2020 is 52% with 5 year coverage at 53%. I prefer this DPR to be at 40% or less. Analysts expect this DPR to be just under 50% over the next three years. The DPR for Free Cash Flow (FCF) for 2020 is 440%. The 5 year coverage is not calculable because of negative FCF in the past. The DPR for FCF for 2021 is expected to be 105% and then falling to 99% in 2022.

Debt Ratios are fine. The Long Term Debt/Market Cap for 2020 is 0.59 and falling to 0.47 in the second quarter of 2021. The Liquidity Ratio for 2020 is 1.30. If you add in cash flow after dividends it is 1.82 and fine. The Debt Ratio is good at 1.58. The Leverage and Debt/Equity Ratios are 2.74 and 1.74 and are fine.

The Total Return per year is shown below for years of 5 to 17 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 6.56% -5.45% -10.89% 5.45%
2010 10 7.87% 9.55% 2.56% 7.00%
2005 15 7.49% 12.59% 5.00% 7.58%
2002 17 12.17% 18.71% 8.75% 9.96%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 23.26, 25.42 and 27.58. The corresponding 10 year ratios are 23.05, 27.59 and 32.07. The corresponding historical ratios are 18.79, 22.58 and 26.37. The current P/E Ratio is 18.32 based on a stock price of $31.51 and EPS estimate for 2021 of $1.72. The current ratio is below the 10 year median low ratio. This stock price testing suggests that the stock price is relatively cheap.

I get a Graham Price of $21.74. The 10 year low, median, and high median Price/Graham Price Ratios are 1.77, 2.22 and 2.55. The current P/GP Ratio is 1.45 based on a stock price of $31.51. The current ratio is below the 10 year median low 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 3.86. The current ratio is 2.58 based on a Book Value of $2,701M, Book Value per Share of $12.22 and a stock price of $31.51. The current ratio is 33% 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 13.07. The current P/CF Ratio is 8.16 based on Cash Flow per Share estimate for 2021 of $3.86, Cash Flow of $853M and a stock price of $31.51. The current ratio is 38% below the 10 year median ratio. This stock price testing suggests that the stock price is cheap.

I get an historical median dividend yield of 5.68%. The current dividend yield is 6.09% based on Dividends of $1.92 and a stock price of $31.51. The current dividend yield is 7% above the historical 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 4.37%. The current dividend yield is 6.09% based on Dividends of $1.92 and a stock price of $31.51. The current dividend yield is 40% above the 10 year dividend yield. This stock price testing suggests that the stock price is relatively cheap.

The 10 year median Price/Sales (Revenue) Ratio is 1.79. The current P/S Ratio is 1.56 based on a stock price of $31.51, Revenue estimate for 2021 of $4,468M, and Revenue per Share of $20.22. The current ratio is 13% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.

Results of stock price testing is that the stock price could be reasonable. The dividend yield testing says the stock is reasonable to cheap. The P/S Ratio testing says the stock price is reasonable. The rest of the testing is saying the stock is cheap, but a lot of these ratios are quite high. For example, the P/B Ratio of 2.58 is rather high. Generally, a P/B Ratio of 1.50 is considered reasonable.

I look at the total return over a number of years. For P/S Ratio and P/E Ratio, the lower the ratio the cheaper the stock. For yield, the higher the yield, the cheaper the stock. In the chart below you can see that the P/E Ratios is lower than for good yields in the past and this is a positive. The P/S Ratio is higher today that for the good yields in the past and this is a negative. However, the current P/S Ratio is closer to the 10 year beginning P/S Ratio than the 5 year beginning P/S Ratio.

The beginning dividend yields for good returns is lower than the current dividend yield and this is a positive. However, the problem with the current high yield is that it is unaffordable, but the company is holding the dividends at the current rate.

In the following chart the total return for the 10 years to December 31, 2020 is 9.55% per year. The beginning yield was at 5.12%, and the P/E Ratio and the P/S Ratio were at 19.42 and 1.26. Does this chart change my opinion of the stock price? This chart is just another way of looking at the stock price and seems to indicate that the price could reasonable.

# Years Total Ret Beg P/E Beg P/S Beg Yield
5 -5.45% 33.83 2.74 3.47%
10 9.55% 19.42 1.26 5.12%
15 12.59% 22.66 1.10 5.98%
18 18.71%
current 18.32 1.56 6.09%

Is it a good company at a reasonable price? The price could be reasonable. This is a pipeline stock, so it is into oil and gas energy. The problem with any stock in the oil and gas industry is the current push towards renewable energy. It is hard to know how long the transition to renewables will take, but usually such transitions take a long time. Longer than you might imagine. I would not be surprised if it took 20 years. Currently I am not exiting my pipeline stocks. This stock was also an income trust in the past and it has been a difficult transition from income trust to a corporation for most income trusts. Dividends have been a problem to get under control for all old income trusts stocks. However, this stock should do well in the near future.

When I look at analysts’ recommendations, I find Strong Buy (4), Buy (5), and Hold (6). The consensus would be a Buy. The 12 month stock price consensus is $34.87. This implies a total return of 16.76% with 10.66% from capital gains and 6.09% from dividends.

Last year when I look at analysts’ recommendations, I found Strong Buy (6), Buy (11) and Hold (2). The consensus would be a Buy. The 12 month stock price consensus is $26.74. This implies a total return of 51.56% with 41.41% from capital gains and 10.15% from dividends. What happened is that the stock price is one year later is at $31.51 for a total return of 76.78% with 66.63% from capital gains and 10.15% from dividends. Last year I thought the stock price was cheap.

Analysts on Stock Chase mainly say it is a buy, but they are also cautious. Rajiv Nanjapla on Motley Fool says this company has an attractive valuation and healthy growth prospects and is a Buy. The Executive Summary on Simply Wall Street lists 5 risks and gives this stock 3 stars out of 5. A writer on Simply Wall Street says this stock has a fair value of $37.74 CDN$. A Writer on Simply Wall Street is worried about the high payout ratios for dividends.

Keyera operates as a midstream energy business in western Canada. Its primary operations consist of gathering, processing, and fractionation of natural gas in western Canada; storage and transportation of crude oil and natural gas byproducts; and marketing of natural gas liquids. The company operates over 5,000 kilometers of gathering pipelines and 15 natural gas processing plants. Its web site is here Keyera Corp.

The last stock I wrote about was about was Titanium Transportation Group Inc (TSX-TRR, OTC-PVVTF) ... learn more. The next stock I will write about will be Cenovus Energy Inc (TSX-CVE, NYSE-CVE) ... learn more on Monday, November 1, 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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Wednesday, October 27, 2021

Titanium Transportation Group Inc

Yesterday, because I had some cash in the TFSA (my fooling around money), I bought some 200 shares of this stock. Please note that this is a highly speculative stock and highly risky. Just because TFII has done well, it does not follow that this stock will do well also.

Sound bite for Twitter and StockTwits is: Dividend Paying Industrial. Stock price might be reasonable. They just started to pay a dividend in 2020. This is a small industrial company using tech and is quite speculative. You should not invest any money in this stock that you cannot afford to lose. That is why I am using my fooling around money on this. See my spreadsheet on Titanium Transportation Group Inc .

I do now own this stock of Titanium Transportation Group Inc (TSX-TRR, OTC-PVVTF). I found this stock on a blog of Our Life Financial.

When I was updating my spreadsheet, I found it quite fun. This is a relatively new company on the TSX and it is small and paying a dividend. I also wanted to look at this because I have TFI International which is also into transportation and logistics. I have had this TFI for just under 5 years and have made a total return of 50.30% per year with 48.11% from capital gains and 2.19% from dividends.

The dividend yields are moderate with dividend growth unknown. The current dividend yield is moderate (2% to 4% range) at 2.22%. They just started to pay dividends with one dividend payment at the end of 2020 and 4 quarterly payments expected in 2021. It is unknown at this time if this will be a dividend growth stock, but I speculate that it will be.

The Dividend Payout Ratios (DPR) seem fine. The DPR for 2020 for EPS is 12%, with 5 year coverage 7%. The DPR for EPS is expected to be 42% in 2021 and then dropping to 27% in 2022. Since only one dividend payment was made in 2020, it is important to see what is expected this year and next. The DPR for CFPS for 2020 is 7%, with 5 year coverage at 1%. The DPR for CFPS is expected to be 24% in 2021. The DPR for Free Cash Flow for 2020 is 5% with 5 year coverage at 1%. The DPR for FCF for 2021 is expected to be 490% with 5 year coverage at 7%. The DPR for FCF for 2022 is expected to be 21%.

Debt Ratios are fine. The Long Term Debt/Market Cap Ratio is low and good at 0.14. The Liquidity Ratio for 2020 is low at 1.24. However, if you add in Cash Flow after Dividends it is good at 1.65. It is low again in the Second Quarter of 2021 at just 1.03 and when you add in Cash Flow after dividends it is still low at 1.15. The Debt Ratio for 2020 is good at 1.51. The Leverage and Debt/Equity Ratios for 2020 are fine at 2.95 and 1.95.

The Total Return per year is shown below for years of 5 to 6 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 0.00% -0.78% -0.94% 0.16%
2014 6 0.00% 8.75% 8.61% 0.15%

The Total Return per year is shown below for years of 5 to 7 to the Date. 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. I did this because the stock is up some 53% to date.

From Years Div. Gth Tot Ret Cap Gain Div.
2015 5 0.00% 20.29% 19.64% 0.65%
2014 7 0.00% 14.52% 14.08% 0.44%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 5.25. 9.44 and 13.63. The corresponding 6 year and historical ratios are 5.86, 10.00 and 14.14. The current P/E Ratio is 18.95 based on a stock price of $3.60 and EPS estimate for 2021 of $0.19. The current ratio is above the 6 year median ratio. This stock price testing suggests that the stock price is relatively expensive.

I get a Graham Price of $2.89. The 6 year low, median, and high median Price/Graham Price Ratios are 0.53, 0.81 and 1.12. The current P/GP Ratio is 1.24 based on a stock price of $3.60. The current ratio is above the 7 year median P/GP Ratio. This stock price testing suggests that the stock price is relatively expensive.

I get a 6 year median Price/Book Value per Share Ratio of 1.40. The current P/B Ratio is 1.84 based on a Book Value of $71.9M, Book Value per Share of $1.96 and a stock price of $3.60. The current ratio is 31% above the 6 year median ratio. This stock price testing suggests that the stock price is relatively expensive.

I get a 6 year median Price/Cash Flow per Share Ratio of 4.16. The current P/CF Ratio is 10.98 based on a stock price of $3.60 and Cash Flow for the last 12 months at $12.04M and Cash Flow per Share of $0.33. The current ratio is 163% above the 6 year median ratio.

I cannot do any dividend yield tests as they have only paid dividends for one year.

The 6 year median Price/Sales (Revenue) Ratio is 0.33. The current P/S Ratio is 0.35 based on Revenue estimate for 2021 of $374M, Revenue per Share of $10.18 and a stock price of $3.60. The current ratio is 8% above the 6 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 might be reasonable based on the P/S Ratio test. All the other tests say that the stock price is expensive, but no dividend yield test can be done because dividends have just started. For the P/B Ratio test to get into the reasonable range, the stock would need to be at $3.25. Then the P/S Ratio would be below the 6 year median ratio by 2.8% and show as reasonable and below the median.

I looked at the total return over a number of years. For P/S Ratio and P/E Ratio, the lower the ratio the cheaper the stock. For yield, the higher the yield, the cheaper the stock. I have included charts for starting value ending December 31, 2020 and to date.

In the following chart the total return for the 5 years to December 31, 2020 is a loss of 0.78%. The beginning yield was not available as dividends were just started and the P/E Ratio and the P/S Ratio were at 65 and 0.86. Does this chart change my opinion of the stock price? No really. The P/S Ratio currently at 0.35 looks moderate.

# Years Total Ret Beg P/E Beg P/S Beg Yield
5 -0.78% 65.00 0.86
6 8.75% 0.23
current 18.95 0.35 2.22%
# Years Total Ret Beg P/E Beg P/S Beg Yield
5 20.29% -933.34 0.50
7 14.52% 0.23
current 18.95 0.35 2.22%

Is it a good company at a reasonable price? The stock price might be reasonable at $3.60. However, this is a small industrial company using tech and is therefore quite speculative. You should not invest any money in this stock that you cannot afford to lose.

When I look at analysts’ recommendations, I find Strong Buy (1) and Buy (2). The consensus would be a Buy. The 12 month stock price consensus is $6.08. This implies a total return of 71.11% with 68.89% from capital gains and 2.22% from dividends.

An analyst on Stock Chase says he is not buying because he has TFII and TTR is struggling with its balance sheet. Adam Othman on Motley Fool suggests this is the stock to buy with your 2021 TFSA money. The Executive Summary on Simply Wall Street gives this stock 4 stars out of 5 and lists 4 risks. A writer on Simply Wall Street says the ROCE is low, but the stock is up 117% over the past 5 years. The company reports on their second quarterly results for 2021 on Globe Newswire.

Titanium Transportation Group Inc is assets based transportation and logistics firm that provides services like, truckload, dedicated, cross-border trucking services, freight logistics, warehousing, and distribution. The group has a business presence in Canada and the United States. Its web site is here Titanium Transportation Group Inc .

The last stock I wrote about was about was Dollarama Inc (TSX-DOL, OTC-DLMAF) ... learn more. The next stock I will write about will be Keyera Corp (TSX-KEY, OTC-KEYUF) ... learn more on Friday, October 29, 2021 around 5 pm. Tomorrow on my other blog I will write about Dividend Safety .... learn more on Thursday, October 28, 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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Monday, October 25, 2021

Dollarama Inc

Sound bite for Twitter and StockTwits is: Dividend Growth Consumer. The stock price might be reasonable, but at the top end of this range. Dividend yield is extremely low and will probably continue to be low for years to come. Debt Ratios need to improve. Companies can easily and quickly get into trouble when debt is a problem. Price/Graham Price Ratio is far too high. See my spreadsheet on Dollarama Inc.

I do not own this stock of Dollarama Inc (TSX-DOL, OTC-DLMAF). I belong to an investment club and this was a stock I volunteered to look at. I had, of course, heard of this stock before and people have mentioned that it is doing very well for shareholders.

When I was updating my spreadsheet, I noticed the that Graham Price is very high. The median Graham Price for this stock in 2020 is 7.91. Here is information on this price at Investopedia. Basically, a stock is cheap if this Graham Price is under 1.00. The upper level for a reasonable stock price is 1.50. This company has a financial year ending at February 1 every year, so this year the financial year is ending February 1, 2021

The dividend yields are low with dividend growth moderate. The current dividend yield is low (below 2%) at 0.35%. The 5 and 9 year median dividend yields are also low at 0.39% and 0.44%. The dividend increases have been moderate (8% to 14% ranges) at 8.57% per year over the past 5 years. The last dividend increase was in 2021 and it was for 7%. There was also another increase in 2021 at 6.8%. There were no increases in 2020.

The Dividend Payout Ratios (DPR) are good. The DPR for EPS for 2021 was 10% with 5 year coverage at 11%. The DPR for CFPS for 2021 was 7% with 5 year coverage at 8%. The DPR for Free Cash Flow for 2021 is 8%, with 5 year coverage at 10%.

Debt Ratios need improving. The Long Term Debt/Market Cap Ratio for 2021 is 0.07 and it is low and good. The Liquidity Ratio for 2021 is very low 0.83. It means that current assets cannot cover current liabilities. If you add in cash flow after dividends it is 1.46 and this is still low. The Debt Ratio is 1.09 and this is very low. I like the last two ratios to be at 1.50 or above. The Leverage and Debt/Equity Ratios are very high at 12.61 and 11.61. I like these to be below 3.00 and 2.00. Believe it or not the debt ratios are better than they have been since 2017 even though they are pathetic.

The Total Return per year is shown below for years of 5 to 12 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 8.57% 14.77% 14.25% 0.52%
2010 10 12.70% 27.76% 26.87% 0.89%
2008 12 26.99% 26.27% 0.71%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 19.43, 24.99 and 30.39. The corresponding 10 year ratios are 18.85, 23.97 and 28.66. The corresponding historical ratios are 18.55, 23.36 and 27.87. The current P/E Ratio is 26.94 based on a stock price of $56.84 and EPS estimate for 2022 of $2.11. The current ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median. However, the P/E Ratio is rather high.

I get a Graham Price of $4.58. The 10 year low, median, and high median Price/Graham Price Ratios are 4.55, 5.80 and 7.05. The current P/GP Ratio is 12.41 based on a stock price of $56.84. The current P/GP Ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive. The P/GP Ratios are very high due to very low book value.

I get a 10 year median Price/Book Value per Share Ratio of 5.13. The current P/B Ratio is 128.67 based on a Book Value of $137M, Book Value per Share of $0.44 and a stock price of $56.84. The current ratio is 2047% above the 10 year median ratio. Problems with the ratios is that they were often negative. You cannot do effective P/B Ratio testing with negative P/B Ratios. In any case, the current P/B Ratio is extremely high.

I get a 10 year median Price/Cash Flow per Share Ratio of 18.47. The current P/CF Ratio is 18.39 based on Cash Flow per Share estimate for 2022 of $3.09, Cash Flow of $958.7M and a stock price of $56.84. The current ratio is 0.4% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and at the median.

I get an historical and 9 year median dividend yield of 0.44%. The dividends have only been paid for 9 years. The current Dividend Yield is 0.35% based on dividends of $0.2012, and a stock price of $56.84. The current dividend yield is 19.6% below the historical and 9 year median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median and almost to the expensive range.

The 10 year median Price/Sales (Revenue) Ratio is 3.44. The current P/S Ratio is 4.07 based on Revenue estimate for 2022 of $4,334M, Revenue per Share of $13.97 and a stock price of $56.84. The current ratio is 18% 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 might be reasonable, but it is on the high side of the reasonable range. Both the Dividend Yield test and P/S Ratio test say this. However, the Graham Ratio is far too high and I cannot do a proper P/B Ratio test because of past negative book values. The P/B Ratio is also quite high.

I looked at the total return over a number of years. For P/S Ratio and P/E Ratio, the lower the ratio the cheaper the stock. For yield, the higher the yield, the cheaper the stock. In the chart below you can see that the beginning P/E Ratios for good returns are lower than today. This is the same with P/S Ratio. Also, the beginning yield was higher than today.

In the following chart the total return for the 5 years to February 1, 2021 is 14.77% per year. The beginning yield was at 0.47%, and the P/E Ratio and the P/S Ratio were at 24.96 and 3.45. Does this chart change my opinion of the stock price? No.

# Years Total Ret Beg P/E Beg P/S Beg Yield
5 14.77% 24.96 3.45 0.47%
10 27.76% 18.43 1.48
12 26.99% -52.61 0.74
Current 26.94 4.07 0.35%

Is it a good company at a reasonable price? The Price might be within the reasonableness range, but I do not like the P/GP Ratio being so high. I do not like the high P/B Ratio test and the fact that I cannot do a proper P/B Ratio test. Also, I do not like the Debt Ratios. Companies can easily and quickly get into trouble when debt is a problem. Also, this company is just sort of a Dividend Growth Stock. Why I say that is because the dividend yield is very low. If they continue to increase at the current 5 year rate of 8.57% per year, in 15 years, you will have a dividend yield of just 1.22%. In 20 years’, yield might only reach 1.83%.

When I look at analysts’ recommendations, I find Strong Buy (3), Buy (6) and Hold (5). The consensus would be a Buy. The 12 month stock price consensus is $62.55. This implies a total return of $10.40% with 10.05% from capital gains and 0.35% from dividends.

Analysts on Stock Chase like this stock and mostly suggest it is a buy. Amy Legate-Wolfe on Motley Fool says the stock is cheap and it is time to buy it. The executive summary on Simply Wall Street gives the stock 3 stars out of 5 and mentions one risk. This is the first article to mention risk for their high level of debt. A writer on Simply Wall Street says it is trading at a fair value but has a robust future. A writer on Simply Wall Street says analysts expect this company to grow faster than its wider industry.

Dollarama Inc is a Canada-based company principally engaged in operating discount retail stores. The company's stores are throughout Canada, generally located in convenient locations, such as metropolitan areas, midsize cities, and small towns. All the stores are owned and operated by the company. Its web site is here Dollarama Inc.

The last stock I wrote about was about was Ovintiv Inc (TSX-OVV, NYSE-OVV) ... learn more. The next stock I will write about will be Titanium Transportation Group Inc (TSX-TRR, OTC-PVVTF) ... learn more on Wednesday, October 27, 2021 around 5 pm. Tomorrow on my other blog I will write about TECSYS Inc.... learn more on Tuesday, October 126, 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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Friday, October 22, 2021

Ovintiv Inc

Sound bite for Twitter and StockTwits is: Dividend Paying Energy. The price is probably cheap to reasonable and below the median. This is cyclical and therefore a risky stock. The Debt Ratios need to be improved, but the DPRs are probably fine. See my spreadsheet on Ovintiv Inc.

I do not own this stock of Ovintiv Inc (TSX-OVV, NYSE-OVV), but I have owned this stock before as Alberta Energy Co. This company split into two companies in the later part of 2009 - Encana Corporation and Cenovus Energy Inc. On January 27, 2020, this company has changed its name from Encana Corp (TSX-ECA, OTC-ECA) to Ovintiv Inc (TSX-OVV, OTC-OVV).

When I was updating my spreadsheet, I noticed that there was a big drop in Property, Plant and Equipment’s value in the Asset section and in the Shareholder’s Equity for Reclassification of Share Capital due to Reorganization. The end result is that Book Value per Share dropped some 61% in US$ and 62% in CDN$.

The dividend yields are low with dividend growth has been restarted. The current dividend yield is low (below 2%) at 1.45%. The 5 year and historical median dividend yields are also low at 0.75% and 1.45%. The 10 year median dividend yield is moderate (2% to 4% ranges) at 2.18%. Over the 28 years of data I have, the company increased dividends 11 times and decreased them 10 times. The last decrease was in 2021 and it was for 49%. Dividends have been paid in each of the 28 year I have covered.

The Dividend Payout Ratios (DPR) are probably fine. I cannot calculate the DPR for EPS for 2020, nor the 5 year coverage because of earning losses. The DPR for EPS for 2021 is expected to be 13.5%. The DPR for CFPS for 2020 is 5% with 5 year coverage at 4%. The DPR for Free Cash Flow for 2020 is 61%. I cannot calculate the 5 year coverage because of negative FCF. The FCF for 2021 is expected to be 7%. Analysts expect the FCF to go up some 1,029% in 2021.

Debt Ratios need improving. The Long Term Debt/Market Cap Ratio for 2020 is much too high at 1.71 for 2020. If this ratio is higher than 1.00, it means that the Long Term Debt is greater than the Market Cap. The Liquidity Ratio for 2020 is 0.51. If you add in cash flow after dividends it is 1.26. This is too low. The Debt Ratio is low at 1.36. I like these two last ratios to be at 1.50 or higher. The Leverage and Debt/Equity Ratios for 2020 are too high at 3.77 and 2.77. I like these below 3.00 and below 2.00.

The Total Return per year is shown below for years of 5 to 28 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 -24.43% -10.62% -12.25% 1.63%
2010 10 -19.12% -16.50% -18.73% 2.23%
2005 15 -4.13% -8.91% -12.50% 3.59%
2000 20 1.56% -0.90% -5.99% 5.09%
1995 25 1.25% 6.79% -0.18% 6.98%
1992 28 1.60% 7.75% 0.90% 6.85%

The Total Return per year is shown below for years of 5 to 19 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 -23.15% -8.16% -9.87% 1.71%
2010 10 -21.07% -18.58% -20.68% 2.10%
2005 15 -4.71% -9.25% -13.12% 3.88%
2001 19 2.48% 2.69% -4.55% 7.24%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 4.56, 8.39 and 12.22. The corresponding 10 year ratios are 3.55, 6.08 and 8.62. The corresponding historical ratios are 7.11, 8.39 and 10.09. The current P/E Ratio is 11.15 based on a stock price of $47.60, EPS estimate of $4.28 ($3.46 US$). 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. This testing is in CDN$.

I get a Graham Price of $42.40. The 10 year low, median, and high median Price/Graham Price Ratios are 0.73, 1.04 and 1.44. The current P/GP Ratio is 1.12 based on a stock price of $47.60. The current ratio is between the median and high ratios of the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in CDN$.

I get a 10 year median Price/Book Value per Share Ratio of 1.31. The current P/B Ratio is 2.60 based on a Book Value of $3,934M, Book Value of $15.07 and a stock price of $38.56. The current ratio is 95% above 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get a similar result in CDN$.

I get a 10 year median Price/Cash Flow per Share Ratio of 3.61. The current P/CF Ratio is 3.06 based on the Cash Flow per Share estimate for 2021 of $12.60, Cash Flow of $3,290M and a stock price of $38.56. The current ratio is 15% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$. You will get a similar result in CDN$.

I get an historical median dividend yield of 1.45%. The current dividend yield is 1.45% based on a stock price of $47.60 and dividend of $0.69 ($0.56 US$). The current ratio is at the historical dividend yield. This stock price testing suggests that the stock price is relatively reasonable and at the median. This testing is in CDN$. You will not get a similar result in US$ because US$ information only goes back 19 years whereas CDN$ information goes back 28 years.

I get a 10 year median dividend yield of 2.18%. The current dividend yield is 1.45% based on a stock price of $47.60 and dividend of $0.69 ($0.56 US$). The current ratio is 32% below the 10 year dividend yield. This stock price testing suggests that the stock price is relatively reasonable and at the median. This testing is in CDN$. You will not get a similar result in US$ because US$ information only goes back 19 years whereas CDN$ information goes back 28 years.

The 10 year median Price/Sales (Revenue) Ratio is 2.18. The current P/s Ratio is 1.37 based on Revenue estimate for 2021 of $7,344M, Revenue per Share of $28.13 and a stock price of $38.56. The current ratio is 33% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$. You will get a similar result in CDN$.

I looked at the total return over a number of years. For P/S Ratio and P/E Ratio, the lower the ratio the cheaper the stock. For yield, the higher the yield, the cheaper the stock.

In the following chart the total return for the 10 years to December 31, 2020 is a loss of 16.50% per year. The beginning yield was high at 2.74%, and the P/E Ratio and the P/S Ratio were at 14.37 and 2.42. Does this chart change my opinion of the stock price? I do not think this chart spreads any light on the stock price.

# Years Total Ret Beg P/E Beg P/S Beg Yield
5 -10.62% -0.81 0.98 5.52%
10 -16.50% 14.37 2.42 2.74%
15 -8.91% 11.74 2.68 0.66%
20 -0.90% 6.01 1.16 0.56%
25 6.79% 7.60 1.42 1.83%
28 7.75% 30.66 2.15%
current 11.15 1.37 1.21%

Results of stock price testing is that the stock price might be reasonable or even cheap, but there is lots of risk involved. This company is into oil and gas and therefore is cyclical. If you time cyclical stocks at the right time you can make money. I do not think they are ever a buy and hold. There is also a problem that eventually we will have to get off oil and gas for energy. However, no matter what anyone says, this a going to take awhile (like maybe 20 years).

The one clear signal is the P/S Ratio test which shows that the stock price is cheap. The other good test is the P/CF Ratio test and this shows the stock price as reasonable and below the median. The dividend yield tests are not helpful as dividends have gone up and down over the years. The dividend yield tests work on stocks where the dividends are increased over time.

Is it a good company at a reasonable price? The price is cheap to reasonable, but with lots of risks. Since this is a cyclical stock, I would never consider it a long term hold but people can make money over a cycle when the stock price is rising. We have also been in an unusual cycle because of the pandemic and measures taken by various governments. No one knows how this will end. Also, the company has recently changed its name. This is so investors will not think of what the old company did, but only what the new one did. This works surprising well.

When I look at analysts’ recommendations, I find Strong Buy (10), Buy (8), Hold (7) and Underperform (1). The consensus would be a Buy. Recommendations from analysts are all over the place and this is never a good sign.

The 12 month stock price consensus is $49.39 ($39.90 US$). This implies a total return of 4.85% with 3.40% from capital gains and 1.45% from dividends. The high stock price from analysts is $58.27 ($47.07 US$). This implies a total return of $23.43% with 21.98% from capital gains and 1.45% from dividends. The low stock price from analysts is $40.15 ($32.43US$). This implies a loss of 14.51% with a capital loss of 15.96% and dividends of 1.45%.

Analysts on Stock Chase are mostly unexcited by this company. On Motley Fool is the transcript for the Q2 2021 Earnings Call. The executive summary on Simply Wall Street gives this stock 3 stars out of 5 and list no risk. A writer on Simply Wall Street says this stock has poor dividend characteristics. A writer on Simply Wall Street says that the intrinsic value of this stock is $57.56 CDN$ and it is undervalued. Asma UL Husna of Insider Monkey on Yahoo Finance says Hedge Funds are snapping up this stock.

Ovintiv Inc is an independent oil and gas producer with key assets in the Permian, Eagle Ford, Montney, and Duvernay areas of US and Canada. Its web site is here Ovintiv Inc.

The last stock I wrote about was about was CCL Industries Inc (TSX-CCL.B, OTC-CCDBF) ... learn more. The next stock I will write about will be Dollarama Inc (TSX-DOL, OTC-DLMAF) ... learn more on Monday, October 25, 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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Wednesday, October 20, 2021

CCL Industries Inc

Sound bite for Twitter and StockTwits is: Dividend Growth Materials. The current stock price seems reasonable but above the median. Dividend yields are low, so might be suitable for people building a portfolio. DPRs are good. See my spreadsheet on CCL Industries Inc.

I do not own this stock of CCL Industries Inc (TSX-CCL.B, OTC-CCDBF). In 2009 I read a favorable report on this stock of which I had also heard before. This is also a dividend paying stock and in 2009 it was on Dividend Achievers list.

When I was updating my spreadsheet, I noticed the company did better than expected. Revenue was expected to be down at $5,157M and they were down but better than expected at $5,242.3M. This was a decline of 1.5% rather than a decline of 3%. EPS was expected to be down also at $2.56, but was up at $2.94. This was a 10.5% increase rather than a 3.8% decline.

Last year when I look at analysts’ recommendations, I find Strong Buy (2), Buy (7) and Hold (1). The consensus would be a Buy. The 12 month stock price consensus is $57.89. This implies a total return of 12.32%, with 10.94% from capital gains and 1.38% from dividends based on a stock price of $52.18. What happened was in 12 months’ time it has a current price of $67.70 which is a total return of 31.12% with 29.74% from capital gains and 1.38% from dividends. Last year, I thought that the stock price was reasonable.

The dividend yields are low with dividend growth good. The current dividend yield is low (below 2%) at 1.27%. The 5 and 10 year median dividend yields are also low at 0.90% and 1.12%. The historical median dividend yield is moderate (2% to 4%) range at 2.09%. The dividend growth is good (15% and above) at 19.14% per year over the past 5 years. The last dividend increase occurred in 2021 and it was for 16.67%.

The Dividend Payout Ratios (DPR) are good. The DPR for EPS for 2020 was 24% with 5 year coverage at 22%. The DPR for CFPS for 2020 was 12% with 5 year coverage at 10%. The DPR for Free Cash Flow for 2020 is 21% with 5 year coverage at 22%.

Debt Ratios are fine. The Long Term Debt/Market Cap Ratio is good at 0.18 for 2020. The Liquidity Ratio for 2020 is 1.76. The Debt Ratio for 2020 is 1.81. These are both good. The Leverage and Debt/Equity Ratios for 2020 are fine at 2.24 and 1.24.

The Total Return per year is shown below for years of 5 to 33 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 19.14% 6.29% 5.19% 1.10%
2010 10 18.85% 27.54% 25.58% 1.96%
2005 15 15.78% 17.96% 16.63% 1.33%
2000 20 12.86% 22.47% 20.23% 2.23%
1995 25 10.76% 15.16% 13.81% 1.34%
1990 30 8.95% 14.18% 12.70% 1.48%
1987 33 8.83% 13.22% 11.75% 1.46%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 18.39, 22.16 and 25.65. The corresponding 10 year ratios are 14.31, 21.24 and 25.58. The corresponding historical ratios are 11.90, 14.47 and 20.61. The current P/E Ratio is 19.70 based on a stock price of $66.00 and EPS estimate for 2021 of $3.35. This ratio is between the low and median of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a Graham Price of $38.17. The 10 year low, median, and high median Price/Graham Price Ratios are 1.19, 1.66 and 2.07. The current P/GP ratio is 1.73 based on a stock price of $66.00. The current ratio is between the median and high of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get a 10 year median Price/Book Value per Share Ratio of 3.26. The current P/B Ratio is 3.41 based on a Book Value of $3,475M, Book Value per Share of $19.33 and a stock price of $66.00. The current ratio is 5% 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 11.24. The current P/CF Ratio is 11.30 based on a stock price of $66.00, Cash Flow per Share estimate for 2021 of $5.84 and Cash Flow of $1,050M. The current ratio is 0.55% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and at the median.

I get a 10 year median dividend yield of 2.07%. The current dividend yield is 1.27% based on a dividend of $0.84 and a stock price of $66.00. The current yield is 14% above the historical dividend yield. This stock price testing suggests that the stock price is relatively expensive.

I get a 10 year median dividend yield of 1.12%. The current dividend yield is 1.27% based on a dividend of $0.84 and a stock price of $66.00. The current yield is 14% below the 10 year 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 1.80. The current P/S Ratio is 2.13 based on Revenue estimate for 2021 of $5,575M, Revenue per Share of $31.01 and a stock price of $66.00. The current ratio is 18% 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, but it may be on the high side of the reasonable range. The dividend yield has been going down. The stock price has been rising faster than the dividend growth. The dividend growth has been rising inline with EPS. The 10 year dividend yield test shows the stock is reasonable and below the median. The P/S Ratio testing shows that the stock is reasonable but above the median.

I looked at the total return over a number of years. For P/S Ratio and P/E Ratio, the lower the ratio the cheaper the stock. For yield, the higher the yield, the cheaper the stock. In the chart below you can see that the beginning P/E Ratios for good returns are lower than today. This is the same with P/S Ratio. Also, the beginning yield was higher than today.

In the following chart the total return for the 10 years to December 31, 2020 is 27.54%. The beginning yield was high at 2.16%, and the P/E Ratio and the P/S Ratio were relatively low at 19.70 and 2.13. Does this chart change my opinion of the stock price? Not really. The stock price seems reasonable but above the median. The Yield seems to be the best indicator. The P/S Ratio was much lower in the past.

# Years Total Ret Beg P/E Beg P/S Beg Yield
5 6.29% 26.77 2.59 0.67%
10 27.54% 13.91 0.83 2.16%
15 17.96% 5.78 0.84 1.39%
20 22.47% 10.36 0.16 4.41%
25 15.16% 11.61 0.40 2.46%
30 14.18% 13.56 0.55 3.44%
current 19.70 2.13 1.27%

Is it a good company at a reasonable price? The price seems reasonable, but it is on the high side of reasonable. This is a dividend growth stock which is what I like. The dividend yield is low, so this might be good for someone building their portfolio.

When I look at analysts’ recommendations, I find Strong Buy (3), Buy (6) and Hold (1). The consensus would be a Buy. The 12 month stock price is $81.89. This implies a total return of 25.35% with 24.08% from capital gains and 1.27% from dividends.

Analysts on Stock Chase mostly like this stock, but not all do. Chris MacDonald on Motley Fool thinks long-term investors would be remiss to ignore this company at this current valuation. The executive summary on Simply Wall Street gives this stock 4 stars out of 5 and list two risks. It looks like there is a lot of insider selling but mostly it is officers not picking up their options. There is no selling by CEO, CFO or Chairman. A writer on Simply Wall Street looks at who owns shares in this company. A writer on Simply Wall Street talks about this company’s debt. An article on Yahoo Finance talks about CCL acquisitions.

CCL Industries Inc manufactures and sells packaging and packaging-related products. The majority of revenue comes from North America. Its web site is here CCL Industries Inc.

The last stock I wrote about was about was Brookfield Asset Management Inc (TSX-BAM.A, NYSE-BAM) ... learn more. The next stock I will write about will be Ovintiv Inc (TSX-OVV, NYSE-OVV) ... learn more on Friday, October 22, 2021 around 5 pm. Tomorrow on my other blog I will write about Renting or Buying.... learn more on Thursday, October 8, 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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Monday, October 18, 2021

Brookfield Asset Management Inc

Sound bite for Twitter and StockTwits is: Dividend Growth Financial. The stock price seems to be currently expensive. A number of insiders have sold stock over the past year. This is not a positive sign. The dividend yield is quite low at just 0.90%. See my spreadsheet on Brookfield Asset Management Inc.

I do not own this stock of Brookfield Asset Management Inc (TSX-BAM.A, NYSE-BAM). I used to own an earlier version of this stock as Hees International, then Edper Group and then EdperBrascan back in 1987 to 1999.

When I was updating my spreadsheet, I noticed that the estimates from Market Screener seemed to make no sense. They give Revenue for 2021 as $34,730M, a 45% drop and it gets worse for 2022 and 2023. Market Screener also gives EPS with loss in 2021 of $0.52, then losses of $1.70 and $2.36.

TD Bank estimates for EPS is different at $2.20, then $3.22 and $4.51. These EPS make more sense as the 12 month EPS to the end of the second quarter is $1.77. In the six months to the end of second quarter of last year there was a loss of $0.26. This year, there is a profit of $1.26. Also, the Net Income estimates are all positive at $4,357M, $5,110M and $5,757M. Using the current number of outstanding shares, the EPS would be$2.89, $3.39 and $3.82.

The other thing is I follow 9 officers and directors of BAM. Of them 6 decreased their holdings over the past year, with 5 of them decreasing them from 18% to 28%. Two increased their holding, but by only 1.5% and 1%. The last one had no shares and bought some. Ink shows Net Insider Selling at $50M and.05% of the outstanding shares. You have to wonder what is going on.

I have been following this stock for 7 years and this is the lowest Net Insider Selling I have seen. For example, last year there was $70M of insider selling at 0.09% of outstanding shares. In 2019 there was $86M of Net Insider Selling for 0.11% of the outstanding shares. Most stock I follow of NIS at around 0.01%.

The dividend yields are low with dividend growth moderate. Dividends are paid in US$. The current dividend yield is low (below 2%) at 0.90%. The dividends were increased over the past 5 year at a moderate rate (8% to 14% ranges) at 8.75% per year. The last dividend increase was made in 2021 and it was for 8.3%.

The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2020 cannot be calculated because of an earnings loss. The 5 year coverage is 35%. The DPR for CFPS for 2020 is 8.7% with 5 year coverage at 10.7%. DPR for Free Cash Flow is 24% with 5 year coverage at 31%. However, sites do not agree on what FCF is.

Debt Ratios are fine. Because this is a financial institution, we need to look to see if their assets can cover the debt produced for those assets. The Mortgage/Investment Ratio is fine at 0.89. The Liquidity Ratio is not important for financials, although I calculate it and it is 1.12 for 2020. The Debt Ratio for 2020 is good at 1.55. The Leverage and Debt/Equity Ratios are 2.80 and 1.80.

The Total Return per year is shown below for years of 5 to 33 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 6.94% 14.23% 12.78% 1.46%
2010 10 10.25% 15.88% 13.48% 2.40%
2005 15 7.61% 12.85% 10.57% 2.28%
2000 20 8.03% 19.71% 15.57% 4.14%
1995 25 6.42% 18.49% 14.35% 4.13%
1990 30 5.32% 14.25% 11.15% 3.09%
1987 33 5.90% 12.19% 9.60% 2.58%

The Total Return per year is shown below for years of 5 to 33 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 8.75% 16.18% 14.69% 1.49%
2010 10 7.58% 12.99% 10.72% 2.26%
2005 15 6.97% 12.19% 9.80% 2.38%
2000 20 9.00% 21.39% 16.55% 4.84%
1995 25 6.73% 18.94% 14.68% 4.26%
1990 30 5.00% 13.71% 10.81% 2.90%
1987 33 5.97% 12.36% 9.67% 2.69%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 14.21, 18.65 and 22.97. The corresponding 10 year ratios are 11.70, 12.86 and 14.07. The corresponding historical ratios are 11.14, 12.73 and 15.18. The current P/E Ratio is 26.37 based on EPS estimate for 2021 of $2.20 (from TD WebBroker) and a stock price of $72.40. The current ratio is above the 10 year high median ratio. This stock price testing suggests that the stock price is relatively expensive. This is in CDN$.

I get a Graham Price of $37.81. The 10 year low, median, and high median Price/Graham Price Ratios are 0.81, 0.92 and 1.02. The current P/GP Ratio is 1.92 based on a stock price of $72.40. The current ratio is above the high 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This is in CDN$.

I get a 10 year median Price/Book Value per Share Ratio of 1.34. The current P/B Ratio is 3.16 based on a Book Value of $27,925M, Book Value per Share of $18.53 and a stock price of $58.49. The current ratio is 136% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get a similar result in CDN$.

I get a 10 year median Price/Cash Flow per Share Ratio of 9.95. The current P/CF Ratio is 18.45 based on Cash Flow per Share estimate for 2021 of $3.17, Cash Flow of $4777M, and a stock price of $58.49. The current ratio is 85% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get a similar result in CDN$.

I get an historical median dividend yield of 2.08%. The current dividend yield is 0.89% based on dividends of $0.52, and a stock price of $58.49. The current yield is 57% below the historical dividend yield. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get a similar result in CDN$.

I get a 10 year median dividend yield of 1.47%. The current dividend yield is 0.89% based on dividends of $0.52, and a stock price of $58.49. The current yield is 39% below the historical dividend yield. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get a similar result in CDN$.

The 10 year median Price/Sales (Revenue) Ratio is 1.09. The current P/S Ratio is 2.56 based on Revenue estimate for 2021 of $34,370M, Revenue per Share of $22.81 and a stock price of $58.49. The current ratio is 136% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get a similar result in CDN$. However, as I have stated above, I do not think that the Revenue estimate make any sense as this shows a drop of 45%.

The 10 year median Price/Sales (Revenue) Ratio is 1.09. The current P/S Ratio is 1.29 based on Revenue for the last 12 months of $68,306M, Revenue per Share of $45.33 and a stock price of $58.49. The current ratio is 19% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. It is almost to the expensive range. This testing is in US$. You will get a similar result in CDN$.

Results of stock price testing is that the stock price is probably expensive. I see a problem with using the estimates for Revenue. However, previously the results in using the last 12 months data there has also been problems. So, I am discounting the P/S Ratio tests. The Dividend yield tests show that the stock price is relatively expensive. The other tests show the same thing. In any event, the P/S Ratio tests might confirm the dividend yield test. I will go with the stock price being expensive.

Last year I thought the stock price was reasonable, but a bit on the high side. The stock price was $44.52 then. The 12 month stock price consensus last year was $46.98 ($35.75 US$). This implies a total return of 6.93% with 1.42% from dividends and 5.52% from capital gains. Since last year, the stock price has gone up some 62%.

Is it a good company at a reasonable price? I would think that the stock is expensive. What I do not like about this stock is that there is a lot of complexity in what they are doing. This year, some of the estimates given for the stock make no sense to me. I can find no reason for the values given.

I looked at the total return over a number of years. For P/S Ratio and P/E Ratio, the lower the ratio the cheaper the stock. For yield, the higher the yield, the cheaper the stock. In the chart below you can see that the beginning P/E Ratios for good returns are lower than today. This is the same with P/S Ratio. Also, the beginning yield was higher than today.

In the following chart the total return for the 10 years to December 31, 2020 is 15.88%. The beginning yield was high at 1.56%, and the P/S Ratio and the P/E Ratio were relatively low at 1.70 and 14.29. Does this chart change my opinion of the stock price? It does not. Also, over the years I have tracked this stock there has been a lot of changes in direction and mergers, so I do wonder how good the older values are for using today.

# Years Total Ret Beg P/E Beg P/S Beg Yield
5 14.23% 13.73 1.50 1.53%
10 15.88% 14.29 1.70 1.56%
15 12.85% 8.23 1.65 1.76%
20 19.71% 6.44 1.58 4.51%
25 18.49% 8.84 7.06%
30 14.25% 5.89%
33 12.19%
current 26.37 2.56 0.90%

When I look at analysts’ recommendations, I find Strong Buy (4), Buy (6) and Hold (3). The consensus would be a Buy. The 12 month stock price is $69.55 ($55.22 US). This implies a total loss of 3.04% with a capital loss of 3.94% and dividends of 0.90%. A consensus of a Buy and a loss also makes no sense.

Analysts on Stock Chase really like this stock and certainly feel it is a buy. Jed Lloren on Motley Fool also likes this stock, especially to hold for the long term and feels they can afford to up their dividends soon. The executive summary on Simply Wall Street gives this stock 3 stars out of 5 and lists 4 risks. A writer on Simply Wall Street says that EPS has grown at 15% per year which is untrue and even their chart shows this. There has been some recent insider buying. Debasis Saha at Insider Monkey says this stock is not among the 30 most popular stocks among Hedge Funds.

Brookfield Asset Management Inc owns and manages commercial property, power, and infrastructure assets. Its investment focus includes Real Estate, Infrastructure, Renewable Power and Private Equity. Brookfield has the greatest amount of assets in Real Estate and generates the most revenue through Private Equity. Located around the world, its assets are concentrated in the United States, Canada, Brazil, and Australia. Its web site is here Brookfield Asset Management Inc.

The last stock I wrote about was about was Molson Coors Canada (TSX-TPX.B, NYSE-TAP) ... learn more. The next stock I will write about will be CCL Industries Inc (TSX-CCL.B, OTC-CCDBF) ... learn more on Wednesday, October 20, 2021 around 5 pm. Tomorrow on my other blog I will write about RioCan REIT .... learn more on Tuesday, October 19, 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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Friday, October 15, 2021

Molson Coors Canada

Sound bite for Twitter and StockTwits is: Dividend Growth Consumer. The stock price seems cheap. Dividends are down at present but are expected to increase in the near term. The low Liquidity Ratio is a risk. See my spreadsheet on Molson Coors Canada.

I do not own this stock of Molson Coors Canada (TSX-TPX.B, NYSE-TAP). In 2008 I did a spreadsheet on this stock as it has recently been recommended and generally, beer companies make good money. Labatt’s was one of the original companies that I purchased and I did very well with it before it was bought out.

When I was updating my spreadsheet, I noticed the reason for the loss in 2020 was because of Special Items which went from a positive value in 2018 to a big negative in 2020. The Special Items was $249.7M in 2018 and in 2021 was a negative 1,740.2M. Special items to the company are items not indicative of their core operations. Recently these have been restructuring charges and impairment losses.

The dividend yields are moderate with dividend growth restarting. The current dividend yield is moderate (2% to 4% range) at 2.94%. The 5 year and historical median dividend yields are low (below 2%) at 1.84% and 1.88%. The 10 year median dividend yield is moderate at 2.32%.

Over the past 30 years of data I have, the dividends were raised 15 times. There was one decrease and that happened in 2020. They only paid one dividend in 2020 and then restarted them at the end of 2021 and paid 2 dividends. They are expected to pay 4 dividends in 2022. Analysts also expect dividend increases in 2022 and 2023.

The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2020 cannot be calculated because of an earnings loss. The 5 year coverage for EPS is 42%. Analysts expect the DPR for EPS for 2021 to be around 16% and then raising to 35% in 2022. The DPR for CFPS for 2020 is 6% with 5 year coverage at 16%. The DPR for Free Cash Flow for 2020 is 11% with 5 year coverage at 25%. Sites seem to agree on FCF.

Debt Ratios are fine, but Liquidity Ratio could be improved. The Long Term Debt/Market Cap Ratio for 2020 is 0.71. The Debt Ratio is fine at 1.86. The Leverage and Debt/Equity Ratios are fine at 2.21 and 1.19, respectively.

The Liquidity Ratio is very low at 0.62. This means that current assets cannot cover current liabilities. If you add in cash flow after dividends it is still quite low at 1.02. I prefer this to be 1.50 or higher. If you add back in the current portion of the long term debt, the ratio is still very low at 1.38. You have to be careful of doing this as you must be sure that debt can be rolled over. I must admit this company has always had a very low Liquidity Ratio.

The Total Return per year is shown below for years of 5 to 25 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 -20.40% -12.97% -15.01% 2.04%
2010 10 -3.87% 4.61% 1.34% 3.27%
2005 15 -0.17% 5.87% 2.86% 3.01%
2000 20 1.88% 11.95% 6.56% 5.39%
1995 25 1.50% 9.85% 5.58% 4.27%

The Total Return per year is shown below for years of 5 to 30 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 -19.05% -11.52% -13.61% 2.09%
2010 10 -6.19% 1.95% -1.04% 2.99%
2005 15 -0.77% 4.00% 1.12% 2.87%
2000 20 2.32% 2.88% 0.59% 2.29%
1995 25 3.35% 9.14% 5.79% 3.35%
1990 30 2.79% 7.96% 5.07% 2.89%

Coors bought out Molson in 2005. This could account for why Canadians have done better than Americans with this stock. However, I am sure that the Total Return will improve in the future.

The 5 year low, median, and high median Price/Earnings per Share Ratios are 10.76, 13.68 and 16.22. The corresponding 10 year ratios are 12.30, 14.76 and 17.41. The corresponding historical ratios are 1.83, 14.12 and 16.61. The current P/E Ratio is 10.86 based on a stock price of $57.50 and EPS estimate for 2021 of $5.29 ($4.24 US$). The current ratio is below low 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.

I get a Graham Price of $92.37. The 10 year low, median, and high median Price/Graham Price Ratios are 0.84, 0.97 and 1.10. The current P/GP Ratio is 0.62 based on a stock price of $57.50. The current ratio is below the low ratio for the 10 year median ratios. 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 1.13. The current P/B Ratio is 0.81 based on a Book Value of $12,985M, Book Value per Share of $57.40 and a stock price of $46.33. The current P/B Ratio is 29% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$ but you will get a similar result in CDN$.

I get a 10 year median Price/Cash Flow per Share Ratio of 8.84. The current ratio is 6.10 based on Cash Flow per Share estimate for 2021 of $7.60, Cash Flow of $1,719M and a stock price of $46.33. The current ratio is 31% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$ but you will get a similar result in CDN$.

I get an historical median dividend yield of 1.88%. The current dividend yield is 2.94% based on dividends of $1.36 and a stock price of $46.33. The current dividend is 56% above the historical dividend yield. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$. The results are a bit different in CDN$ because Molson and Coors came together in 2005 and my data goes back to 1990. However, even in CDN$, the stock price testing suggests that the stock price is relatively cheap.

I get a 10 year median dividend yield of 2.35%. The current dividend yield is 2.94% based on dividends of $1.36 and a stock price of $46.33. The current dividend is 26% above the 10 year dividend yield. This stock price testing suggests that the stock price is relatively cheap. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$ but you will get a similar result in CDN$.

The 10 year median Price/Sales (Revenue) Ratio is 2.13. The current P/S Ratio is 1.02 based on Revenue estimate for 2021 of $10,283M, Revenue per Share of $45.46 and a stock price of $43.33. The current ratio is 52% below the 10 year median P/S Ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$ but you will get a similar result in CDN$.

Results of stock price testing is that the stock price is probably cheap. The dividend yield tests show this and it is confirmed by the P/S Ratio test. All the other test show this also.

Is it a good company at a reasonable price? The stock price would appear to be reasonable if not cheap. A lot of companies are having a hard time coming out of the 2008 recession as it was a long slow recovery. It will probably do well for the shareholders in the longer term. You can certainly buy it now with a decent dividend yield that is better than normal.

When I look at analysts’ recommendations, I find Strong Buy (7), Buy (2), Hold (8), Underperform (4) and Sell (1). This is certainly a very wide spread of recommendations and not commonly found. The consensus is a Buy. There is obviously a very wide range of opinions on this stock. The 12 month stock price is $71.15 ($57.00 US$). This implies a total return of 26.695 with 23.73% from capital gains and 2.95% from dividends based on a stock price of $57.50 CDN$.

This stock is not well followed in Stock Chase. This goes for both the Canadian stock and the US stock. Chen Liu on Motley Fool in January 2020 thought that the intrinsic value of this stock was much higher than the stock price. Motley Fool in March 2021 thought that this stock was in a unique position to thrive. The executive summary on Simply Wall Street gives this stock 3 stars out of 5 and lists 2 risks. Bruce Kaser on Money Show says why you should buy this stock. The company on Newswire talks about Coca-Cola Company Expanding Offering to Bring Topo Chico Hard Seltzer to Canada.

Molson Coors Canada is a large global brewer and distributor of beer and other malt beverages. Its breweries are located across the U.S., Canada, and Europe, with the majority of the company's revenue generated in North America. Its web site is here Molson Coors Canada.

The last stock I wrote about was about was Pason Systems Inc (TSX-PSI, OTC-PSYTF) ... learn more. The next stock I will write about will be Brookfield Asset Management Inc (TSX-BAM.A, NYSE-BAM) ... learn more on Monday, October 18, 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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