Wednesday, October 5, 2022

Logistec Corp

Sound bite for Twitter and StockTwits is: Dividend Growth Industrial. The stock price seems cheap. The Dividend Payout Ratios (DPR) are good. Debt Ratios are fine. Dividend is over 1% (I do not buy shares of a company when dividends are currently lower than 1%). They just increased the dividends by 20%, which shows that management has faith in the future. See my spreadsheet on Logistec Corp.

Is it a good company at a reasonable price? The stock price is certainly reasonable and is in a cheap range. This company has done well for its shareholders over the longer term. It has two types of shares, Class A with 30 votes per share and Class B with 1 vote per share. A lot of people do not like this sort of structure. It is also a stock that is not being following currently by any analyst as far as I can see.

I do not own this stock of Logistec Corp (TSX-LGT.B, OTC-LTKBF). I got this stock from Dividend Growth Investing and Retirement blogger’s all-star spreadsheet for March 2017.

When I was updating my spreadsheet, I noticed that they always separate out the earnings between their Class A shares and their Class B shares. I have always found this curious. I know of no other company that does this. It is rather a small cap company, but it does not seem to be followed my anyone. It has done well for its shareholders over the longer term.

If you had invested in this company in December 2011, for $1,000.00 you would have bought 100 shares at $10 per share. In December 2021, after 10 years you would have received $402.70 in dividends. The stock would be worth $4,400. Your total return would have been $4,802.70.

Cost Tot. Cost Shares Years Dividends Stock Val Tot Ret
$10.00 $1,000.00 100 10 $402.70 $4,400.00 $4,802.70

The dividend yields are low with dividend growth low. The current dividend yield is low (below 2%) at 1.36%. The 5 year, 10 year and historical median dividend yields are also low at 0.97%, 0.91% and 1.87%. The dividend growth for the last 5 years is low (below 8%) at 4.76%. The last dividend increase was in 2022 and it was for 20%. Dividend growth has varied in the past. Over the past 25 years, the annual dividends have increased in 19 years.

The Dividend Payout Ratios (DPR) are good. The DPR for EPS for 2021 is 11% with 5 year coverage at 17%. The DPR for Cash Flow per Share (CFPS) for 2021 is 9% with 5 year coverage at 11%. The DPR for Free Cash Flow (FCF) for 2021 is 15% with 5 year coverage at 11%.

Debt Ratios are fine. The Long Term Debt/Market Cap is 0.33 for 2021. It rises to 0.47 in the second quarter of 2022 due to increase in debt and fall in Stock price. The Liquidity Ratio for 2021 is 1.45. The Debt Ratio for 2021 is 1.54. The Leverage and Debt/Equity Ratios for 2021 is 2.86 and 1.85 respectively.

The Total Return per year is shown below for years of 5 to 25 to the end of 2021. 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.
2016 5 4.76% 5.63% 4.62% 1.01%
2011 10 8.23% 18.24% 15.97% 2.27%
2006 15 7.45% 12.58% 10.38% 2.19%
2001 20 6.37% 16.17% 13.29% 2.88%
1996 25 5.68% 14.33% 10.66% 3.68%

The 5-year low, median, and high median Price/Earnings per Share Ratios are 14.81, 17.77 and 20.72. The corresponding 10 year ratios are 12.00, 15.05 and 18.11. The corresponding historical ratios are 9.54, 11.13 and 12.86. The current P/E Ratio is 10.44 based on a stock price of $38.00 and EPS for the last 12 months of $3.64. The ratio is below the low of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.

I get a Graham Price of $44.66. The 10-year low, median, and high median Price/Graham Price Ratios are 1.07, 1.32 and 1.47. The current P/GP Ratio is 0.85 based on a stock price of $38.00. 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 2.03. The current P/B Ratio is 1.56 based on a stock price of $38.00, Book Value of $318M and Book Value per Share of $24.35. The current P/B Ratio is 23% 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 9.72. The current P/CF Ratio is 9.08 based on Cash Flow for the last 12 months of $54.8M, Cash Flow per Share of $4.20 and a stock price of $38.00. The current ratio is 6.6% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get an historical median dividend yield of 1.87%. The current dividend yield is 1.36% based on a stock price of $38.00 and Dividends of $0.4536. The current dividend yield is 27% 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 0.91%. The current dividend yield is 1.36% based on a stock price of $38.00 and Dividends of $0.4536. The current dividend yield is 49% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.

The 10-year median Price/Sales (Revenue) Ratio is 0.94. The current P/S Ratio is 0.60 based on last 12 months Revenue of $827M, Revenue per Share of $63.30 and a stock price of $38.00. The current ratio is 36% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

Results of stock price testing is that the stock price is probably cheap. The 10 year dividend test says the stock price is cheap as does the P/S Ratio test. The historical dividend test says expensive and the dividend was more moderate (2% to 4% ranges) before 2010. After that the yield fell to low (below 2%). Most of the other tests say that the stock price is cheap.

When I look for analysts’ recommendations, I find none. I cannot find any 12 month consensus stock price and no estimates.

The analysts reporting in 2022Stock Chase say this is their top pick and it is underpriced. Stock Chase gives this stock 1 star out of 5. It is not on the Money Sense list. Christopher Liew in November 2021 on Motley Fool thought the stock was undervalued. The company in a Press Release reports on their four quarter of 2021 results. The company reports on their Second Quarter of 2022 results in a Press Release. Simply Wall Street on Yahoo Finance reviews this stock. They have one warning of has a high level of debt.

Logistec Corp provides specialized cargo handling and other services to a wide variety of marine, industrial and municipal customers. The company is organized and operate in two industry segments: Marine services, and Environmental services. The Marine Services Segment which is the key revenue-generating segment provides cargo handling and other services to marine and industrial customers. It has a business presence in Canada and the US. Its web site is here Logistec Corp.

The last stock I wrote about was about was Teck Resources Ltd (TSX-TECK.B, NYSE-TECK) ... learn more. The next stock I will write about will be Trigon Metals Inc (TSX-TM, OTC-PNTZF) ... learn more on Friday, October 7, 2022 around 5 pm. Tomorrow on my other blog I will write about Something to Buy October 2022 .... learn more on Thursday, October 06, 2022 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 3, 2022

Teck Resources Ltd

Sound bite for Twitter and StockTwits is: Dividend Paying Materials. Stock price is probably reasonable. The Dividend Payout Ratios (DPR) are low and good . Debt Ratios are fine. See my spreadsheet on Teck Resources Ltd.

Is it a good company at a reasonable price? The stock price seems reasonable. However, this is a resource and so it is cyclical and I never consider these sorts of companies as a long term buy. However, you can make money by buying them relatively low and selling them relatively high. I personally would not buy at this price as the price is not low enough for me.

I do not own this stock of Teck Resources Ltd (TSX-TECK.B, NYSE-TECK). In 2008, I wanted to cover some resource stocks and this is one that I decided to look at. I held this stock for a short period of time after it cut its dividend in 2008 and sold it after it recovered.

When I was updating my spreadsheet, I noticed that analysts expected very good growth in Revenue and EPS and the company surpassed what the analysts expected. Revenue was expected to grow 39% to $29,445M, but it grew 50% to $13,481M. EPS was expected to grow 360% from a loss of $1.62 to $4.22, but it came in at $5.31.

I also noted that estimates are higher in 2022 than in 2023 or 2024. For example, Revenue estimates for 2022 to 2024 are $19,084, $17,370, and $17,157. EPS estimate for 2022 to 2024 are $9.36, $6.05, and $5.73. According to Alpha Spread, number of analysts for 2022 and 2023 are 19, and for 2024 they are 13. I looked for the number of analysts because sometimes you get changes like this and it is due to fewer analysts in later years. This does not seem to be the case here.

If you had invested in this company in December 2011, for $1,005.48 you would have bought 28 shares at $35.91 per share. In December 2021, after 10 years you would have received $134.40 in dividends. The stock would be worth $1,020.01. Your total return would have been $1,154.44.

Cost Tot. Cost Shares Years Dividends Stock Val Tot Ret
$35.91 $1,005.48 28 10 $134.40 $1,020.01 $1,154.44

The dividend yields are low with dividend growth currently moderate. The current dividend yield is low (below 2%) at 1.15%. The 5, 10 and historical dividend yields are also low at 0.74%, 1.08% and 0.31%. The current increases in dividends are moderate at 14.9% (8% to 14% ranges) per year over the past 5 years. The last dividend increase was in 2022 and it was for 150%. Over the last 28 years, the annual dividend was increased 7 times and decreased 3 times. Dividends are down over the 10 and 15 year periods and up over the 20 to 28 year periods. See chart below.

The Dividend Payout Ratios (DPR) are low and good. The DPR for 2021 for EPS is 4% with 5 year coverage at 12%. The DPR for Adjusted Earnings per Share (AEPS) for 2021 is 4% with 5 year coverage at 9%. The DPR for Cash Flow per Share (CFPS) for 2021 is 2% with 5 year coverage at 4%. The DPR for Free Cash Flow for 2021 is 424% with 5 year coverage at 33%. There is disagreement on what the FCF is.

Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2021is low at 0.37. The Liquidity Ratio is good at 1.62. The Debt Ratio is high and good at 2.01. The Leverage and Debt/Equity Ratios for 2021 are fine at 2.05 and 1.02.

The Total Return per year is shown below for years of 5 to 28 to the end of 2021. 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.
2016 5 14.87% 7.31% 6.28% 1.04%
2011 10 -10.40% 1.50% 0.14% 1.36%
2006 15 -10.17% 0.09% -1.17% 1.27%
2001 20 3.53% 12.84% 9.08% 3.76%
1996 25 2.81% 5.29% 3.65% 1.64%
1993 28 2.51% 5.86% 4.22% 1.64%

The 5-year low, median, and high median Price/Earnings per Share Ratios are 4.27, 5.62 and 6.96. The corresponding 10 year ratios are 4.43, 6.11 and 7.63. The corresponding historical ratios are 6.38, 10.93 and 14.04. The current P/E Ratio is 4.67 based on a stock price of $43.40 and EPS estimate for 2022 of $9.25. The current ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Earnings per Share Ratios are 4.92, 8.07 and 11.21. The corresponding 10 year ratios are 8.03, 13.97 and 18.57. The current P/AEPS Ratio is 4.64 based on a stock price of $43.40 and AEPS estimate for 2022 of $9.36. The current ratio is below the low ratio of the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

I get a Graham Price of $100.37. The 10-year low, median, and high median Price/Graham Price Ratios are 0.33, 0.52 and 0.80. The current P/GP Ratio is 0.43 based on a stock price of $43.40. The current is between the low and median ratios 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 10-year median Price/Book Value per Share Ratio of 0.67. The current P/B Ratio is 0.90 based on a Book Value of $25,631M, Book Valuer per Share of $48.41 and a stock price of $43.40. The current P/B Ratio is 34% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. By the way, these P/B Ratios are very low. A normal one is thought to be around 1.50.

I get a 10-year median Price/Cash Flow per Share Ratio of 3.93. The current P/CF Ratio is 2.93 based on Cash Flow per Share estimate for 2022 of $14.80 and a stock price of $43.40. The current ratio is 25% 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 1.29%. The current dividend yield is 1.15% based on a stock price of $43.40 and dividends of $0.50. The current dividend yield is 11% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get an historical median dividend yield of 1.08%. The current dividend yield is 1.15% based on a stock price of $43.40 and dividends of $0.50. The current dividend yield is 7% above the 10 year median ratio. 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 1.25. The current P/S Ratio is 1.20 based on a stock price of $43.40, Revenue estimate for 2022 of $19,084M and Revenue per Share of $36.04. The current ratio is 3% 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 is probably reasonable. The P/S Ratio test says this. I wonder about the dividend tests because this stock is not a dividend growth stock, but has mucked around with the dividends over time with dividends up, down, and flat. Most of the test say that the stock price is reasonable. However, this is a resource stock and stock price tend to be cyclical. The stock price is off the high, but it is far from the low points.

When I look at analysts’ recommendations, I find Strong Buy (12), Buy (10) and Hold (3). The consensus is a strong Buy. The 12 month stock price consensus is $51.55. It is not an unreasonable consensus as the last 3 peaks in the stock price was $52.22 July 2007, $62.22 in January 2011, $55.30 in June 2022. The consensus stock price implies a total return of $19.93%, with 18.78% from capital gains and 1.15% from dividends.

There are both Buy and Sell recommendations this year on Stock Chase. Stock Chase gives this stock 4 stars out of 5. It is on the Money Sense list latest list with a C rating. Ambrose O'Callaghan on Motley Fool thinks this stock is undervalued. Demetris Afxentiou on Motley says this company is into copper, zinc and steelmaking coal which are currently in high demand. The company put out a News Release on their fourth quarter of 2021. The company put out a News Release on their second quarter of 2022 results.

Simply Wall Street has a report on this stock via Yahoo Finance. Simply Wall Street has one warning on this company of earnings are forecast to decline by an average of 12.4% per year for the next 3 years.

Teck is a diversified miner with coal, copper, zinc, and oil sands operations in Canada, the United States, Chile, and Peru. Metallurgical coal is Teck's primary commodity in terms of EBITDA contribution, closely followed by copper, with zinc and oil sands contributing smaller amounts to earnings. Teck ranks as the world's second-largest exporter of seaborne metallurgical coal and is a top-three zinc miner. Its web site is here Teck Resources Ltd.

The last stock I wrote about was about was Linamar Corporation (TSX-LNR, OTC-LIMAF) ... learn more. The next stock I will write about will be Logistec Corp (TSX-LGT.B, OTC-LTKBF) ... learn more on Wednesday, October 5, 2022 around 5 pm. Tomorrow on my other blog I will write about Dividend Stocks October 2022 .... learn more on Tuesday, October 04, 2022 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, September 30, 2022

Linamar Corporation

Sound bite for Twitter and StockTwits is: Dividend Growth Consumer. The stock price is relatively cheap. The dividends are growing but inconsistently. The Dividend Payout Ratios (DPR) are good. Debt Ratios are good. See my spreadsheet on Linamar Corporation.

Is it a good company at a reasonable price? Stock Price is relatively cheap. This stock has generally delivered for its shareholders. If you are interested in having this stock, now is the time to buy when the dividend yield is over 1%.

I do not own this stock of Linamar Corporation (TSX-LNR, OTC-LIMAF). I looked at this stock back in 2000 and it was not a stock I thought fit my investment philosophy. In 2008 I read an article that recommended this company as a dividend stock with good value. This stock used to be on the Investment reporter portfolio stock list as an average risk stock. However, it has now been taken off this list. It is on the Money Saving list of Top 100 Canadian Dividend stocks.

When I was updating my spreadsheet, I noticed that the company cut the dividends briefly in 2020 and then raised them even higher than they had been in 2021. In 2019, dividends were $0.48. After an increase in 2021, they were $0.68 and now they are $0.80. EPS did drop in 2020. The company did a similar thing with dividends in 2009, because in 2009 they had an earnings loss.

If you had invested in this company in December 2011, for $1,008.00 you would have bought 72 shares at $14 per share. In December 2021, after 10 years you would have received $311.04 in dividends. The stock would be worth $5,394.96. Your total return would have been $5,706.00.

Cost Tot. Cost Shares Years Dividends Stock Val Tot Ret
$14.00 $1,008.00 72 10 $311.04 $5,394.96 $5,706.00

The dividend yields are low with dividend growth moderate. The current dividend yield is low (below 2%) at 1.35%. The 5, 10 and historical dividend yields are also low at 0.80%, 0.78% and 1.17%. Currently dividends are growing at a moderate rate (8% to 14% ranges) at 11.2% per year over the past 5 years. Prior to that, going back 26 years, growth was low (below 8%), but just below 8% ranging from 7.1% to 7.9%. The last dividend increase was for 25% and it was made in 2021. Note dividends are not raised every year. I have 26 years of data and annual dividends were increase 10 times and decreased 2 times.

The Dividend Payout Ratios (DPR) are good. The DPR for EPS for 2021 is 11% with 5 year coverage at 7%. The DPR for Adjusted Earnings per Share (AEPS) for 2021 is 10.4% with 5 year coverage at 7.2%. The DPR for Cash Flow per Share (CFPS) for 2021 is 5% with 5 year coverage at 4%. The DPR for Free Cash Flow (FCF) for 2021 is 7% with 5 year coverage at 6%.

Debt Ratios are good. The Debt Ratio for 2021 is 0.16 and this is low and good. The Liquidity Ratio for 2021 is 1.71 and this is high and good. The Debt Ratio for 2021 is 2.65 and this is high and good. The Leverage and Debt/Equity Ratios are low and good at 1.61 and 0.61.

The Total Return per year is shown below for years of 5 to 33 to the end of 2021. 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.
2016 5 11.20% 6.14% 5.37% 0.77%
2011 10 7.83% 19.78% 18.26% 1.52%
2006 15 7.19% 13.05% 11.89% 1.16%
2001 20 7.50% 10.50% 9.45% 1.05%
1996 25 7.69% 7.55% 6.74% 0.81%
1991 30 7.94% 15.68% 13.63% 2.05%
1988 33 16.08% 14.12% 1.96%

The 5-year low, median, and high median Price/Earnings per Share Ratios are 5.85, 8.16 and 9.67. The corresponding 10 year ratios are 6.42, 8.93 and 11.44. The corresponding historical ratios are 8.34, 11.60 and 15.56. The current P/E Ratio is 8.04 based on a stock price of $54.11 and EPS estimate for 2022 of $6.73. The current ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Earnings per Share Ratios are 5.19, 8.13 and 9.64. The corresponding 10 year ratios are 6.42, 8.93 and 11.44. The current P/AEPS Ratio is 8.04 based on a stock price of $54.11. The current ratio is between the low and median ratios 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 $104.69. The 10-year low, median, and high median Price/Graham Price Ratios are 0.53, 0.71 and 0.88. The current P/GP Ratio is 0.52 based on a stock price of $54.11. The current ratio is below the low of the 10 year median 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 1.27. The current P/B Ratio is 0.75 based on a stock price of $54.11, Book Value of $4,602M and Book Value per Share of $72.38. The current P/B Ratio is 41% 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 4.90. the current P/CF Ratio is 6.19 based on Cash Flow estimate for 2022 of $556M, Cash Flow per Share of $8.74 and a stock price of $54.11. The current ratio is 26% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.

Analysts seem to give Cash Flow for 2022 at a lower rate than for 2021 and for 2023 and 2024. The spread for 2022 is 498M to 617M. The spread for 2023 is 636M to 799M and for 2024 it is $771M to $834. The Cash Flow for 2021 was $909M. If the Cash Flow for 2022 is the estimate of $617M, then the ratio would be 5.58 and 14% below the 10 year median. For 2023, with a Cash Flow of $727M, the ratio would be 4.73 and 3% below the 10 year median. Both these would suggest a stock price that is relatively reasonable.

I get an historical median dividend yield of 1.17%. The current dividend yield is 1.48% based on dividends of $0.80 and a stock price of $54.11. The current dividend yield is 26% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.

I get a 10 year median dividend yield of 0.78%. The current dividend yield is 1.48% based on dividends of $0.80 and a stock price of $54.11. The current dividend yield is 90% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap.

The 10-year median Price/Sales (Revenue) Ratio is 0.62. The current P/S Ratio is 0.44 based on Revenue estimate for 2022 of $7,830M, Revenue per Share of $123.14 and a stock price of $54.11. The current ratio is 29% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

Results of stock price testing is that the stock price is probably cheap. The dividend yield tests say that the stock is cheap and this is confirmed by the P/S Ratio test. Other good tests suggest that the stock price is cheap to reasonable.

When I look at analysts’ recommendations, I find Strong Buy (2), Buy (2) and Hold (2). The consensus would be a Strong Buy. The 12 month stock price consensus is $78.00. This implies a total return of 45.63% with 44.15% from capital gains and 1.48% from dividends based on a stock price of $54.11.

Analysts on Stock Chase are positive about this stock. Stock Chase gives this stock 5 stars out of 5. Money Sense gives this company a B rating. Kay Ng on Motley Fool thinks this company has growth potential. Sneha Nahata on Motley Fool reviews this stock and she thinks it is cheap. The company released a Press Release on Newswire about its fourth quarter of 2021 results. The company released a Press Release on Newswire about its second quarterly results of 2022.

There is a Simply Wall Street report on this company via Yahoo Finance. Simply Wall Street has three warnings signs of earnings have declined by 11.3% per year over past 5 years; profit margins (5.2%) are lower than last year (7.5%); and significant insider selling over the past 3 months. (Actually, what is happening is that officers and directors are not taking options.)

Linamar Corp is a diversified global manufacturing company of highly engineered products. The Company's Industrial segment operates the Skyjack and MacDon brands. It manufactures products for the Aerial Work Platform and Agricultural industries, respectively. Its web site is here Linamar Corporation.

The last stock I wrote about was about was BRP Inc (TSX-DOO, OTC-DOOO) ... learn more. The next stock I will write about will be Teck Resources Ltd (TSX-TECK.B, NYSE-TECK) ... learn more on Monday, October 3, 2022 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, September 28, 2022

BRP Inc

Sound bite for Twitter and StockTwits is: Dividend Growth Consumer. The stock price seems reasonable. The dividends are growing, but dividend yield very low and under 1%. Analysts expect great growth in this company. Shareholders have done very well with this stock so far. Negative Book Value is a problem, I think. See my spreadsheet on BRP Inc.

Is it a good company at a reasonable price? I think that the price is currently reasonable. Personally, I do not like companies with a negative Book Value. It says that the possible breakup price of the company is negative. So, this stock is risky, but analysts maybe right that it will do great.

I do not own this stock of BRP Inc (TSX-DOO, OTC-DOOO). Robin Speziale, author of Market Masters and Capital Compounders had mentioned this stock in Capital Compounders, Table 3 (page 93 in my copy) as a possible next Capital Compounder.

When I was updating my spreadsheet, I noticed that for the first time since 2013, this company has a positive value for the Book Value. The financial year ends at January 31 each year so I am reviewing the January 31, 2022 year end.

If you had invested in this company in December 2013, for $1,025.10 you would have bought 34 shares at $30.15 per share. In December 2021, after 8 years you would have received $55.42 in dividends. The stock would be worth $3,767.20. Your total return would have been $2,822.62.

Cost Tot. Cost Shares Years Dividends Stock Val Tot Ret
$30.15 $1,025.10 34 8 $55.42 $3,767.20 $3,822.62

The dividend yields are low with dividend growth good. The dividend yield is low (below 2%) at just 0.73%. Dividends have only been paid for some 4 years and the 4 year and historical median dividend yield is also low at 0.64%. The dividend growth is currently good (15% and above) at 19% per year over the past 4 years.

The Dividend Payout Ratios (DPR) are good. The DPR for EPS for 2022 is 6% with 5 year coverage at 7%. The DPR for Adjusted Earnings per Share (AEPS) for 2022 is 5% with 5 year coverage at 8%. The DPR for Cash Flow per Share (CFPS) for 2022 is 3% with 5 year coverage also at 3%. Different sites give different values for FCF.

Debt Ratios are poor because of a negative Book Value. The Long Term Debt/Market Cap Ratio is good and low at 0.21. The Liquidity Ratio is low at 1.02. If you add in Cash Flow after Dividends, it is good at 1.55. The Debt Ratio is below 1.00 at 0.97 as the stock has a negative book value. The book value turned positive this year and is at 1.00. This is low. The Leverage and Debt/Equity Ratios are negative because of the negative book Value.

The Total Return per year is shown below for years of 5 to 8 to the end of 2021. 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.
2016 5 19.45% 32.03% 31.34% 0.69%
2013 8 17.97% 17.67% 0.30%

The 5-year low, median, and high median Price/Earnings per Share Ratios are 9.42, 13.49 and 19.54. The corresponding 9 year and historical ratios are 10.07, 18.81 and 22.16. The current P/E Ratio is 7.78 based on a stock price of $87.90 and EPS estimate for 2023 of $11.30. The current ratio is below the low of the 9 year median ratios. This stock price testing suggests that the stock price is relatively cheap.

I have Adjusted Earnings per Share data. The 5-year low, median, and high median P/AEPS Ratios are 9.30, 13.32 and 17.34. The corresponding 9 year ratios are 10.01, 14.17 and 17.26. The current P/AEPS Ratio is 7.64 based on an AEPS estimate for 2021 of $11.51 and a stock price of $87.90. This is below the low of the 9 year median ratios. This stock price testing suggests that the stock price is relatively cheap.

I cannot really calculate a Graham Price because of the lack of a Book Value. The current P/GP Ratio is 16.13 based on a stock price of $87.90. This is a high value, but the Book Value is very low. This test is not much good.

I cannot do a Price/Book Value per Share Ratio test because of all the years with a negative Book Value.

I get a 10-year median Price/Cash Flow per Share Ratio of 7.95. The current P/CF Ratio is 5.36 based on Cash Flow per Share estimate for 2023 of $16.40, Cash Flow of $1,291M and a stock price of $87.90. 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 4 year and historical median dividend yield of 0.64%. The current dividend yield is 0.73% based on a stock price of $89.70 and dividends of $0.64. The current dividend yield is 14% above the 4 year and historical 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 0.84. The current P/S Ratio is 0.71 based on Revenue estimate for 2023 of $9,785M, Revenue per Share of $124.29 and a stock price of $87.90. The current ratio is 16% 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 is probably reasonable and below the median. The dividend yield test says this as does the P/S Ratio test. Other tests, that could be run say that the stock price is cheap.

When I look at analysts’ recommendations, I find Strong Buy (8), Buy (8) and Hold (1). The consensus would be a Strong Buy. The 12 month stock price consensus is $133.20. This implies a total return of 52.26% with 51.54% from capital gains and 0.73% from dividends.

The only remark on Stock Chase for 2022 is a Hold and analyst is waiting to see what happens. Stock Chase gives this stock 3 stars out of 5. It is not on the Money Sense list. Vineet Kulkarni on Motley Fool thinks this stock is well placed to outperform in the long term. Robin Brown on Motley Fool thinks this stock has a bright future. The company released on Newswire its fourth quarter results for 2022. The company released on newswire its second quarter of 2023 results.

Simply Wall Street via Yahoo Finance talks about this stock being undervalued. Simply Wall Street has 3 warnings of debt is not well covered by operating cash flow; high level of non-cash earnings and profit margins (8.5%) are lower than last year (12.8%).

BRP Inc designs, develops, manufactures, distributes, and markets snowmobiles, all-terrain vehicles, and personal watercraft under the Ski-Doo, Sea-Doo, Can-Am, and Lynx brand names. It also builds engines under the Rotax brand and offers clothing, parts, and accessories that cater to its core consumers. In 2018, BRP created a marine group. Its web site is here BRP Inc.

The last stock I wrote about was about was K-Bro Linen Inc (TSX-KBL, OTC-KBRLF) ... learn more. The next stock I will write about will be Linamar Corporation (TSX-LNR, OTC-LIMAF) ... learn more on Friday, September 30, 2022 around 5 pm. Tomorrow on my other blog I will write about Money Show Toronto 2022 .... learn more on Thursday, September 29, 2022 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, September 26, 2022

K-Bro Linen Inc

Today, I bought some shares of BCE Inc. It is a small purchase of 175 shares. With BCE at $60.67, I will get a yield of 6.07%, which is 48% above the historical median of 4.10% and 17% above the 10 year median yield of 5.17%. TSX is down 17% over the past 6 months.

Sound bite for Twitter and StockTwits is: Dividend paying Consumer. The stock price is cheap. Dividends are good, but are not increasing. The Dividend Payout Ratios (DPR) are fine. Debt Ratios are good. See my spreadsheet on K-Bro Linen Inc.

Is it a good company at a reasonable price? The stock price seems to be cheap. problem is that this company used to be an income trust and income trusts can afford a lot higher dividends that corporations. It might have been better off to decrease the dividends at the time of the change to a corporation and then increased them as it could later. The dividends are currently at 4.28%. There is a trade off between dividend yield and dividend increases. The higher the yield the lower the increases.

I do not own this stock of K-Bro Linen Inc (TSX-KBL, OTC-KBRLF). People were talking about this stock at the 2009 Toronto Money Show. This was one income trust being touted as currently a good buy with very good yield. It was also recommended by Aaron Dunn who is the Senior Equity Analyst for Keystone Publishing Corp, a publisher of Canadian investment newsletters.

When I was updating my spreadsheet, I noticed that analysts expect the EPS to be $1.41 in 2021, but EPS came in at $0.81. The problem is that expenses as a ratio of Sales is going up. The Ratio of Expenses to Revenue increases and EPS goes down. See chart below.

Year 2015 2016 2017 2018 2019 2020 2021
Ratio 0.88 0.90 0.94 0.97 0.95 0.97 0.94
EPS $1.52 $1.44 $0.63 $0.59 $1.03 $0.36 $0.81

However, there is a problem with what is currently included in EPS calculation and their Distributable Cash (which is like an Adjusted Earnings per Share (AEPS)) is probably a better measure. However, this value is down over the past 5 years by 1.42% per year. Analysts expect the next 3 years (2022-2024), this Distributable Cash will increase to $2.17, $3.63, and $4.24.

Year 2016 2017 2018 2019 2020 2021
Dis Cash $2.76 $2.20 $2.36 $2.80 $2.94 $2.57

If you had invested in this company in December 2011, for $1,000.80 you would have bought 45 shares at $22.24 per share. In December 2021, after 10 years you would have received $536.79 in dividends. The stock would be worth $1,639. Your total return would have been $2,075.79.

Cost Tot. Cost Shares Years Dividends Stock Val Tot Ret
$22.24 $1,000.80 45 10 $536.79 $1,639.00 $2,075.79

The dividend yields are moderate with dividend growth non-existent. The dividend yield is moderate (2% to 4% ranges) at 4.01%. The 5, 10 and historical median dividend yields are also moderate at 3.23%, 3.11% and 3.44%. The dividends have been flat since 2014. This company used to be an income trust. It did not cut the dividend when it because a corporation. The problem is that the old income trust companies could pay much higher dividends than corporations can. The DPR for EPS was not bad at 70% in 2014, but it has since grown in 148% in 2021.

The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2021 is 148%. The 5 year coverage is 176%. The DPR for Cash Flow per Share (CFPS) is fine at 34% with 5 year coverage at 37%. The DPR for Distributable Cash is fine at 47% with 5 year coverage at 47%. The DPR for Free Cash Flow (FCF) for 2021 is 60% with 5 year coverage at 140%.

Debt Ratios are good. The Long Term Debt/Market Cap Ratio for 2021 is low and good at 0.10. The Liquidity Ratio for 2021 is high and good at 1.70. The Debt Ratio for 2021 is high and good at 2.28. The Leverage and Debt/Equity Ratios are low and good at 1.78 and 0.78, respectively.

The Total Return per year is shown below for years of 5 to 17 to the end of 2021. 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.
2016 5 0.00% -1.00% -4.09% 3.09%
2011 10 0.65% 8.91% 4.40% 4.51%
2006 15 0.61% 14.88% 7.88% 7.01%
2004 17 0.95% 13.15% 6.52% 6.62%

The 5-year low, median, and high median Price/Earnings per Share Ratios are 54.44, 62.36 and 70.27. The corresponding 10 year ratios are 30.52, 34.86 and 39.21. The corresponding historical ratios are 20.57, 23.30 and 26.99. The current P/E Ratio is 28.33 based on a stock price of $28.05 and EPS estimate for 2022 of $0.99. The current P/E Ratio is below the low of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap. A problem is the very high P/E Ratios. Stock prices only go so low on a company when EPS drops. That is because the company still has value.

I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median P/AEPS Ratios are 13.13, 15.54 and 17.51. The corresponding 10 year ratios are 13.07, 15.22 and 17.16. The current P/AEPS Ratio is 12.93 based on a stock price of $28.05 and AEPS estimate for 2022 of $2.17. This ratio is below the low of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.

I get a Graham Price of $19.78. The 10-year low, median, and high median Price/Graham Price Ratios are 1.80, 2.14 and 2.47. The current P/GP Ratio is 1.42 based on a stock price of 28.05. The current ratio is below the low of the 10 year median 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 2.48. The current P/B Ratio is 1.60 based on a stock price of $28.05, Book Value of $188M and a Book Value per Share of $17.56. The current ratio is 36% 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 13.79. The current P/CF Ratio is 12.99 based on Cash Flow per Share (CFPS) estimate for 2022 of $2.16, Cash Flow of $23.2M and a stock price of $28.05. The current ratio is 6% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get an historical median dividend yield of 2.31%. The current dividend yield is 4.28% based on dividends of $1.20 and a stock price of $28.05. The current dividend yield is 37% above the historical dividend yield. This stock price testing suggests that the stock price is relatively cheap.

The 10-year median Price/Sales (Revenue) Ratio is 1.91. The current P/S Ratio is 1.09 based on Revenue estimate for 2022 of $275M, Revenue per Share of $25.65 and a stock price of $28.05. The current ratio is 43% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

Results of stock price testing is that the stock price is probably cheap. The P/S Ratio test says this. I know that the dividend yield tests say the same thing, but a problem with the dividends is that they have been flat since 2014. All the tests, except for the P/CF Ratio test shows the stock price as cheap.

When I look at analysts’ recommendations, I find Strong Buy (3), Buy (3) and Hold (1). The consensus would be a Strong Buy. The 12 month stock price consensus is $41.79. This implies a total return of $53.26% with 48.98% from capital gains and 4.28% from dividends based on a stock price of $28.05.

On a recent entry on Stock Chase an analysts said it was a Top Pick with target price of $44.56. Stock Chase gives this stock 1 star out of 5. It is not on the Money Sense list. Daniel Da Costa on Motley Fool thinks it is defensive stock to buy in times of rising inflation. Adam Othman on Motley Fool wrote last July that he thinks this stock might recovery once hospitality industry starts to thrive again. The company put out a Press Release on Newswire about the fourth quarter results of 2021. The company put out a Press Release on Newswire about their results for the second quarter of 2022.

Simply Wall Street via Yahoo Finance looks at Return on Capital Employed for this company. Simply Wall Street puts out 3 warnings signs on this stock of dividend of 4% is not well covered; large one-off items impacting financial results; and profit margins (1.9%) are lower than last year (5.3%).

K-Bro Linen Inc is a healthcare and hospitality laundry and linen processor in Canada. It operates in major cities across Canada, and has two distribution centers, providing management services and laundry processing of hospitality, healthcare, and specialty linens. It operates through two divisions, which are the Canadian division and the United Kingdom division. Its web site is here K-Bro Linen Inc.

The last stock I wrote about was about was Granite REIT (TSX-GRT.UN, NYSE-GRP.U) ... learn more. The next stock I will write about will be BRP Inc (TSX-DOO, OTC-DOOO) ... learn more on Wednesday, September 28, 2022 around 5 pm. Tomorrow on my other blog I will write about Paulina Neuding, Substack.... learn more on Thursday, September 27, 2022 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, September 23, 2022

Granite REIT

Sound bite for Twitter and StockTwits is: Dividend Growth REIT. The stock price is reasonable. The Dividend Payout Ratios (DPR) are fine. Debt Ratios are good. The current stock price is below both the 2021 and 2020 year end prices. See my spreadsheet on Granite REIT.

Is it a good company at a reasonable price? The stock price is reasonable, but above the median. I looked to see what would have happened if I had held on to my shares to today, and figured I would have made a total return of 6.93% per year to 9.13%, depending on dividend values. I am not sorry I sold this stock and I very much doubt if I would buy it again. The stock price seems to be unusually volatile for a REIT.

I do not own this stock of Granite REIT (TSX-GRT.UN, NYSE-GRP.U). I first bought some of this stock in 2003 when it was called MI Developments (TSX-MIM.A). It was a company connected with Frank Stronach and Magna. TD bank also had an Action Buy Call (Strong Buy) on this stock. By the December 2006, it was doing well and my stock was up some 15% per year. I bought some more. The year of 2006 was the last time I did well on this stock. It kept going down and I sold it in 2009; being discourage it would ever do well again.

When I was updating my spreadsheet, I noticed that this stock has a big run up in price to the end of 2021 gaining 35%. However, so far this year the stock price has fallen 35%.

If you had invested in this company in December 2011, for $1,010.29 you would have bought 31 shares at $32.59 per share. In December 2021, after 10 years you would have received $813.13 in dividends. The stock would be worth $3,267.40. Your total return would have been $4,080.53.

Cost Tot. Cost Shares Years Dividends Stock Val Tot Ret
$32.59 $1,010.29 31 10 $813.13 $3,267.40 $4,080.53

The dividend yields are moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 4.19%. The 5 and historical median dividend yield is also moderate at 4.90% and 4.80%. The 10 year median dividend yield is good (5% to 6%) at 5.19%. The dividend yield has varied a lot over time. During the past 18 years, it has had a high of 8.18% and a low of 1.25%. This is because of big changes in the stock price. The current dividend growth is low (below 8%) at 4.54% per year over the past 5 years. The last dividend increase was in 2022 and it was for 3.32%. Over the past 18 years yearly dividends have decreased 4 times and increased 14 times.

The Dividend Payout Ratios (DPR) are fine because for REITs it is generally believed that the DPR for AFFO and FFO are what counts. The DPR for EPS for 2021 is 15% with 5 year coverage at 28%. The DPR for Adjusted Funds from Operations (AFFO) for 2021 is 82% and 5 year coverage at 82%. The DPR Funds from Operations (FFO) for 2021 76% with 5 year coverage at 76%. The AFFO and FFO coverage is fine and more accurate than for EPS. The DPR for Cash Flow per Share is $63% and 70%. These are quite high. The DPR for Free Cash Flow (FCF) for 2021 is 52% with 5 year coverage at 78%.

Debt Ratios are good. The Long Term Debt/Market Cap Ratio for 2021 is 0.35. This is good. The Liquidity Ratio for 2021 is 2.96. The Debt Ratio for 2021 is 2.64. The Leverage and Debt/Equity Ratios are 1.61 and 0.61.

The Total Return per year is shown below for years of 5 to 19 to the end of 2021 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.
2016 5 4.54% 23.60% 18.65% 4.95%
2011 10 13.89% 17.29% 12.45% 4.84%
2006 15 10.20% 9.05% 6.38% 2.68%
2002 19 10.91% 10.10% 7.47% 2.62%

The Total Return per year is shown below for years of 5 to 19 to the end of 2021 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.
2016 5 5.74% 25.07% 20.03% 5.04%
2011 10 11.45% 14.48% 10.05% 4.43%
2006 15 9.58% 8.55% 5.81% 2.74%
2002 19 11.03% 11.85% 8.74% 3.11%

The 5-year low, median, and high median Price/Earnings per Share Ratios are 5.03, 5.50 and 5.97. The corresponding 10 year ratios are 6.48, 7.92 and 9.68. The corresponding historical ratios are 6.08, 7.887 and 8.85. The current P/E Ratio 3.94 based on a stock price of $68.66 and EPS for the last 12 months of $17.40. The current ratio is below the low of the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

I have Adjusted Fund from Operations (AFFO) data. The 5-year low, median, and high median Price/AFFO Ratios are 15.21, 17.38, and 19.55. The corresponding 10 year ratios are 13.26, 15.67 and 17.92. The current P/AFFO Ratio is 17.47 based on a stock price of $68.66 and AFFO estimate for 2022 of $3.93. The current ratio is between the median and high of the 10 year P/AFFO ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I have Fund from Operations (FFO) data. The 5-year low, median, and high median Price/FFO Ratios are 13.46, 15.17, and 19.06 . The corresponding 10 year ratios are 12.37, 14.37 and 15.63. The current P/FFO Ratio is 15.97 based on a stock price of $68.66 and FFO estimate for 2022 of $4.30. The current ratio is between the median and high of the 10 year P/AFFO ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get a Graham Price of $91.03. The 10-year low, median, and high median Price/Graham Price Ratios are 0.72, 0.79 and 0.88. The current P/GP Ratio is 0.75 based on a stock price of $68.66. The current ratio is between the low and median P/GP 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 1.05. The current P/B Ratio is 0.80 based on a stock price of $68.66, Book Value of $5,627M, and a Book Value per Share of $85.65. The current ratio is 24% 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 14.68. The current P/CF Ratio is 16.90 based on Cash Flow for the last 12 months of $267M, Cash Flow per Share of $4.06 and a stock price of $68.66. The current ratio is 15% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get an historical median dividend yield of 4.56%. The current dividend yield is 4.51% based on a stock price of $68.66 and dividends of $3.0996. The current dividend yield is 1% below the historical median 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 4.51% based on a stock price of $68.66 and dividends of $3.0996. The current dividend yield is 17.5% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.

The 10-year median Price/Sales (Revenue) Ratio is 9.41. The current P/S Ratio is 10.18 based on Revenue estimate for 2022 of $443M, Revenue per Share of $3.59 and a stock price of $68.66. The current ratio is 8% 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 reasonable. It also seems to be above the median. Both the dividend yield tests say this and it is confirmed by the P/S Ratio test. The P/AFFO and P/FFO tests are also showing a reasonable, but above the median results and these, for REITs, are better tests than a P/E Ratio test.

When I look at analysts’ recommendations, I find Strong Buy (5) and Buy (6). The consensus would be a Strong Buy. The 12 months stock price consensus is $97.64. This implies a total return of 46.72% with 42.21% from capital gains and 4.51% from dividends. Note that a stock price of $97.64 is below the 2021 year end price of $105.40 and also below the 2020 year end price of $77.90. Alpha Spread target is $98.3025.

Not everyone likes this stock on Stock Chase. Last analyst says Do Not Buy. Others like it. Stock Chase gives this stock 4 stars out of 5. Money Sense list has no REITs. Adam Othman on Motley Fool says this REIT should provide capital gains. Daniel Da Costa on Motley Fool also says this stock has good long term growth potential. The company results for the fourth quarter of 2021 is in a press release on Business Wire. The company on Business Wire has a press release on the second quarter of 2022 results.

Simply Wall Street on Yahoo Finance talk about who owns this company. Simply Wall Street has two warning signs for this company of debt is not well covered by operating cash flow and large one-off items impacting financial results.

Granite Real Estate Investment Trust is engaged in the acquisition, development, and management of primarily industrial properties in North America and Europe. Granite's portfolio comprises various manufacturing, corporate office, warehouse and logistics, and product engineering facilities. The company's largest tenant is Magna International, which accounts for most of Granite's lease income. Its web site is here Granite REIT.

The last stock I wrote about was about was Great-West Lifeco Inc (TSX-GWO, OTC-GWLIF) ... learn more. The next stock I will write about will be K-Bro Linen Inc (TSX-KBL, OTC-KBRLF) ... learn more on Monday, September 26, 2022 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, September 21, 2022

Great-West Lifeco Inc

Sound bite for Twitter and StockTwits is: Dividend Growth Financial. The stock price is cheap. The Dividend Payout Ratios (DPR) are good. Debt Ratios are fine. You should expect future dividend yield rates to be in the moderate range. See my spreadsheet on Great-West Lifeco Inc.

Is it a good company at a reasonable price? The stock price is relatively cheap. If you do not have Power Corp or are no intending to buy it, then if you are building a dividend growth portfolio, this would be a good stock to add for the long term.

I do not own this stock of Great-West Lifeco Inc (TSX-GWO, OTC-GWLIF). This stock seems to be a favorite with investors who like solid, stable, dividend paying stock. It was on Mike Higgs' list and it used to be on the dividend lists. I have been following this stock for some time. However, I will not buy it because I have Power Corp. (TSX-POW). Great West Lifeco Inc. is one of the companies under Power Corp. (TSX-POW).

When I was updating my spreadsheet, I noticed that the usual site I go to for estimates showed the current Revenue of $64,417M for 2021, but give Revenue estimates of $210,100M and $228,217M for 2023. I went looking elsewhere and got a more reasonable Revenue for 2022 of $66,900M.

If you had invested in this company in December 2011, for $1,020.00 you would have bought 50 shares at $20.40 per share. In December 2021, after 10 years you would have received $730.50 in dividends. The stock would be worth $1,898.00. Your total return would have been $2,628.50.

Cost Tot. Cost Shares Years Dividends Stock Val Tot Ret
$20.40 $1,020.00 50 10 $730.50 $1,898.00 $2,628.50

The dividend yields are good with dividend growth low. The current dividend yield is good (5% to 6% ranges) at 6.24%. The 5 year median dividend yield is also good at 5.24%. The 10 year and historical median dividend yields are moderate (2% to 4% ranges) at 4.62% and 3.49%. You should expect future dividend yields to go back to the moderate range. The dividend growth is low (below 8%) at 5.44% per year for the past 5 years. The last dividend increase was in 2021 and it was for 11.9%.

The Dividend Payout Ratios (DPR) are good. The DPR for EPS for 2021 is 54% with 5 year coverage at 58%. The DPR for Adjusted Earnings per Share (AEPS) for 2021 is 52% with 5 year coverage at 55%. The DPR for Cash Flow per Share (CFPS) for 2021 is 16% with 5 year coverage at 20%. The DPR for Free Cash Flow (FCF) for 2021 is 16% with 5 year coverage at 20%.

Debt Ratios are fine. This is a financial stock, so I am looking at Long Term Debt/Covering Assets Ratio and for 2021 it is 0.90. This is fine. I calculate a Liquidity Ratio of 1.37, but this is not an important ratio for financials. The Debt Ratio is 1.05 and this is fine for a financial.

The Total Return per year is shown below for years of 5 to 33 to the end of 2021. 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.
2016 5 5.44% 6.06% 1.54% 4.52%
2011 10 3.90% 11.81% 6.41% 5.40%
2006 15 4.53% 4.54% 0.78% 3.76%
2001 20 7.96% 8.58% 4.06% 4.51%
1996 25 10.53% 14.45% 8.18% 6.27%
1991 30 11.86% 18.26% 10.76% 7.50%
1988 33 10.73% 16.73% 10.29% 6.44%

The 5-year low, median, and high median Price/Earnings per Share Ratios are 9.05, 10.46 and 11.86. The corresponding 10 year ratios are 10.80, 12.36 and 13.43. The corresponding historical ratios are 10.80, 12.41 and 12.81. The current ratio is 9.27 based on a stock price of $31.42 and EPS estimate for 2022 of $3.39. The current ratio is below the low of the 10 year ratio. This stock price testing suggests that the stock price is relatively cheap.

I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Earnings per Share Ratios are 8.88, 10.26 and 11.97. The corresponding 10 year ratios are 10.51, 12.10 and 13.27. The current P/AEPS Ratio is 8.70 based on a stock price of $31.42 and AEPS estimate for 2022 of $3.61. The current ratio is below the low of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.

I get a Graham Price of $45.08. The 10-year low, median, and high median Price/Graham Price Ratios are 0.85, 0.96 and 1.06. The current P/GP Ratio is 0.70 based on a stock price of $31.42. The current ratio is below the low of the 10 year median 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 1.71. The current P/B Ratio is 1.18 based on a stock price of $31.42, Book Value of $24,792M and Book Value per Share of $26.64. The current ratio is 31% 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 4.98. The current ratio is 2.55 based on Cash Flow per Share for the last 12 months of $11,471M, Cash Flow per Share of $12.33 and a stock price of $31.42. The current ratio is 49% 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 3.68%. The current dividend yield is 6.24% based on dividends of $1.96 and a stock price of $31.42. The current dividend yield is 70% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.

I get a 10 year median dividend yield of 4.62%. The current dividend yield is 6.24% based on dividends of $1.96 and a stock price of $31.42. The current dividend yield is 35% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.

The 10-year median Price/Sales (Revenue) Ratio is 0.72. The current P/S Ratio is 0.44 based on Revenue estimate for 2022 of $66,900M, Revenue per Share of $71.89 and a stock price of $31.42. The current ratio is 39% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

Results of stock price testing is that the stock price is cheap. The dividend yield tests are saying the stock price is cheap and it is confirmed by the P/S Ratio test. All the tests are pointing to a cheap price.

When I look at analysts’ recommendations, I find Buy (2), Hold (7) and Underperform (1). The consensus would be a Hold. The 12 month stock price consensus is $36.80. This implies a total return of $23.36% with 17.12% from capital gains and 6.24% from dividends based on a current stock price of $31.42.

There are various views on Stock Chase by analysts. Some like it like it and some do not. Life Insurance companies need higher interest rates. Stock Chase give this stock 4 stars out of 5. Money Sense rates gives this stock an A rating. Ambrose O'Callaghan on Motley Fool says this company will give you income and capital growth. Adam Othman on Motley Fool thinks this company has an edge because it also into investment management. The company put out a News Release on their fourth quarter of 2021 results. The company put out a News Release on their second quarter of 2022 results. Simply Wall Street on Yahoo Finance talk about who owns this company. Short answer is Power Corp. They have no warning signs.

Great-West Lifeco is one of the three big Canadian life insurance firms. With just under half of the firm's profit and revenue in Canada, Great-West also operates in the U.S. and Europe. Its web site is here Great-West Lifeco Inc.

The last stock I wrote about was about was Trican Well Service Ltd (TSX-TCW, OTC-TOLWF) ... learn more. The next stock I will write about will be Granite REIT (TSX-GRT.UN, NYSE-GRP.U) ... learn more on Friday, September 23, 2022 around 5 pm. Tomorrow on my other blog I will write about Tara Henley Substack.... learn more on Thursday, September 22, 2022 around 5 pm.

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