Is it a good company at a reasonable price? I have done well with this small cap growing company. I would like it better to see dividends increased, but they are putting their money into growing the company. I have no plans to sell this company. However, I think that the current stock price is relatively expensive.
I own this stock of Calian Group Ltd (TSX-CGY, OTC-CLNFF). This is an interesting company with a very nice dividend. This stock came up on a Globe Investor site. The Globe Investor Number Cruncher is an investment column about screening for stocks and funds. They did one on companies with little to no debt. I also noted that the Financial Blogger has this stock on his Top Ten Canadian Dividend Stocks list.
I have had this stock for 10 years and I have made 17.88% per year with 13.98% from capital gains and 3.90% from dividends. My current dividend yield is 6.19% on my original purchase. However, I bought the stock before they stopped raising dividends. Currently there are no sign that dividends will be raised anytime soon, so going forward the dividend yield is probably going down.
When I was updating my spreadsheet, I noticed EPS fell due to payout agreements on past acquisitions. This is due to the way that acquisitions payments are structured. I looked at differences in Net Profit statements because EPS fell some 52%. Analysts did expect a drop in EPS, but only of some 7%. They also report an adjusted Net Income and EPS which excludes acquisition costs. TD WebBroker follows this Adjusted EPS. Over the past 5 year Adjusted EPS has grown 13% per year.
If you bought shares in this company in December 1994, 26 years ago for $1,001.00 (approximately $1,000) by December 2021 you would have received $4,040.40 in dividends and your stock would be worth $16,000.40 for a total of $20,040.80.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $3.85 | $1,001.00 | 260 | 26 | $4,040.40 | $16,000.40 | $20,040.80 |
The dividend yields are low with dividend growth non-existent. The current yield is low (below 2%) at 1.99%. The 5, 10 and historical dividend yields are moderate (2% to 4% ranges) at 3.49%, 4.88% and 4.28%. The last dividend increase was in 2013. Before 2013 they consistently raised their dividends at an average rate of 21% per year. There is always a trade-off between paying dividends and re-investing back into the company.
The Dividend Payout Ratios (DPR) need improving and should decline with the flat dividend. The DPR for EPS for 2021 is 105% with 5 year coverage at 56%. The DPR for Cash Flow per Share for 2021 is 23% with 5 year coverage at 30%. The DPR for Free Cash Flow for 2021 is 30% with 5 year coverage at 70%. Sites do not agree on FCF, but there is not much difference.
Debt Ratios are good. The Long Term Debt/Market Cap Ratio for 2021 is 0.02. The Liquidity Ratio for 2021 is 2.16. The Debt Ratio for 2021 is 2.77. The Leverage and Debt/Equity Ratios for 2021 are 1.57 and 0.57.
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 | 0.00% | 23.51% | 20.21% | 3.44% |
| 2011 | 10 | 1.45% | 17.51% | 13.48% | 3.90% |
| 2006 | 15 | 8.49% | 15.78% | 11.15% | 4.60% |
| 2001 | 20 | 11.04% | 25.79% | 17.37% | 7.45% |
| 1996 | 25 | 15.51% | 12.15% | 2.96% | |
| 1993 | 28 | 10.12% | 8.14% | 2.26% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 14.20, 15.49 and 16.78. The corresponding 10 year ratios are 11.96, 13.12 and 14.22. The corresponding historical ratios are 9.96, 11.35 and 13.39. The current P/E Ratio is 30.80 based on a stock price of $56.37 and EPS estimate of $1.83. The current P/E Ratio is above the 10 years median high. This stock price testing suggests that the stock price is expensive.
If you look at adjusted EPS P/E Ratios, the 5 year low, median, and high median Price/Earnings per Share Ratios are 13.07, 14.25, and 15.44. The corresponding 6 year Adjusted P/E Ratios are 12.36, 13.64 and 15.12. The current Adjust P/E Ratio is 15.49 based on an Adjusted EPS for 2022 of $3.64 and a stock price of $56.37. The current P/E Ratio is above the 6 years median high. This stock price testing suggests that the stock price is expensive. However, the current Adjusted P/E and the 6 year Adjusted P/E Ratio are much closer than in the test above. Also, a P/E Ratio of 15.49 is not a high ratio for P/E.
I get a Graham Price of $32.66. The 10 year low, median, and high median Price/Graham Price Ratios are 1.00, 1.08 and 1.21. The current P/GP Ratio is 1.73 based on a stock price of $56.37. The current ratio is above the 10 year median high ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median Price/Book Value per Share Ratio of 2.20. The current P/B Ratio is 2.18 based on a Book Value of $292M, Book Value per Share of $25.91 and a stock price of $56.37. The current ratio is 1% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median Price/Cash Flow per Share Ratio of 10.76. The current P/CF Ratio is 14.79 based on Cash Flow for last 12 months of $46.54M, Cash Flow per Share of $18.35 and a stock price of $56.37. The current Ratio is 37% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 4.28%. The current dividend yield is 1.99% based on dividends of $1.12 and a stock price of $56.37. The current dividend yield is 54% below the historical dividend yield. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 4.88%. The current dividend yield is 1.99% based on dividends of $1.12 and a stock price of $56.37. The current dividend yield is 59% below the historical dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10 year median Price/Sales (Revenue) Ratio is 0.69. The current P/S Ratio is 1.12 based on Revenue estimate for 2022 of $567M, Revenue per Share of $50.24 and a stock price of $56.37. The current ratio is 62% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
Results of stock price testing is that the stock price is probably expensive. This is mainly based on the P/S Ratio test. All the tests are pointing to this except for the P/B Ratio testing. The dividend yield tests are not helpful because the dividends have been flat for a long time.
When I look at analysts’ recommendations, I find Strong Buy (3) and Buy (3). The consensus would be a strong Buy. The 12 month stock price is $78.13. This implies a total return of 40.59% with 38.60% from capital gains and 1.99% from dividends.
When I looked at analysts’ recommendations last year, I found Strong Buy (3) and Buy (4). The consensus was be a Strong Buy. The 12 month stock price consensus is $74.29. This implies a total return of 16.73% with 15% from capital gains and 1.73% from dividends based on a stock price of $64.60. What happened was a capital loss of 11.01% with 12.74% from capital losses and 1.73% from dividends. Analysts were way off what would happen. Last year I thought the stock price was relatively expensive.
There are no recent entries on Stock Chase for this company. Robin Brown on Motley Fool thinks this stock is an interesting growth-at-a-reasonable-price (GARP) stock pick. He admits it is not well followed, but thinks that opens up opportunities for investors. Adam Othman on Motley Fool thinks the company is currently overvalued, but it is a company worthwhile to have on a watchlist. The company announces on their site their fourth quarterly results. A Simply Wall Street report on this stock on Yahoo Finance thinks that investors are more interest in their revenue growth than their earnings growth. Their risks list that dividends not well covered, a large one-off item impacting financial reports, that profit margins lower than last year and shareholders have been diluted in the past year.
Calian Group Ltd operates through four segments namely Advanced Technologies, Health, Learning, and Information Technology. It generates maximum revenue from the Health segment. Its web site is here Calian Group Ltd.
The last stock I wrote about was about was Rogers Sugar Inc (TSX-RSI, OTC-RSGUF) ... learn more. The next stock I will write about will be Toronto Dominion Bank (TSX-TD, NYSE-TD) ... learn more on Friday, January 14, 2022 around 5 pm. Tomorrow on my other blog I will write about Good News from 2021.... learn more on Thursday, January 13, 2022 around 5 pm.
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