Is it a good company at a reasonable price? If I held this stock I would sell. The price is high because of the potential buy-out. I do not know when it will happen or if it will happen. The buy-out price is not much high than the current price. If the buy-out does not occur the stock price will take a dive. I have been in this position before on a stock that this is what I did. The current stock price is on the expensive side.
I do not own this stock of Shaw Communications Inc (TSX-SJR.B, NYSE-SJR). I am following this stock because it was a stock on Investment Reporter’s list, a MPL Communications Publication.
When I was updating my spreadsheet, I noticed that analyst in 2020 expected this company to raise dividends in August 1921. Last year analysts expected that his company would start to raise the dividends after August 2022. This year, analysts expect that dividends will be raised after August 2022. Dividends have been flat for 6 years. This company has a financial year ending August 31 each year.
If you had invested in this company in December 2005, for $1004.00 you would have bought 80 shares at $12.62 per share. In December 2021, after 15 years you would have received $1,221.60 in dividends. The stock would be worth $2970.40. Your total return would have been $4192.00.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $12.62 | $1,004.00 | 80 | 10 | $1,221.60 | $2,970.40 | $4,192.00 |
The dividend yields are moderate with current dividend growth non-existent. The current dividend yield is moderate (2% to 4% ranges) at 3.12%. The 5 and 10 year median dividend yields are moderate at 4.39% and 4.35%. This historical dividend yield is low (below 2%) at 1.43%. Prior to 2006, the dividend yield was always low. Dividends have been flat for the past 6 years.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2021 is 61% with 5 year coverage at 91%. Going forward, analysts expect DPR for EPS to be in the 70% range. The DPR for CFPS for 2021 is 31% with 5 year coverage at 35%. The DPR for Free Cash Flow (FCF) for 2021 is 66% with 5 year coverage at 123%. Different site varies on what the FCF is. Analysts expect DPR for FCF to be in the 50% and 60% ranges.
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2021 is 0.25. The Liquidity Ratio for 2021 is 0.79. If you had in Cash Flow after dividends, it is fine at 1.64. The Debt Ratio is good at 1.62. The Leverage and Debt/Equity Ratios for 2021 are fine at 2.61 and 1.61.
The Total Return per year is shown below for years of 5 to 31 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% | 11.20% | 7.34% | 3.86% |
| 2011 | 10 | 2.79% | 10.84% | 6.61% | 4.24% |
| 2006 | 15 | 11.31% | 8.78% | 5.00% | 3.78% |
| 2001 | 20 | 21.28% | 6.83% | 4.19% | 2.64% |
| 1996 | 25 | 18.37% | 17.97% | 13.44% | 4.53% |
| 1991 | 30 | 16.38% | 13.42% | 10.50% | 2.92% |
| 1990 | 31 | 15.82% | 14.96% | 11.77% | 3.19% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 15.09, 17.22 and 19.88. The corresponding 10 year ratios are 13.18, 15.36 and 17.69. The corresponding historical ratios are 14.06, 16.52 and 19.02. The current P/E Ratio is 24.54 based on a stock price of $38.03 and EPS of 1.55. The current ratios are above the high of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive. Note that the proposed buy-out price is $40.50.
I get a Graham Price of $20.66. The 10 year low, median, and high median Price/Graham Price Ratios are 1.14, 1.30 and 1.46. The current P/GP Ratio is 1.84 based on a stock price of $38.03. The current P/GP Ratio is above the high of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median Price/Book Value per Share Ratio of 2.42. The current P/B Ratio is 3.11 based on a Book Value of $6,110M, Book Value per Share of $12.24 and a stock price of $38.03. The current ratio is 28% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median Price/Cash Flow per Share Ratio of 7.64. The current P/CF Ratio is 10.01 based on Cash Flow per Share estimate for 2022 of $3.80, Cash Flow of $1,896M and a stock price of $38.03. The current ratio is 31% 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 1.43%. The current dividend yield is 3.12% based on a stock price of $38.03 and dividends of $1.185. The current dividend yield is 118% above the historical dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 4.35%. The current dividend yield is 3.12% based on a stock price of $38.03 and dividends of $1.185. The current dividend yield is 28% below the 10 year dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10 year median Price/Sales (Revenue) Ratio is 2.46. The current P/S Ratio is 3.41 based on a stock price of $38.03, Revenue estimate for 2022 of $5,570M and Revenue per Share of $11.16. The current ratio is 39% above the 10 year median ratio.
Results of stock price testing is that the stock price is probably expensive. The 10 year median dividend yield test says this and it is confirmed by the P/S Ratio test. The problem with the historical dividend yield test is that the dividend yields, of which I have some 31 years of data, started at under 1% and started to increase in 2005 and ending up some in the 5 and 6% ranges by 2000. So, they have been higher for some 15 years. All the other tests are showing the stock price as relatively expensive
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (5) and Hold (5). The consensus would be a Buy. The 12 months stock price consensus is $40.17. This implies a total return of 8.74% with 5.63% from capital gains and 3.12% from dividends based on a current price of $38.03. (I find it interesting that the high price is $40.50, which is the buy-out price).
The big news is that Rogers is buying out Shaw as detailed in the newsroom of Shaw on Shaw Communications. This was announced in March 2021. Pete Evens on CBC in November 2021 says that the CRTC hearings on this deal is just beginning. One analyst on Stock Chase is worried that the drama at Rogers will shift to Shaw. Christopher Liew on Motley Fool discusses the protentional take-over of Shaw by Rogers. Zacks Equity Research via Yahoo Finance discusses the first quarterly results for this company. They think that this stock is currently a Hold.
Shaw Communications is a Canadian cable company that is one of the biggest providers of Internet, television, and landline telephone services in British Columbia, Alberta, Saskatchewan, Manitoba, and northern Ontario. Its web site is here Shaw Communications Inc.
The last stock I wrote about was about was Enghouse Systems Ltd (TSX-ENGH, OTC-EGHSF) ... learn more. The next stock I will write about will be Exco Technologies Ltd (TSX-XTC, OTC-EXCOF) ... learn more on Wednesday, February 2, 2022 around 5 pm. Tomorrow on my other blog I will write about Dividend Stocks February 2022 .... learn more on Tuesday February 01, 2022 around 5 pm.
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