Is it a good company at a reasonable price? The current stock price is reasonable. Analysts do seem positive about this stock. However, it is still not one I would currently put on my buy list.
I do not own this stock of AGF Management Ltd (TSX-AGF.B, OTC-AGFMF). I used to own this stock. I bought it in 2001 and sold half in 2006 and the rest in 2008. It used to be a dividend growth stock, but has not been one for some time now. I sold because I did not see that the stock would improve. It was raising dividends still but at the expense of DPR. In 2008 I was lucky that I sold before it crashed. It crashed again in 2018 and it has been recovering since 2018. Analysts now expect that dividends will start to be raised again and it will again become a dividend growth stock. There was an increase in 2021.
When I was updating my spreadsheet, I noticed they made a much bigger profit in 2020 due to sale of an asset. EPS was $0.60 in 2019, $2.22 in 2020, and then $0.55 in 2021. They had 3 special items that produced the special profit in 2020, but the major one was sale of an asset. See the new release by AGF Management.
Shareholders who have had this stock for 10, 15 and 20 years have lost money on this stock. They have not lost a lot because it is a dividend stock. For example, the 20 year shareholders have lost 1.12% per year. The stock hit a low in 2018 and has made progress since then. Shareholders who have held this stock for 5 and then 25 and 30 years have still made money. For dividend stocks, a lot of the return is in dividends.
If you had invested in this company in December 2010, $1014.52 you would have bought 52 shares at $19.51 per share. In December 2021, after 10 years you would have received $351 in dividends. The stock would be worth $434.00. Your total return would have been $785.20.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $19.51 | $1,014.52 | 52 | 10 | $351.00 | $434.00 | $785.20 |
The dividend yields are moderate with dividend growth slightly positive now. The current dividend yield is good (2% to 4% ranges) at 4.85%. The 5 year and historical median dividend yields are also moderate at 4.92% and 4.26%. The 10 year median dividend yield is good (5% to 6% ranges) at 6.71%. The dividend growth over the past 5 years is 1.22% per year. This is because the dividends were flat and then in 2021 dividends were raised some 12.5%.
The Dividend Payout Ratios (DPR) are currently fine. The DPR for EPS for 2021 is 62% with 5 year coverage at 33%. The DPR for Cash Flow per Share is 35% with 5 year coverage at 36%. The DPR for Free Cash Flow for 2021 was 67% with 5 year coverage at 41%.
Debt Ratios are good. The company has no long term debt, so the Long Term Debt/Market Cap Ratio is 0.00. The Liquidity Ratio for 2021 is 1.76. The Debt Ratio for 2021 is 4.14. The Leverage and Debt/Equity Ratios for 2021 are 1.32 and 0.32.
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 | 1.22% | 10.53% | 5.90% | 4.63% |
| 2011 | 10 | -10.75% | -1.54% | -6.19% | 4.65% |
| 2006 | 15 | -4.61% | -3.64% | -7.75% | 4.11% |
| 2001 | 20 | 2.20% | -1.12% | -5.28% | 4.16% |
| 1996 | 25 | 5.02% | 9.14% | 1.90% | 7.24% |
| 1991 | 30 | 5.95% | 17.27% | 6.65% | 10.62% |
| 1990 | 31 | 5.75% | 16.20% | 6.37% | 9.83% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 7.38, 8.65 and 9.92. The corresponding 10 year ratios are 8.46, 11.65 and 14.08. The corresponding historical ratios are 10.21, 14.23 and 18.96. The current P/E Ratio is 8.63 based on a stock price of $7.42, and EPS estimate for 2022 of $0.86. The current ratio is between the low and median 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 $16.88. The 10 year low, median, and high median Price/Graham Price Ratios are 0.41, 0.52 and 0.63. The current P/GP Ratio is 0.44 based on a stock price of $7.42. 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 10 year median Price/Book Value per Share Ratio of 0.56. The current P/B Ratio is 0.50 based on a Book Value of $1,031M, Book Value per Share of $14.73 and a stock price of $7.42. The current P/B Ratio is 9% 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 8.63. The current P/CF Ratio is 7.73 based on Cash Flow per Share estimate for 2022 of $0.96, Cash Flow of $67.21 and a stock price of $7.42. The current ratio is 10% 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 4.26%. The current dividend yield is 4.85% based on dividends of $0.36 and a stock price of $7.42. The current dividend yield is 14% 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 6.71%. The current dividend yield is 4.85% based on dividends of $0.36 and a stock price of $7.42. The current dividend yield is 28% 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 1.18. The current P/S Ratio is 1.09 based on Revenue estimate for 2022 of $478M, Revenue per Share of $6.83 and a stock price of $7.42. The current P/S Ratio is 8% 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. I realize that a lot of the ratios are very low and the 10 year dividend yield quite high. This is due to the fact that the company did not do very well from approximately 2002. I lost faith in the company in 2006. It continued to increase its dividends which took a higher and higher percentage of the EPS. I did not like that. It is just now recovering. Management seems optimistic with the recent dividend increase, but they raised dividends in the past when they should not have. So, I am a bit skeptical. It would still not be a stock I would want to buy at present.
When I look at analysts’ recommendations, I find Buy (2), Hold (6). The consensus would be a Hold. The 12 month stock price consensus is $8.81. This implies a total return of 23.58% with 18.73% from capital gains and 4.85% from dividends.
When I looked at analysts’ recommendations last year, I found Buy (2), Hold (4) and Underperform (2). The consensus would be a Hold. There is a lot of negativities in the recommendations. The 12 month stock price was $7.25. This implied a total return of 7.53% with 2.98% from capital gains and 4.55% from dividends based on a stock price of 7.04. What happened is a price rise to $7.42 and a total return of 9.95% with 5.40% from capital gains and 4.55% from dividends.
What I said last year about this stock: The stock price is reasonable. This company has not done well for shareholders for quite some time until very recently. It is not a dividend growth stock. It would not be on my radar to buy.
Most of the analyst’s comments on Stock Chase are blanked out, but there is a Buy on Weakness and Hold comments. Adam Othman on Motley Fool thinks the company is an undervalue dividend stock. Ambrose O'Callaghan on Motley Fool thinks this is a buy and hold type of company. Shareholders who have held this stock for a long time, like 10 to 20 years may disagree on this. The company reports on their fourth quarter on Newswire. A Simply Wall Street report on Yahoo Finance talks about the latest analysis for this company.
AGF Management Ltd is a Canadian-based asset manager with operations and investments in Canada, the United States, the United Kingdom, Ireland, and Asia. Its web site is here AGF Management Ltd.
The last stock I wrote about was about was Canadian Pacific Railway (TSX-CP, NYSE-CP) ... learn more. The next stock I will write about will be Richelieu Hardware Ltd (TSX-RCH, OTC-RHUHF) ... learn more on Monday, February 14, 2022 around 5 pm.
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