Is it a good company at a reasonable price? I still think that the stock price is reasonable. The P/S Ratio testing says it is almost cheap. I still like this company and I will continue to hold my shares. It will be nice to finally receive a dividend.
I own this stock of Home Capital Group (TSX-HCG, OTC-HMCBF). I started reviewing this company in September 2009. It is a dividend growth company and was coming up on lists of good, dividend paying stocks. It is on some dividends paying companies lists that I look at. I am glad I did not sell it and held on and now it its back being a dividend growth stock.
When I was updating my spreadsheet, I noticed that they have restarted their dividends. The yield is low at 1.58% but it is a start. When it paid dividends before, they were mostly until 2% until the company got into problems.
If you had invested in this company in December 2011, $1006.55 you would have bought 41 shares at $24.55 per share. In December 2021, after 10 years you would have received $156.21 in dividends. The stock would be worth $1601.87. Your total return would have been $1758.08.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $24.55 | $1,006.55 | 41 | 10 | $156.21 | $1,601.87 | $1,758.08 |
The dividend yields are low with dividend growth restarting. The current dividend yield is low (below 2%) at 1.58%. The 5, 10 and historical dividend yields are also low at 0%, 1.44% and 1.27%. The company has not paid dividends since 2017 and in 2022 they will now again pay dividends. I believe it will be a dividend growth stock again.
The Dividend Payout Ratios (DPR) are good and expected to continue to be good. The last year of full dividend payments was 2016. The DPR for EPS for 2016 is 26% with 5 year coverage at 19%. The expected DPR for EPS for 2022 is 11%. The DPR for Cash Flow per Share for 2016 was 23% with 5 year coverage at 14%. The expected DPR for 2022 is 7%. The DPR for Free Cash Flow for 2016 was 12%. There are no estimates for FCF for 2022.
Debt Ratios are fine. Because this is a financial stock, I am looking at Long Term Debt/Covering Assets Ratio. That ratio for 2021 is 0.72 and this is good. The Liquidity Ratio is not important for financial, but I still calculated it and for 2021 it is 2.77. The Debt Ratio is 1.08 and this is fine for financials.
The Total Return per year is shown below for years of 5 to 26 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% | 4.67% | 4.51% | 0.17% |
| 2011 | 10 | 0.00% | 6.17% | 4.76% | 1.42% |
| 2006 | 15 | 0.00% | 7.13% | 5.62% | 1.51% |
| 2001 | 20 | 0.00% | 16.99% | 14.16% | 2.83% |
| 1996 | 25 | 0.00% | 35.98% | 26.96% | 9.02% |
| 1995 | 26 | 0.00% | 39.93% | 29.20% | 10.73% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 6.31, 9.38 and 11.15. The corresponding 10 year ratios are 6.45, 9.18 and 11.43. The corresponding historical ratios are 7.50, 9.06 and 11.89. The current P/E Ratio is 7.25 based on a stock price of $37.98 and EPS estimate of $5.24. 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 $65.65. The 10 year low, median, and high median Price/Graham Price Ratios are 0.53, 0.74 and 0.92. The current P/GP Ratio is 0.58 based on a current stock price of $37.98. 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 1.14. The current ratio of 1.04 is based on the Book Value of the last 12 months of $1,571M, Book Value per Share of $36.55 and a stock price of $37.98. The current 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.
Analysts give a Book Value per Share for 2022 of $40.40. This would give a current P/B Ratio of 0.94 based on Book Value per Share of $2022, Book Value of $1,736M and a stock price of $37.98. This P/B Ratio is 18% 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 4.02. The current P/CF Ratio is 4.37 based on Cash Flow of last 12 months of $373M, Cash Flow per Share of $8.69 and a stock price of $37.98. The current ratio is 9% 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 1.27%. The current dividend yield is 1.58% based on dividends of $0.60 and a stock price of $37.98. The current yield is 24% above the historical dividend yield. This stock price testing suggests that the stock price is relatively cheap.
If you take out the last 4 years of no dividends, the historical median dividend yield is 1.45%. The current dividend yield is 1.58% based on dividends of $0.60 and a stock price of $37.98. The current dividend yield is 9% 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 1.38%. The current dividend yield is 1.58% based on dividends of $0.60 and a stock price of $37.98. The current yield is 15% above the historical dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
It I take off the 4 years of no dividends, that is years 1 to 6 of the 10 year dividend median yield, I get a yield of 1.69%. This is a value 6% below the current dividend yield. If I use the 10 years prior to 2017 (when dividends were cancelled) I get a 10 year dividend yield of 1.68%, a value also 6% below the current dividend yield. These stock price testing suggests that the stock price is relatively reasonable but above the median.
The 10 year median Price/Sales (Revenue) Ratio is 3.74. The current P/S Ratio is 3.00 based on Revenue estimate for 2022 of $545M, Revenue per Share of $12.68 and a stock price of $37.98. The current ratio is 19.9% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. It almost cheap.
Results of stock price testing is that the stock price is probably reasonable. The P/S Ratio test says the stock price is reasonable and almost cheap. Most the dividend testing says the stock price is reasonable and above the below the median. Most of the rest of the testing is showing a reasonable stock price.
Last year I said that the results of stock price testing were that the stock price was probably cheap. The P/S Ratio testing and the P/B Ratio testing says this. The P/E Ratio says it is reasonable and below the median with the P/GP Ratio testing show the stock as cheap.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (4) and Hold (2). The consensus is a Buy. The 12 months stock price consensus is $51.57. This implies a total return of 37.36% with 35.78% from capital gains and 1.58% from dividends based on a stock price of $37.98.
When I looked at analysts’ recommendations last year, I found Strong Buy (1), Buy (4) and Hold (3). The consensus would be a Buy. The 12 month stock price consensus was $38.14. That implied a total return of 18.41%, all from capital gains based on a stock price of $32.21. What happened was a move to a stock price of $37.98 and so a total return of 17.91%. So, they were pretty accurate.
It is not well followed on Stock Chase. Some think the stock price could go higher but worry about the effect of higher interest rates. Ambrose O'Callaghan on Motley Fool thinks the stock is cheap, but worry about rising interest rates. Ambrose O'Callaghan on Motley Fool reviews this stock and thinks it is still attractive. The company released a Press Release on the fourth quarterly results. A report from Simply Wall Street on Yahoo Finance talk about who owns shares in this company. They have no warning signs for this company.
Home Capital Group Inc is a specialty finance company that offers residential and commercial mortgage lending, securitization of insured mortgage products, consumer lending, and credit card services. The company also offers deposits via brokers and financial planners, and through its direct-to-consumer deposit brand, Oaken Financial. Its web site is here Home Capital Group .
The last stock I wrote about was about was Bombardier Inc (TSX-BBD.B, OTC-BDRBF) ... learn more. The next stock I will write about will be RioCan Real Estate (TSX-REI.UN, OTC-RIOCF) ... learn more on Wednesday, March 16, 2022 around 5 pm. Tomorrow on my other blog I will write about Dividend All-Stars 2022.... learn more on Tuesday, March 15, 2022 around 5 pm.
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