Friday, April 29, 2022

SNC-Lavalin Group Inc

Sound bite for Twitter and StockTwits is: Dividend Growth Industrial. The stock price is probably reasonable. The company did worse in 2021 than expected. Debt Ratios are not good and need improving. Analyst expect that dividends will grow again in the future. See my spreadsheet on SNC-Lavalin Group Inc.

Is it a good company at a reasonable price? The stock price is probably reasonable. Analysts expect a big increase in the stock price again this year, but that is hard to tell. Analysts also are expecting a recovery this year, like they did last year. I expect this company to recover at some point in the future. In the meantime, they have a problem with debt. This is a risk and problems with debt can become serious in a downturn.

I do not own this stock of SNC-Lavalin Group Inc (TSX-SNC, OTC-SNCAF), but I used to. I sold my stock in SNC-Lavalin (TSX-SNC, OTC-SNCAF) in 2019. I had given up hope that there will be any sort of resolution for this company anytime soon. I live off my dividends and they have cut the dividends twice this year.

In 2019 the Investment Reporter has removed this stock from their Key Stock List and Issued a sell on the stock. Also, in 2019 the largest shareholder and a shareholder for lots of Quebec companies of Caisse de Depot et Placement du Quebec seems to be losing patience with this stock also.

When I was updating my spreadsheet, I noticed analysts expected the EPS for 2021, 2022 and 2023 last year to be $1.71, $1.96, and $1.95. However, for 2021, instead of an EPS of $1.71, the EPS was a lot lower at $0.57. Analysts have reduced the expected EPS in 2022 to $1.75 from $1.95. However, the expected EPS for 2023 in 2020 was $1.96 and now it is $2.45. Also, last year analysts thought that dividends were again be raised in 2022, now they think the next dividend raise will be in 2023.

If you had invested in this company in December 2011, $1,021.60 you would have bought 20 shares at $51.08 per share. In December 2021, after 10 years you would have received $148.80 in dividends. The stock would be worth $618.20. Your total return would have been $767.00.

Cost Tot. Cost Shares Years Dividends Stock Val Tot Ret
$51.08 $1,021.60 20 10 $148.80 $618.20 $767.00

The dividend yields are low with dividend growth has stopped. The current dividend yield is low (below 2%) at 0.28%. Personally, I never buy a stock with dividends below 1%. The company decreased their dividends in 2019. Dividends were decreased some 93%. The dividends have been flat since 2020. Analysts expect dividend to start rising again in 2023.

The Dividend Payout Ratios (DPR) seems fine going forward. The DPR for EPS for 2021 is 14%. I cannot calculate 5 year coverage because of past earning losses. This company provides Adjusted Earnings per Share (AEPS). The DPR for AEPS for 2021 is 9% with 5 year coverage at 53%. The DPR for Cash Flow per Share (CFPS) for 2021 is 6% with 5 year coverage at 39%. The DPR for Free Cash Flow (FCF) for 2021 is 50% with 5 year coverage not calculable due to past negative FCF.

Debt Ratios are not good and need improving. The Long Term Debt/Market Cap Ratio is low and good at 0.29. The Debt Ratio is 1.43. I prefer this to be 1.50 or higher. The Leverage and Debt/Equity Ratios for 2021 are 3.30 and 2.30. These are too high. I prefer them to be below 3.00 and below 2.00, respectively.

The Liquidity Ratio is very low at 0.92 and even adding in Cash Flow after dividends gets you to 0.95 and add back in the current portion of the current debt, we still get only 0.98. So current assets cannot coverage current liabilities. To do that the ratio needs to be at least 1.00 and a decent ratio is 1.50. I looked at the Assets/Current Liabilities Ratio and it is at 2.50. This could be higher. I also looked at the Long Term Debt to Cash Flow (in years) and that is 11.57. A good Long Term Debt to Cash Flow is 3.00 (years).

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 -40.13% -10.73% -11.76% 1.03%
2011 10 -20.95% -3.13% -4.90% 1.77%
2006 15 -8.43% 2.12% -0.12% 2.24%
2001 20 -0.94% 9.19% 6.00% 3.19%
1996 25 1.39% 11.08% 7.86% 3.22%
1991 30 2.34% 13.42% 9.92% 3.50%
1988 33 5.09% 19.51% 13.75% 5.76%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 8.29, 17.11 and 25.16. The corresponding 10 year ratios are 15.42, 19.65 and 25.55. The corresponding historical ratios are 13.87, 19.11 and 23.90. The current P/E Ratio is 16.61 based on a stock price of $29.07 and EPS estimate for 2022 of $1.75. This 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.

This company also provides Adjusted Earnings per Share (AEPS). The 5 year low, median, and high median Price/Earnings per Share Ratios are 23.13, 34.06 and 43.79. (These are high because the AEPS was low.) The corresponding 10 year ratios are 16.61, 21.16 and 25.71. The current P/AEPS is 16.90 based on AEPS estimate for 2022 of $1.72 and a stock price of $29.07. This 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 $21.72. The 10 year low, median, and high median Price/Graham Price Ratios are 1.31, 1.56 and 1.85. The current P/GP Ratio is 1.34 based on a stock price of $29.07. 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 1.85. The current P/B Ratio is 2.43 based on a stock price of $29.07, Book Value of $2,102M and a Book Value per Share of $11.98. This current ratio is 31% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.

I also have an estimate for Book Value per Share (BVPS) for 2022. I get a 10 year median Price/Book Value per Share Ratio of 1.85. The P/B Ratio with the estimate is 1.59 based on an BVPS estimate for 2022 of $18.30, Book Value of $3,213M and a stock price of $29.06. This ratio is 14% 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 24.37. The current ratio is 14.25 based on a stock price of $29.06, Cash Flow per Share (CVPS) estimate for 2022 of $2.04 and Cash Flow of $358M. The current ratio is 42% 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 1.47%. The current dividend yield is $0.28% based on dividends of $0.08 and a stock price of $29.07. The current yield is 81% 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 1.98%. The current dividend yield is $0.28% based on dividends of $0.08 and a stock price of $29.07. The current yield is 86% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively expensive.

The 10 year median Price/Sales (Revenue) Ratio is 0.85. The current P/S Ratio is 0.69 based on a stock price of $29.06, Revenue estimate for 2022 of $7,386M and Revenue per Share of $42.07. The current ratio is 19% 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 says this. It is not confirmed by the dividend yield tests as dividends have been drastically reduced over the past few years. Most of the other testing support this conclusion.

Last year I said that the results of stock price testing were that the stock price was probably reasonable to cheap. You cannot use the dividend yield tests because the dividends have been reduced some 93%. The P/S Ratio test says that the stock is cheap, other tests show the same thing or that the stock price is reasonable and below the median.

When I look at analysts’ recommendations, I find Strong Buy (5), Buy (7) and Hold (2). The consensus would be a Strong Buy. The 12 month stock price consensus is $40.43. This implies a total return of 39.35% with 39.08% from capital gains and 0.28% from dividends based on a stock price of $29.07.

When I looked at analysts’ recommendations last year, I found Strong Buy (5), Buy (6) and Hold (3). The consensus was Buy. The 12 month stock price consensus is $33.96. This implies a total return of 24.10%, with 23.81% from capital gains and 0.29% from dividends based on a stock price of $27.43. What happened was a move to $29.07 with a total return of 6.27% with 5.98% from capital gains and 0.29% from dividends. So, analysts thought there would be a big recovery in 2021 and now they think that for 2022. This stock will probably recover, we just do not know when.

The two analysts’ remarks this year on Stock Chase are Do Not Buy and Hold. This is a rather negative result. Stock Chase gives this stock 4 stars out of 5. Amy Legate-Wolfe on Motley Fool thinks this stock will continue to perform but it will not be a steady ride. She likes the $41.00 target price. Christopher Liew on Motley Fool says is winning investors over of late. This company in a Press Release talk about their fourth quarter results. There is a Simply Wall Street report on this company on Yahoo Finance.

Based in Montreal, SNC-Lavalin is a fully integrated professional services and project management firm that offers a wide range of services, including financing, consulting, engineering and construction, procurement, and operations and maintenance. Its web site is here SNC-Lavalin Group Inc.

The last stock I wrote about was about was Barclays PLC ADR (LSE-BARC, NYSE-BCS) ... learn more. The next stock I will write about will be Fortis Inc (TSX-FTS, OTC-FRTSF) ... learn more on Monday, May 02, 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, April 27, 2022

Barclays PLC ADR

Sound bite for Twitter and StockTwits is: Dividend Growth Bank. The stock price appears cheap. I would suspect that the risk level of this stock is high. One analyst on Stock Chase says that European Banking is difficult. See my spreadsheet on Barclays PLC ADR.

Is it a good company at a reasonable price? The stock price is probably cheap. I sold this stock because I had lost hope in it recovering anytime soon. The EPS and Dividends have been making a recover, but the Revenue has not. Revenue has only increased by 0.5% per year in the past 5 years and is down by 4% per year over the past 10 years. I would not been buying any foreign stock anytime soon as is difficult.

I do not own this stock of Barclays PLC ADR (LSE-BARC, NYSE-BCS), but I used to. This is one of the foreign stocks I was into before 2008. Unfortunately, it was hit hard my 2008 problems and I finally sold it in 2017 at a loss. I had lost hope that it would recover anytime soon. I had a capital loss of 4.92% per year. However, this stock did pay dividends, so my total return was 1.25% per year as I had 6.17% from dividends each year. This was an ARD in US$ so, it was in my US$ account.

When I was updating my spreadsheet, I noticed that this bank earned a lot more than expected in EPS of £0.363 when estimate was £0.170. If you look at the spreadsheet, all you see a lot of red. This is because Revenue, EPS, and Dividends has been declining. Also, this case shows the problems of buying ADRs. My spreadsheet is dealing with 3 currencies of US, UK and CDN.

If you were Canadian and bought the US ADR in CDN$, and you had invested in this company in December 2011, $1,005.91 CDN$ you would have bought 90 shares at $11.18 CDN$ per share. In December 2021, after 10 years you would have received $303.25 CDN$ in dividends. The stock would be worth $1180.96 CDN$. Your total return would have been $1,484.20 CDN$.

If you were Canadian and bought the US ADR in US$ (i.e., in an US$ account), and you had invested in this company in December 2011, $1000.09 US$ you would have bought 91 shares at $10.99 US$ per share. In December 2021, after 10 years you would have received $253.82 US$ in dividends. The stock would be worth $941.85 US$. Your total return would have been $1,195.67 US$.

If you bought this company in UK£ and you had invested in this company in December 2011, £1,001.72 you would have bought 569 shares at £1.76 per share. In December 2021, after 10 years you would have received £273.12 in dividends. The stock would be worth £1,064.03. Your total return would have been £1,337.15.

Note that each ADR represents 4 ordinary shares. I have used the current exchange rates at the time of purchase and each dividend payment. I thought it might be interesting to look at all three currencies and this stock.

Cost Tot. Cost Shares Years Dividends Stock Val Tot Ret
$11.18 $1,005.91 90 10 $303.25 $1,180.96 $1,484.20
$10.99 $1,000.09 91 10 $253.82 $941.85 $1,195.67
£1.76 £1,001.72 569 10 £273.12 £1,064.03 £1,337.15

The dividend yields are moderate with dividend growth in the past were moderate to good. The current dividend yield is moderate (2% to 4% ranges) at 4.05%. The 5 year median dividend yield is low (below 2%) at 1.78%. The 10 year and historical median dividend yields were moderate at 2.47% and 3.12%. Note that there were no dividend payments in 2020.

Past increases varied a lot and sometimes were under 15% and sometimes were over 15%. This bank is currently paying two dividends a year. Dividends are declared in UK pence. Generally, but not necessarily so, a bigger dividend payment at the beginning of the year after the year end (in April) and then a smaller dividend near the year end (September). Sometimes the bigger dividend is at the year end (September). They do not pay dividends like US and Canadian firms with quarterly dividends. The dividends are never equal.

The Dividend Payout Ratios (DPR) are currently fine. The DPR for EPS for 2021 was 8% with 5 year coverage at 30%. The DPR for Cash Flow per Share (CFPS) for 2021 was 0.6% with 5 year coverage at 1.6%. The DPR for Free Cash Flow (FCF) is 7% with 5 year coverage at 29%.

Debt Ratios are fine. Because this is a Bank, I am looking at Deposit/Asset Ratio and for 2021 it is good at 0.75. The Debt Ratio for 2021 is 1.05 and this is fine for banks.

The Total Return per year is shown below for years of 5 to 28 to the end of 2021 in UK Pounds. 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 -7.79% -2.71% -4.34% 1.63%
2011 10 -5.88% 3.34% 0.61% 2.73%
2006 15 -13.81% -6.87% -8.68% 1.81%
2001 20 -8.21% -1.55% -5.01% 3.47%
1996 25 -3.79% 4.96% -1.15% 6.12%
1993 28 -0.84% 8.76% 0.87% 7.90%

The Total Return per year is shown below for years of 5 to 28 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 -6.09% 0.51% -1.21% 1.72%
2011 10 -7.19% 2.06% -0.60% 2.66%
2006 15 -15.51% -9.28% -10.87% 1.58%
2001 20 -8.58% -2.00% -5.72% 3.72%
1996 25 -4.58% 4.19% -2.01% 6.20%
1993 28 -1.19% 9.43% 0.62% 8.81%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 8.18, 11.24 and 13.60. The corresponding 10 year ratios are 5.95, 7.98 and 9.67. The corresponding historical ratios are 8.28, 10.12 and 12.94. The current P/E Ratio is 6.75 based on a stock price of $7.63 and EPS estimate for 2022 of $1.13 US$. The current ratio is between the low and median of the 10 year ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$.

I get a Graham Price of $21.09. The 10 year low, median, and high median Price/Graham Price Ratios are 0.53, 0.72 and 0.85. The current P/GP Ratio is 0.36 based on a stock price of $7.63. The current ratio is below the low of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$.

I get a 10 year median Price/Book Value per Share Ratio of 0.59. The current P/B Ratio is 0.42 based on a Book Value of $76,974M, Book Value per Share of $18.38 and a stock price of $7.63. The current ratio is 29% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$.

We also have an estimate for the Book Value per Share for 2022 which is $18.46. The ratio based on this estimate is 0.41 with a stock price of $7.63 and a Book Value of $77,291M. Here the ratio is also 29% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$.

I get a 10 year median Price/Cash Flow per Share Ratio of 0.47. The current P/CF Ratio is 0.51 based on Cash Flow for last 12 months of $62,871M, Cash Flow per Share of $15.01 and a stock price of $7.63. The current ratio is 9% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$.

I get an historical median dividend yield of 2.71%. The current dividend yield is 4.04% based on dividends of $0.3084 and a stock price of $7.63. The current ratio is 49% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$.

I get a 10 year median dividend yield of 2.40%. The current dividend yield is 4.04% based on dividends of $0.3084 and a stock price of $7.63. The current ratio is 68% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$.

The 10 year median Price/Sales (Revenue) Ratio is 1.50. The current P/S Ratio is 1.13 based on Revenue estimate for 2022 of $28,231M, Revenue per Share of $6.74 and a stock price of $7.63. The current ratio is 25% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$.

Results of stock price testing is that the stock price is probably cheap. The dividend yield tests say this and it is confirmed by the P/S Ratio test. Most of the other testing says the same thing, but some do say the stock price is most likely reasonable.

I did the testing is US$ because my readers are mostly Canadian and a way most Canadians will buy this stock is an ADR on a US exchange, but we can also now buy on different foreign exchanges. However, if I did the testing in UK Pounds, the results would be the same.

When I look at analysts’ recommendations, I find Strong Buy (9), Buy (3), Hold (9) and Sell (1). The consensus would be a Buy. The 12 month stock price is 11.37 US$ (221.25 GBX or £2.21 as UK stock is quoted in pence). This implies a total return of 53.06% with 49.02% from capital gains and 4.04% from dividends.

There are two analysts’ comments on Stock Chase that are visible. One says that European banking is difficult. Stock Chase gives this stock 3 stars out of 5. Rich Smith on Motley Fool talks in March why this bank’s stock fell. Bram Berkowitz on Motley Fool in September last year gives a reason to buy this stock. This bank’s fourth quarter results are published on CNBC.

Barclays PLC is a major global banking and financial services company. With 325 years of expertise in banking, and operating through an international network in many countries and regions in Europe, the U.S., Africa & Asia, the company provides a wide range of financial services to individuals, corporations and institutions. Its web site is here Barclays PLC ADR.

The last stock I wrote about was about was Canadian Natural Resources (TSX-CNQ, NYSE-CNQ) ... learn more. The next stock I will write about will be SNC-Lavalin Group Inc (TSX-SNC, OTC-SNCAF) ... learn more on Friday, April 29, 2022 around 5 pm. Tomorrow on my other blog I will write about Sustainable Investing.... learn more on Thursday, April 28, 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, April 25, 2022

Canadian Natural Resources

Sound bite for Twitter and StockTwits is: Dividend Growth Energy. Stock Price still seems reasonable. The Dividend Payout Ratios (DPR) are good. Total returns on this stock have been volatile depending on when stock was bought. See my spreadsheet on Canadian Natural Resources.

Is it a good company at a reasonable price? The price seems reasonable. This seems to be a reasonable energy company to buy. However, personally, I do not have much of in resources stocks (1 to 2% of my portfolio. I think that these stocks are too volatile for my purposes of living of my dividends. Although I realize that other people in my situation think differently.

I own this stock of Canadian Natural Resources (TSX-CNQ, NYSE-CNQ). I first bought CNQ in September 2012 because the dividend yield was relatively high. The 5 and 10 year median dividend yields were 0.73% and 0.75%. The current one was at 1.31% and I got it with a yield of 1.32%. In April 2013 I bought more shares of this stock because the yield is now at 1.54%. I bought another 100 shares in 2020 because the yield was 11.63%

When I was updating my spreadsheet, I noticed lately that I have done quick well with this stock. My total return over 10 years is 16.19% with 13.81% from Capital Gains and 2.38% from dividends. As this is a resource stock, I do not have much of it. It is 0.6% of my portfolio. I only have resource stocks because they are important to the TSX and I need to pay attention to them. I pay attention because I own some.

This company is doing better than expected in 2021. The Adjusted Earnings Per Share (AESP) came in at $6.25 when it was expected at $3.20. The EPS came in at $6.46, when it was expected in at $3.14. Revenue was expected at $23,862M and came in at $30,057M. Free Cash Flow (FCF) was expected at $7,441M and came in at $9,986M.

If you had invested in this company in December 2011, $1,030.05 you would have bought 27 shares at $38.15 per share. In December 2021, after 10 years you would have received $296.46 in dividends. The stock would be worth $1,443.15. Your total return would have been $1,739.61.

Cost Tot. Cost Shares Years Dividends Stock Val Tot Ret
$38.15 $1,030.05 27 10 $296.46 $1,443.15 $1,739.61

The dividend yields are moderate with dividend growth moderate. The current dividend yield is moderate (2% to 4% ranges) at 3.88%. The 5, and 10 year dividend yields are moderate at 4.04% and 2.69%. The historical median dividend yield is low (below 2%) at 1.03%. The dividend yields changed from low to moderate around 2014. The dividends have been increasing at a moderate rate (between 8% and 14%) for the past 5 years with a dividend increase rate of 14.8% per year over the past 5 years. The last increase was in 2022 and it was for 27.7%. For much of this company’s history dividend increases have been good (15% and higher).

The Dividend Payout Ratios (DPR) are good. The DPR for EPS for 2021 is 25% with 5 year coverage at 50%. The DPR for Adjusted EPS for 2021 is 29% with 5 year coverage at 58%. The DPR for Cash Flow per Share for 2021 is 16% with 5 year coverage at 20%. The DPR for Free Cash Flow (FCF) for 2021 is 20% with 5 year coverage at 33%.

Debt Ratios are fine. The Long Term Debt/ Market Cap Ratio for 2021 is 0.22 and going to 0.14 in 2022. This is good and low. The Liquidity Ratio for 2021 is 0.80. If you add in cash flow after dividends it is 2.46 and this is fine. The Debt Ratio for 2021 is good at 1.93. The Leverage and Debt/Equity Ratios are fine at 2.08 and 1.08 for 2021.

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 14.81% 7.67% 4.55% 3.12%
2011 10 18.19% 5.77% 3.43% 2.34%
2006 15 18.57% 5.45% 3.68% 1.77%
2001 20 21.08% 15.42% 12.82% 2.60%
1996 25 11.90% 10.21% 1.69%
1991 30 19.41% 17.09% 2.31%
1990 31 22.07% 19.39% 2.69%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 6.63, 7.96 and 9.29. The corresponding 10 year ratios are 7.77, 9.64 and 11.51. The corresponding historical ratios are 10.57, 15.13 and 16.76. The current P/E Ratio is 6.84 based on a stock price of $77.34 and EPS estimate for 2022 of $11.30. 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.

Because we also have an Adjusted Earnings per Share (AEPS) I will look at that also. The 5 year low, median, and high median P/AEPS Ratios are 9.47, 11.37 and 13.26. The corresponding 10 year ratios are 10.40, 13.09 and 15.15. The current P/AEPS Ratio is 7.74 based on a stock price of $77.34 and AEPS estimate for 2022 of $9.99. This ratio is below the low of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.

There is also Adjusted Funds from Operations (AFFO) values. The 5 year low, median, and high median P/AFFO Ratios are 3.50, 5.33 and 6.59. The corresponding 10 year ratios are 4.13, 5.69 and 7.00. The current P/AFFO Ratio is 6.46 based on a stock price of $77.34 and AFFO estimate for 2022 of 11.97. The current ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get a Graham Price of $89.66. The 10 year low, median, and high median Price/Graham Price Ratios are 0.73, 0.99 and 1.16. The current P/GP Ratio is 0.86 based on a stock price of $77.34. The current ratio is between the low and median of 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/Book Value per Share Ratio of 1.41. The current P/B Ratio is 2.45 based on a Book Value of $36,645M, Book Value per Share of $31.62 and a stock price of $77.34. The current ratio is 74% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.

I also have a Book Value per Share (BVPS) estimate for 2022 of 2.26. This estimate gives a P/B Ratio of 2.26 based on a stock price of $77.34 and Cash Flow of 439.958M and a BVPS of $2.26. This P/B Ratio is 60% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable expensive.

I get a 10 year median Price/Cash Flow per Share Ratio of 5.53. The current P/CF Ratio is 4.80 based on Cash Flow per Share (CFPS) estimate for 2022 of $16.10, Cash Flow of $18,811M and a stock price of $77.43. The current ratio is 13% 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 1.03%. The current dividend yield is 3.88% based on a stock price of $77.34 and dividends of $3.00. The current dividend yield is 277% 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 2.69%. The current dividend yield is 3.88% based on a stock price of $77.34 and dividends of $3.00. The current dividend yield is 44% 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 2.11. The current P/S Ratio is 2.31 based on a stock price of $77.34, Revenue estimate for 2022 of $37,712M and Revenue per Share of $33.42. The current ratio is 10% 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 still reasonable. The dividend yield tests are saying the stock price is cheap, but there also has been a big growth in dividends in 2022 of some 55%. The P/S Ratio test is saying the stock price is reasonable but above the median. The other tests vary but mostly say cheap to reasonable.

Last year I said that the results of stock price testing were that the stock price was probably cheap. Both dividend yield tests point to this as does the P/S Ratio test. Some of tests show the stock price cheap and others show a stock price that is reasonable but below the median.

When I look at analysts’ recommendations, I find Strong Buy (7), Buy (8) and Hold (7). The consensus would be a Strong Buy. The 12 month stock price consensus is $86.86. This implies a total return of 16.19% with 12.31% from capital gains and 3.88% from dividends. Note the stock reached $86.36 a few days ago and has been falling since then. This high is close to the 12 month price consensus.

When I looked at analysts’ recommendations last year, I found Strong Buy (8), Buy (10) and Hold (4). The consensus was Buy. The 12 month stock price consensus is $47.40. This implies a total return of 29.75% with 4.95% from dividends and 24.80% from capital gains based on a stock price of $37.98. What happened was a price move to $77.34 and total return of $108.58 with 103.63% from capital gains and 4.95% from dividends.

Analysts on Stock Chase think this stock is currently a Buy. Stock Chase gives this stock 5 stars out of 5. Christopher Liew on Motley Fool says this stock is beating the TSX and its dividend is decent. Joey Frenette on Motley Fool thinks this stock is a Canadian energy king and is also ripe to buy. The company announces its fourth quarter results via a BOE Report. There is a Zack research report on Yahoo Finance.

Canadian Natural Resources is one of the largest oil and natural gas producers in western Canada, supplemented by operations in the North Sea and Offshore Africa. The company's portfolio includes light and medium oil, heavy oil, bitumen, synthetic oil, natural gas liquids, and natural gas. Its web site is here Canadian Natural Resources.

The last stock I wrote about was about was Pembina Pipelines Corp (TSX-PPL, NYSE-PBA) ... learn more. The next stock I will write about will be Barclays PLC ADR (LSE-BARC, NYSE-BCS) ... learn more on Wednesday, April 27, 2022 around 5 pm. Tomorrow on my other blog I will write about Investing FOMO.... learn more on Tuesday, April 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.

Friday, April 22, 2022

Pembina Pipelines Corp

Sound bite for Twitter and StockTwits is: Dividend Growth Utility. The stock price still seems reasonable. The company did better than expected in 2021. Liquidity Ratio could improve. See my spreadsheet on Pembina Pipelines Corp.

Is it a good company at a reasonable price? Stock price still seems reasonable. I will not be buying more because I have enough of this stock. Expect low dividend yields in the future. I think that all Dividend growth portfolios should have some dividend growth utility stocks. This is a good dividend growth utility stock to consider.

I own this stock of Pembina Pipelines Corp (TSX-PPL, NYSE-PBA). In December 2001 I thought it would be a good time to purchase this stock as the market was relatively low. Pipeline stocks are conservative and the return on this one was good at 9.7%. When I purchased this stock, it was an Income Trust company.

When I was updating my spreadsheet, I noticed analyst expected an increase in Revenue about 9%, but it increased by 39%. After a loss in 2020, analysts expected EPS of $2.20 for 2021, however, EPS came in at $1.99. What I do not like about their statements is that everything is in the millions, including outstanding shares. So, they spend $47M for share based payments to insiders and they do not tell you how many shares are involved?

I have done well with this company. My total return, after owning this company for 20years is 16.20% with 8% from capital gains and 8.20% from dividends.

If you had invested in this company in December 2011, $1,008.44 you would have bought 34 shares at $29.66 per share. In December 2021, after 10 years you would have received $689.79 in dividends. The stock would be worth $1,304.58. Your total return would have been $1,994.37.

Cost Tot. Cost Shares Years Dividends Stock Val Tot Ret
$29.66 $1,008.44 34 10 $689.79 $1,304.58 $1,994.37

The dividend yields are good with dividend growth low. The current dividend yield is good (5% to 6% ranges) at 5.09%. The 5 and 10 year median dividend yields are also good at 5.18% and 5.17%. The historical median dividend yield is high (7% and above) at 7.18%. Yields are high because this stock used to be an income trust. Expect yields to decline to a moderate range (2% to 4%) in the future. The dividend growth is low (below 8%) with dividend growth at 5.92% per year over the past 5 years. There has been no dividend growth in 2021, but analysts expect some in 2022.

The Dividend Payout Ratios (DPR) are fine, but could improve. The DPR for EPS for 2021 is 127% with 5 year coverage at 147%. Analysts expect the DPR for EPS to be around 89% in 2022. Because this is a utility, I have Adjusted Funds from Operations (AFFO). The DPR for AFFO for 2021 is fine at 53% with 5 year coverage at 56%. I also have Funds from Operations (FFO). The DPR for FFO for 2021 is 42% with 5 year coverage at 53%. The DPR for Cash Flow per Share (CFPS) for 2021 is 39% with 5 year coverage at 45%. The DPR for Free Cash Flow (FCF) for 2021 is 77% with 5 year coverage at 133%.

Debt Ratios are fine but Liquidity Ratio could improve. The Long Term Debt/Market Cap for 2021 is fine at 0.46. The Liquidity Ratio for 2021 is 0.52 and even adding in Cash Flow after dividends, it is only 102. Assets/Current Liabilities Ratio is very good at 13.16 and the Debt to Cash Flow (Years) is good at 3.64. The Debt Ratio for 2021 is good at 1.84. The problem with a low liquidity ratio is that the company may not have cash when they need it (like in a recession), even though they have lots of assets. On the other hand, utilities always have lots of debt.

The Total Return per year is shown below for years of 5 to 24 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 5.92% 3.94% -1.77% 5.72%
2011 10 4.71% 8.56% 2.61% 5.95%
2006 15 5.76% 15.32% 6.86% 8.46%
2001 20 4.47% 14.49% 6.30% 8.19%
1997 24 6.47% 20.16% 8.08% 12.09%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 15.36, 18.45 and 20.84. The corresponding 10 year ratios are 23.27, 26.12 and 28.98. The corresponding historical ratios are 19.17, 22.53 and 24.54. The current P/E Ratio is 17.49 based on a stock price of $49.50 and EPS estimate for 2022 of $2.83. 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.

Because this is a utility, I have Adjusted Funds from Operations (AFFO) values. The 5 year low, median, and high median P/AFFO are 9.01, 10.07 and 11.57. The corresponding 10 year ratios are 10.98, 13.42 and 15.05. The current P/AFFO Ratio is 11.12 based on a stock price of $49.50 and AFFO estimate for 2022 of $4.45. This 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.

Because this is a utility, I have Funds from Operations (FFO) values. The 5 year low, median, and high median P/FFO are 8.20, 9.21 and 10.63. The corresponding 10 year ratios are 10.46, 12.31 and 14.16. The current P/FFO Ratio is 10.27 based on a stock price of $49.50 and FFO for last 12 months of $4.82. This is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get a Graham Price of $36.94. The 10 year low, median, and high median Price/Graham Price Ratios are 1.19, 1.31 and 1.60. The current P/GP Ratio is 1.34 based on a stock price of $49.50. the current ratio is between the median and high of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get a 10 year median Price/Book Value per Share Ratio of 1.74. The current P/B Ratio is 2.31 based on a stock price of $49.50, Book Value of $11,786M and Book Value per Share of $21.43. The current ratio is 33% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.

I got an estimate for the Book Value per Share for 2022. This gives a P/B Ratio of 2.12 based on a Book Value per Share estimate for 2022 of $23.40, Book Value of $12,870M and a stock price of $49.50. The current ratio is 22% 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 13.55. The current P/CF Ratio is 10.60 based on a stock price of $49.50, Cash Flow per Share estimate for 2022 of $4.67 and Cash Flow of $2,569M. The current P/CF Ratio is 22% 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 7.18%. The current dividend yield is 5.09% based on dividends of $2.52 and a stock price of $49.50. The current dividend yield is 29% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. This is not a good test as the company used to be an income trust company and income trust had much higher dividend yields than corporations.

I get a 10 year median dividend yield of 5.18%. The current dividend yield is 5.09% based on dividends of $2.52 and a stock price of $49.50. The current dividend yield is 2% 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 2.93. The current P/S Ratio is 3.21 based on Revenue estimate for 2022 of $8,490M, Revenue per Share of $15.44 and a stock price of $49.50. The current ratio is 10% 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 probably still reasonable, but it is above the median. The 10 year median dividend yield test and P/S Ratio test both say this. Because this stock used to be an income trust, I would ignore the historical median yield test. The other tests do vary, but most are showing reasonable and above or below the median.

Last year I said that the results of stock price testing were that the stock price was probably reasonable. The dividend yield is 30% below the 10 year median dividend yield. The P/S Ratio test shows the current ratio slightly above the 10 year median test. Most of the tests show the stock price as cheap or reasonable and below the median. So, last year would have a decent time to buy this stock.

When I look at analysts’ recommendations, I find Strong Buy (5), Buy (5), Hold (5) and Underperform (1). The consensus is a Buy. The 12 months stock price consensus is $48.44. This implies a total return of 2.95% with a capital loss of 2.14% and dividend of 5.09%. The high of the stock price estimates is $57.00 and this would imply a total return of 20.24% with 15.15% from capital gains and 5.09% from dividends.

When I looked at analysts’ recommendations last year, I find Strong Buy (6), Buy (5) and Hold (8). The consensus was a Buy. The 12 months stock price was $39.26. This implies a total return of 11.83% with 6.75% from dividends and 5.09% from capital gains based on a stock price of $37.36. What happened was move to a stock price of $49.50 and a total return of 39.24% with 32.49% from capital gains and 6.75% from dividends. So, last year the analysts were off quite a bit.

Analyst with Buy recommendations on Stock Chase like the dividend yield. Stock Chase gives this stock 5 stars out of 5. Andrew Button on Motley Fool likes the yield of this stock and thinks the dividends are sustainable. Rajiv Nanjapla on Motley Fool says that despite the recent surge in stock price, it is still reasonably priced. The company shows its fourth quarter results via newswire. The company announces on Newswire a deal with KKR.

Simply Wall Street has a report on Yahoo Finance about this company’s dividend. Simply Wall Street has two warnings about this stock of has a high level of debt and dividend is not well covered by earnings

Pembina Pipeline is midstream company serving the Canadian and North American (primarily Bakken) markets with an integrated product portfolio. The firms' assets include pipelines and gas gathering, as well as assets across fractionation, storage, and propane exports. Its web site is here Pembina Pipelines Corp.

The last stock I wrote about was about was Barrick Gold Corp (TSX-ABX, NYSE-GOLD) ... learn more. The next stock I will write about will be Canadian Natural Resources (TSX-CNQ, NYSE-CNQ) ... learn more on Monday, April 25, 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, April 20, 2022

Barrick Gold Corp

Sound bite for Twitter and StockTwits is: Dividend Growth Materials. The stock price is probably expensive by my normal tests. It also tends to have peaks and valleys in the stock price and it may not yet have hit is peak this time around. So, the price may be more reasonable than my testing shows. Dividends have increased a lot lately. See my spreadsheet on Barrick Gold Corp .

Is it a good company at a reasonable price? The price is expensive by my tests but it may not be expensive. I only have a gold stock so I will pay attention to materials stock on the TSX. Between energy (excluding utility companies) and materials companies, they consist of between 1% and 2% of my portfolio. This is just so I pay attention to this section of the TSX.

I own this stock of Barrick Gold Corp (TSX-ABX, NYSE-GOLD). I bought some of this stock in April 2013 because its stock price had fallen hard. I believed the market over reacted. I just bought 100 shares as I am living off my portfolio and do not have much to invest. I bought another 100 shares in 2016. However, this is a resource stock and I only buy resource stocks so I pay attention to that aspect of the TSX. I plan to have only a small stake in any resource stock.

When I was updating my spreadsheet, I noticed that analyst expected the EPS to drop by 1.8% but it dropped by 13%. Analysts expected the Revenue to drop by 1%, but it dropped by 4.8%. Analysts expected the Free Cash Flow to drop by 9%, but it dropped by 42%. The analysts’ estimates for 2022 are similar to that of 2021. That is, they expect the revenue and EPS (and AEPS) in 2022 to be about the same as for 2021.

With my investment in this stock, I have a total return of 10.51% per year with 9.12% from capital gains and 1.39% from dividends. I have had this stock for almost 9 years. A problem is that the dividends are paid in US$, so you never know exactly what the dividends are going to be in CDN$.

If you had invested in this company in December 2011, $1,015.30 you would have bought 22 shares at $46.15 per share. In December 2021, after 10 years you would have received $82.43 in dividends. The stock would be worth $529.10. Your total return would have been $611.53.

If you had invested in this company in December 20131, $1,010.34 you would have bought 54 shares at $18.71 per share. In December 2021, after 8 years you would have received $133.17 in dividends. The stock would be worth $1,298.70. Your total return would have been $1,431.87.

You cannot time the market, but you can ensure you buy at a reasonable price. If you noticed, the purchase 10 years ago was near a peak and the purchase 8 years ago with near a valley.

Cost Tot. Cost Shares Years Dividends Stock Val Tot Ret
$46.15 $1,015.30 22 10 $82.43 $529.10 $611.53
$18.71 $1,010.34 54 8 $133.17 $1,298.70 $1,431.87

The dividend yields are low with dividend growth lately at a high level. The current dividend yield is low (below 2%) at 1.59%. The 5, 10 and historical dividend yields are also low at 1.26%, 1.31% and 1.11%. The dividend growth over the past 5 years is at 33% CDN$ and 35% in US$. The last dividend increase was 2022 and it was for 11% (US$).

The Dividend Payout Ratios (DPR) are good. The DPR for EPS for 2021 is 67% with 5 year coverage at 33%. This company gives out also and Adjusted EPS (AEPS) with a DPR for 2021 of 25% and 5 year coverage at 39%. The DPR for Cash Flow per Share for 2021 is 20% with 5 year coverage at 10%. The DPR for Free Cash Flow (FCF) is 28% with 5 year coverage at 25%.

Debt Ratios are good. The Long Term Debt/Market Cap Ratio is low and good at 0.15. The Liquidity Ratio is high and good at 3.95. The Debt Ratio is high and good at 3.22. Leverage and Debt/Equity Ratios are low and good at 1.97 and 0.61 respectively.

The Total Return per year is shown below for years of 5 to 35 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 33.55% 3.94% 2.28% 1.66%
2011 10 -1.31% -5.19% -6.31% 1.12%
2006 15 3.92% -1.30% -2.63% 1.32%
2001 20 1.33% 1.19% -0.28% 1.47%
1996 25 3.53% -0.80% -1.94% 1.14%
1991 30 5.19% 2.92% 1.37% 1.55%
1986 35 11.03% 9.78% 6.52% 3.26%

The Total Return per year is shown below for years of 5 to 35 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 35.10% 5.20% 3.52% 1.68%
2011 10 -3.42% -7.25% -8.31% 1.06%
2006 15 3.34% -1.74% -3.15% 1.41%
2001 20 2.49% 2.70% 0.88% 1.82%
1996 25 3.85% -0.40% -1.64% 1.24%
1991 30 6.46% 2.56% 1.04% 1.52%
1986 35 11.12% 10.05% 6.82% 3.24%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 11.24, 14.31 and 17.37. The corresponding 10 year ratios are 2.01, 2.42 and 2.83. (These are low due to earnings losses.) The corresponding historical ratios are 16.84, 23.82 and 28.72. The current P/E Ratio is 22.13 based on a stock price of $31.79 CDN$ and ES of $1.14. If you compared the current ratio to the 5 year ratios, which is a logical thing to do, the current one is above the 5 year median ratio . On an absolute basis, a P/E Ratio of 22.13 is on the high side. This stock price testing suggests that the stock price is relatively expensive.

I get a Graham Price of $23.35. The 10 year low, median, and high median Price/Graham Price Ratios are 0.81, 1.07 and 1.34. The current ratio is 1.36 based on a stock price of $31.79. The current ratio is above 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 1.81. The current P/B Ratio is 1.88 based on a stock price of $25.20, Book Value of $23,857M and Book Value per Share of $13.42. The current ratio is 4% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$ and you would get similar results in CDN$.

I also have a Price/Book Value per Share ratio based on an estimate. This ratio is 1.83 and is based on a stock price of $25.20, Book Value per Share estimate for 2022 of $13.80 and a Book Value of $24,539M. This P/B Ratio is 1% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$ and you would get similar results in CDN$.

I get a 10 year median Price/Cash Flow per Share Ratio of 7.74. The current P/CF Ratio is 10.24 based on Cash Flow per Share estimate for 2022 of $2.46, Cash Flow of $4,374M and a stock price of $25.20. The current ratio is 32% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$ and you would get similar results in CDN$.

I get an historical median dividend yield of 0.95%. The current dividend yield is 1.59% based on dividends of $0.50 and a stock price of $31.79. The current dividend yield is 67% above the historical median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in CDN$ and you would get similar results in US$.

I get a 10 year median dividend yield of 1.30%. The current dividend yield is 1.59% based on dividends of $0.50 and a stock price of $31.79. The current dividend yield is 22% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in CDN$ and you would get similar results in US$.

The 10 year median Price/Sales (Revenue) Ratio is 2.34. The current P/S Ratio is 3.75 based on Revenue estimate for 2022 of $11,957M, Revenue per Share of $6.72 and a stock price of $25.20. The current ratio is 60% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$ and you would get similar results in CDN$.

Results of stock price testing is that the stock price is probably expensive. The testing using the dividend yield and P/S Ratio is at odds, with the dividend yield test saying that the stock price is cheap and the P/S Ratio test saying the stock price is expensive. The reason that the stock passes the dividend yield tests is that the dividends have been raised sharply lately. They are up 33% per year over the past 5 years. I will go with the P/S Ratio test as Revenues are important because without revenues, earnings and cash flows cannot be pushed higher. The P/CF Test also say that the stock price is expensive.

The thing with this stock is that the stock price has had peaks in the past before declining. It peaked at $44.25 in 1996 before dropping to $19.20. It peaked again in 2010 at $55.25 before dropping to $7.90. Considering the other peaks, this stock may have a way to go to its next peak. My usual method of testing the stock price may not work on this stock. So, the price might still be reasonable or cheap.

Last year I said that the results of stock price testing were that the stock price was reasonable. The dividend yield tests say it is cheap, but this is not confirmed by the P/S Ratio testing which says the stock is expensive. The stock price is probably reasonable. Most of the test support a reasonable stock price. A gain of 16.60% is a reasonable gain.

When I look at analysts’ recommendations, I find Strong Buy (10), Buy (10) and Hold (5). The consensus would be a Strong Buy. The 12 month consensus stock price is $33.88 ($26.89 US$). This implies a total return of 8.17% with 6.59% from capital gains and 1.59% from dividends based on a stock price of $31.79.

When I looked at analysts’ recommendations last year, I found recommendations of Strong Buy (11), Buy (9), Hold (3) and Underperform (1). The consensus would be a Strong Buy. The 12 month stock price consensus was $36.65 ($29.22 US$). This implies a total return of 34.20% with 1.63% from dividends and 32.56% from capital gains based on a stock price of $27.65 (22.09 US$). What happened was the stock price went to $31.79 a gain of 16.60% with 14.97% from capital gains and 1.63% from dividends. So, analysts were off quite a bit.

The last two analyst’s comments on Stock Chase are Do not Buy and Top Pick. The Do Not Buy does not like gold mining companies. Stock Chase gives this company 5 stars out of 5. Adam Othman on Motley Fool think material stocks are an ideal investment for volatile market conditions. Andrew Walker on Motley Fool thinks this stock is currently cheap. In a Press Release this company talks about its fourth quarter results. Rithika Krishna in a report from Reuters on Yahoo Finance says production will fall for the first quarter of 2022.

Barrick Gold Corp is one of the world's largest gold producers, operating mines in North America, South America, Australia, and Africa. The company segments consist of nine gold mines namely Carlin, Cortez, Turquoise Ridge, Pueblo Viejo, Loulo-Gounkoto, Kibali, Veladero, North Mara, and Bulyanhulu. Geographically, it derives a majority of revenue from the United States. Its web site is here Barrick Gold Corp .

The last stock I wrote about was about was Leon's Furniture Ltd (TSX-LNF, OTC-LEFUF) ... learn more. The next stock I will write about will be Pembina Pipelines Corp (TSX-PPL, NYSE-PBA) ... learn more on Friday, April 22, 2022 around 5 pm. Tomorrow on my other blog I will write about Common Sense.... learn more on Thursday, April 21, 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, April 18, 2022

Leon's Furniture Ltd

Sound bite for Twitter and StockTwits is: Dividend Growth Consumer. The stock price looks reasonable. The dividend tests are showing the stock price as cheap. The company did better in 2021 than the analysts had expected. They paid off their long term debt, but there is room for debt ratios to improve. See my spreadsheet on Leon's Furniture Ltd.

Is it a good company at a reasonable price? The current price looks reasonable. I have been happy with this stock and I have no intentions of selling any shares. However, I feel that I have enough of this stock and have no intentions of buying any more shares.

I own this stock of Leon's Furniture Ltd (TSX-LNF, OTC-LEFUF). I had some money in 2006 and this stock has been on MPL Communication's Investor Reporter list for some time. It was also on Mike Higgs' Dividend Growth Stock list. I bought some in 2006 and then some more in 2008, 2009, 2010, 2013 and 2019.

When I was updating my spreadsheet, I noticed the analysts expected Revenue to come in at $2,388M, an increase of 7.6%, but it came in at $2,513M, an increase of 13%. They also expected a lower EPS to $1.73, a decrease of 13%. However, EPS came in at $2.62, an increase of 32%.

I also noticed that this company, has not yet raised their dividends for 2021, but they gave out two special dividends in 2021.

If you had invested in this company in December 2011, $1,004.40 you would have bought 81 shares at $12.40 per share. In December 2021, after 10 years you would have received $520.02 in dividends. The stock would be worth $2,012.85. Your total return would have been $2,532.87.

Cost Tot. Cost Shares Years Dividends Stock Val Tot Ret
$12.40 $1,004.40 81 10 $520.02 $2,012.85 $2,532.87

The dividend yields are moderate with dividend growth moderate. The current dividend yield is moderate (2% to 4% ranges) at 3.04%. The 5, 10 and historical median dividend yields are also moderate at 2.95%, 2.85% and 2.17%. The dividend growth for the last 5 years has been moderate (8% to 14% ranges) at 9.86% per year. The last dividend increase was in 2021 and it was for 14.3%.

The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2021 was 84% with 5 year coverage at 51%. The DPR for EPS for 2022 is expected to be 25%. The DPR for Adjusted Earnings per Share (AEPS) for 2021 was 25% with 5 year coverage at 34%. The DPR for EPS for Cash Flow per Share (CFPS) for 2021 was 60% with 5 year coverage at 39%. The DPR for CFPS for 2022 is expected to be 22%. The DPR for Free Cash Flow (FCF) for 2021 was 15% with 5 year coverage at 16%.

Debt Ratios could improve. There is no long term debt in 2021. The Liquidity Ratio for 2021 is 0.90. If you add in Cash Flow after dividends, it is only 1.02 and this is very low. I prefer this to be at 1.50 or higher. They have always had a rather low Liquidity Ratio. The Debt Ratio for 2021is 1.48 and this is low as I would prefer it to be 1.50 or higher. They generally meet this standard. The Leverage and Debt/Equity Ratios for 2021 are 3.10 and 2.10. I prefer these to be below 3.00 and below 2.00 and they generally are.

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 9.86% 10.55% 6.57% 3.98%
2011 10 5.92% 10.68% 7.20% 3.48%
2006 15 6.47% 7.41% 4.52% 2.89%
2001 20 9.73% 11.14% 7.59% 3.55%
1996 25 10.74% 12.28% 8.48% 3.80%
1991 30 9.92% 10.87% 7.73% 3.14%
1988 33 8.98% 12.47% 8.92% 3.54%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 10.78, 12.00, 13.23. The corresponding 10 year ratios are 12.89, 14.65 and 16.37. The corresponding historical ratios are 12.15, 14.56 and 16.28. The current P/E Ratio is 8.10 based on a stock price of $21.05 and EPS estimate for 2022 of $2.60. 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.

This company has recently been putting out an Adjusted Earnings per Share (AEPS). These are not significantly different from the EPS. The 5 year low, median, and high median P/AEPS Ratios are 10.78, 12.00, 13.23. The corresponding 6 year ratios are 11.27, 12.96 and 14.65. The current P/AEPS Ratio is 8.10. The current P/E Ratio is below the low of the 6 year median ratios. This stock price testing suggests that the stock price is relatively cheap.

I get a Graham Price of $24.55. The 10 year low, median, and high median Price/Graham Price Ratios are 0.93, 1.06 and 1.19 based on a stock price of $21.05. The current P/GP Ratio is 0.86 based on a stock price of $21.05. 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 1.81. The current ratio is 2.04 based on a book value of $791M, Book Value per Share of $10.30 and a stock price of $21.05. The current ratio is 13% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get a 10 year median Price/Cash Flow per Share Ratio of 7.29. The current P/CF Ratio is 7.21 based on a Cash Flow per Share estimate for 2022 of $2.92, Cash Flow of $224M and a stock price of $21.05. 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 an historical median dividend yield of 2.17%. The current dividend yield is 3.04% based on dividends of $0.64 and a stock price of $21.05. The current dividend is 40% 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 2.85%. The current dividend yield is 3.04% based on dividends of $0.64 and a stock price of $21.05. The current dividend is 7% above the historical median 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 0.57. The current P/S Ratio is 0.65 based on Revenue estimate for 2022 of $2,477M, Revenue per Share of $32.25 and a stock price of $21.5. 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.

Results of stock price testing is that the stock price is probably reasonable. The dividend yield tests say it is cheap, but the P/S Ratio test shows that it is reasonable, but above the median. All the other tests are showing this stock as either cheap or reasonable and below the median.

Last year I said the results of stock price testing is that the stock price is probably reasonable. I know a number of people that like the 10 year median dividend yield test compared to the historical median yield test. Revenue has not grown much since the 2008 recession, especially in the last 5 years. Most tests, except for the P/S Ratio test is showing the stock price as reasonable. However, caution is probably called for as it is a consumer stock and it is a small cap company because its Market Cap is under $2B at $1.7B. However, in Canada, sometimes a Mid-Cap size company is considered to be from $1.5B to $5B.

When I look at analysts’ recommendations, I find a Hold (1) recommendation. The consensus would be a Hold. The 12 month stock price consensus is $28.00. That implies a total return of 36.06% with 33.02% from capital gains and 3.04% from dividends. This makes no sense to have a capital gain of 36% and a recommendation of Hold. However, a number of sites are saying the same thing.

One Analysts on Stock Chase says that the growth is not high enough for him. Stock Chase gives this stock 3 stars out of 5. Demetris Afxentiou on Motley Fool says this is a good long-term value stock. Ambrose O'Callaghan on Motley Fool thinks you should buy this stock because of a low P/E and a 2.7% yield. Nikhil Kumar on Motley Fool talks about the ways this company makes it money. The company released its fourth quarter results on Newswire. A Simply Wall Street Report on Yahoo Finance talks about this company’s ROE.

Leon's Furniture Ltd is a Canada-based retailer which is involved in the sale of home furnishing, mattresses, appliances, and electronics. The firm is also the country's commercial retailer of appliances to builders, developers, hotels, and property management companies. Its web site is here Leon's Furniture Ltd.

The last stock I wrote about was about was Supremex Inc (TSX-SXP, OTC-SUMXF) ... learn more. The next stock I will write about will be Barrick Gold Corp (TSX-ABX, NYSE-GOLD) ... learn more on Wednesday, April 20, 2022 around 5 pm. Tomorrow on my other blog I will write about Stocks that Raise their Dividends.... learn more on Tuesday, April 19, 2021 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.

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