Monday, May 30, 2022

Reitmans (Canada) Ltd

Sound bite for Twitter and StockTwits is: Small Consumer Stock. Stock Price is cheap, in fact it is very cheap. Debt Ratios are currently good. Nevertheless, this has be looked at as a very risky buy. See my spreadsheet on Reitmans (Canada) Ltd.

Is it a good company at a reasonable price? The stock price is very cheap. I am surprised that they were able to come back from their latest problems. They also have a next generation of Reitmans taking over. I am curious how this company will do in the future. This could be interesting. Whether it is a worthwhile investment is a very different question.

I do not own this stock of Reitmans (Canada) Ltd (TSX-RET.A, OTC-RTMAF), but I used to. I bought it with my fooling around money in 2013. I was following this stock as it was a stock on Mike Higgs' dividend growth stocks list.

When I was updating my spreadsheet, I noticed that no analyst seems to following this stock. However, the company, with 4 years of earnings losses in the past 10 years, and 3 years of losses in the past 5, made a decent profit this year. They have also come out of its restructuring proceedings this year.

If you had invested in this company in December 2011, $1007.76 you would have bought 68 shares at $14.82 per share. In December 2021, after 10 years you would have received $176.80 in dividends. The stock would be worth $142.12. Your total return would have been $318.92.

Cost Tot. Cost Shares Years Dividends Stock Val Tot Ret
$14.82 $1,007.76 68 10 $176.80 $142.12 $318.92

The company no longer pays dividends, so there are no dividend yields Dividend Payout Ratios (DPR) to look at.

Debt Ratios are good, and much improved over last year. The company currently has no long term debt. The Liquidity Ratio for 2022 is 1.97 and that is good. The Debt Ratio for 2022 is 2.41 and that is also good. The Leverage and Debt/Equity Ratios for 2022 are 1.71 and 0.71 and these are also good.

The Total Return per year is shown below for years of 5 to 34 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% -16.18% -18.55% 2.37%
2011 10 0.00% -14.65% -17.79% 3.14%
2006 15 0.00% -10.21% -14.57% 4.36%
2001 20 0.00% 13.81% -1.47% 15.28%
1996 25 0.00% 12.78% 0.30% 12.48%
1991 30 0.00% 9.13% -0.06% 9.20%
1987 34 0.00% 7.95% 0.00% 7.95%

The 5 year low, median, and high median Price/Earnings per Share Ratios are negative and so unusable. The corresponding 10 year ratios are 11.47, 16.13 and 19.64. The corresponding historical ratios are 9.76, 12.64 and 15.30. The current ratio is 0.35 based on a stock price of $1.13 and EPS of the last 12 months of $3.24. This ratio is below the low of the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

I also have Adjusted Earnings per Share (AEPS). The 5 year low, median, and high median Price/Earnings per Share Ratios are negative and so unusable. The corresponding 10 year ratios are 11.47, 16.15 and 19.68. The current P/AEPS Ratio is 0.41 based on a stock price of $1.13 and AEPS of the last 12 months of $2.93. This stock price testing suggests that the stock price is relatively cheap.

I get a Graham Price of $16.56. The 10 year low, median, and high median Price/Graham Price Ratios are 0.86, 1.14 and 1.48. The current Ratio is 0.07 based on a stock price of $1.13. 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.

I get a 10 year median Price/Book Value per Share Ratio of 0.97. The current P/B Ratio is 0.32 based on a Book Value of $184M, Book Value per share of $3.76 and a stock price of $1.13. The current ratio is 67% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

I get a 10 year median Price/Cash Flow per Share Ratio of 6.73. The current P/CF Ratio is 0.51 based on a stock price of $1.13 and Cash Flow less Working Capital of $1.16M, CFPS of $2.37. The current ratio is 92% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

I cannot do any dividend yield testing as the company has suspended their dividends.

The 10 year median Price/Sales (Revenue) Ratio is 0.28. The current P/S Ratio is 0.09 based on Revenue of the last 12 months of $662M, Revenue per Share of $14.07 and a stock price of $1.13. The current ratio is 68% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

Results of stock price testing is that the stock price is cheap. Actually, the stock is very cheap. All the testing is pointing to a very cheap stock.

When I look at analysts’ recommendations, it seems that no analysts are following this stock. Currently WSJ has a Hold recommendation and a stock price in one year of $5.00. This would imply a Total Return of $342% all from capital gains. However, it is uncertain if this is really a current recommendation.

Last time an analyst looked at this stock on Stock Chase was 2019. Stock Chase gives this stock 1 star out of 5. A Simply Wall Street report on Yahoo Finance talks about the company coming out of its restructuring proceedings. The company announces on Newswire its fourth quarter results for 2022.

Reitmans (Canada) Ltd is an apparel retailer based in Canada. Its main business is the sale of ladies' specialty apparel to consumers. The company operates an e-commerce website shopping for all its banners. Some of its revenue sources are from the sale of merchandise, customer loyalty award programs and sale of gift cards. The group offers its products through the retail banners of Reitmans, Penningtons and RW & CO. Its web site is here Reitmans (Canada) Ltd.

The last stock I wrote about was about was HLS Therapeutics Inc (TSX-HLS, OTC-HLTRF) ... learn more. The next stock I will write about will be Ritchie Bros Auctioneers Inc (TSX-RBA, NYSE-RBA) ... learn more on Wednesday, June 1, 2022 around 5 pm. Tomorrow on my other blog I will write about Matt Levine.... learn more on Tuesday, May 31, 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, May 27, 2022

HLS Therapeutics Inc

Sound bite for Twitter and StockTwits is: Dividend Paying Health Care. Stock price is probably cheap. Debt Ratios are good. This is a high risk stock. See my spreadsheet on HLS Therapeutics Inc.

IIs it a good company at a reasonable price? The company is selling at a reasonable, if not cheap price. This company is in the high risk category. I am still hoping that this company will do well, but I bought it with my fooling around money. I originally based on buy of this stock on the fact that the major players at Automodular Corp, invested in this company.

I own this stock of HLS Therapeutics Inc (TSX-HLS, OTC-HLTRF). I got this stock because it did a reverse takeover of Automodular Corp (TSX-AM, OTC-AMZKF) on March 12, 2018. There was a plan of arrangement whereby Automodular shareholders got 0.165834 HLS common shares and one HLS preferred share. The HLS preferred shares were a form of contingent value right allowing AMD shareholders to have an equity stake linked to the outcome of litigation that had been ongoing for several years between AMD and General Motors.

When I was updating my spreadsheet, I noticed analyst have been expecting this company to have earnings (that is positive ones) in 2019, then 2020 and 2021. However, this did not occur. Last year, analysts expected EPS to be, for 2021, 2022 and 2023 to be $0.50, $0.47, and $2.23. Now future earnings, in 2022, 2023 and 2024 are expected to be -$0.18, $0.80, and $0.92. So, expectations have been lowered.

Last year also, analysts expect in 2021, 2022 and 2023 Revenue of $69M, $150M and $242M US$. This also did not occur and this year. Revenue for 2021 came in at $60M analysts expect in 2022, 2023 and 2024, Revenue to be $77M, $142M and $214M. So, revenue expectations have also been lowered. However, Analysts are still expecting great things from this stock, but now they expect things to pick up in 2024.

If you had invested in this company in December 2015, the end of the first year after it went public, $1008.99 you would have bought 88 shares at $11.47 per share. In December 2021, after 6 years you would have received $70.40 in dividends. The stock would be worth $1,287.48. Your total return would have been $1,357.88.

Cost Tot. Cost Shares Years Dividends Stock Val Tot Ret
$11.47 $1,008.99 88 6 $70.40 $1,287.48 $1,357.88

The dividend yields are low with dividend growth non-existent. The current dividend yield is low (below 2%) at 1.42%. The 3 year median dividend yield is also low at 1.11%. There has been no growth in dividends, which are paid in CDN$.

The Dividend Payout Ratios (DPR) are fine. The company has yet to make a profit, so there is no DPR for EPS. The DPR for Cash Flow per Share for 2021 is 31% with 4 year coverage at 20%. The DPR for Free Cash Flow for 2021 is 40% with 5 year coverage at 25%.

Debt Ratios are good. The Long Term Debt/Market Cap Ratio for 2021 is 0.23. This is low and good. The Liquidity Ratio for 2021 is good at 1.58. The Debt Ratio is good at 2.40. The Leverage and Debt/Equity Ratios for 2021 are also good at 1.72 and 0.72. Good Debt Ratio are, especially for small companies really help them survive in adverse market conditions.

The Total Return per year is shown below for years of 5 to 6 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 0.00% 9.23% 7.94% 1.29%
2015 6 0.00% 5.57% 4.58% 0.99%

The Total Return per year is shown below for years of 5 to 6 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 0.00% 9.95% 8.64% 1.31%
2015 6 0.00% 6.70% 5.69% 1.01%

The 5 year low, median, and high median Price/Earnings per Share Ratios are negative and not usable. The corresponding 6 year ratios are also negative and unusable.

I calculate a Graham Price of $1.19. The 6 year low, median, and high median Price/Graham Price Ratios are 7.10, 9.12 and 12.17. The current P/GP Ratio is 11.93 based on a stock price of $14.19. The current ratio is between the median and high ratios of the 6 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get a 6 year median Price/Book Value per Share Ratio of 1.54. The current P/B Ratio is 2.26 based on a Book Value of $204M, Book Value per Share of $6.29 and a stock price of $14.19. The current ratio is 47% above the 6 year median ratio. This stock price testing suggests that the stock price is relatively expensive.

I get a 6 year median Price/Cash Flow per Share Ratio of 13.84. The current ratio is 23.91 based on Cash Flow for the last 12 months of $19M, Cash Flow per Share of $0.59 and a stock price of $14.19. The current ratio is 73% above the 6 year median ratio. This stock price testing suggests that the stock price is relatively expensive.

I get a 6 year and historical median dividend yield of 1.11%. The current dividend yield is 1.41% based on a dividend of $0.20 and a stock price of $14.19. The current yield is 27% above the 6 year and historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.

The 6 year median Price/Sales (Revenue) Ratio is 7.51. The current P/S Ratio is 4.66 based on Revenue estimate for 2022 of $99 ($77 US$) and a stock price of $14.19. The current ratio is 38% below the 6 year median ratio. This stock price testing suggests that the stock price is relatively reasonable cheap.

Results of stock price testing is that the stock price is probably cheap. The dividend yield test says that as well as the P/S Ratio test. Part of the problem in testing is there has been no positive earnings. Also, there is big difference in the CDN$ and US$ stock price (overt 5% difference). This is because this stock is thinly traded on the US market, but also on the Canadian market.

When I look at analysts’ recommendations, I find Strong Buy (2) and Buy (3) recommendations. The consensus would be a Strong Buy. The 12 month stock price target is $28.96 ($22.56 US$). This implies a total return of 105.50% with 104.09% from capital gains and 1.41% from dividend based on a stock price of $14.19.

This stock is not mentioned on Stock Chase. Simply Wall Street via Yahoo Finance has a report reviewing this stock and looking at dividends. A Simply Wall Street on Yahoo Finance talks about who owns this company. A Simply Wall Street report on Yahoo Finance talks about the recent analysts’ downgrades in EPS and Revenue. The company on Newswire announces its fourth quarter results. The company announces its first quarterly results on Newswire.

HLS Therapeutics Inc is a specialty pharmaceutical company. It is focused on the acquisition and commercialization of branded pharmaceutical products in the North American markets. Its web site is here HLS Therapeutics Inc.

The last stock I wrote about was about was Pizza Pizza Royalty Corp (TSX-PZA, OTC-PZRIF) ... learn more. The next stock I will write about will be Reitmans (Canada) Ltd (TSX-RET.A, OTC-RTMAF) ... learn more on Monday, May 30, 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, May 25, 2022

Pizza Pizza Royalty Corp

Sound bite for Twitter and StockTwits is: Dividend Growth Consumer. The stock price testing says the stock price is reasonable, but above the median. The Royalty paying company Pizza Pizza Limited (PPL) has awful debt ratios. The stock is followed by very few analysts, maybe 1 or 2. Over the past year some insiders have increased their number of shares. Dividends have started to increase again in 2021. See my spreadsheet on Pizza Pizza Royalty Corp.

Is it a good company at a reasonable price? Stock price is reasonable, but above the median. Restaurants have never been a category that I invest in. I like to invest in companies for the very long term and I do not see restaurants fitting that bill.

I do not own this stock of Pizza Pizza Royalty Corp (TSX-PZA, OTC-PZRIF). A number of people have recommended this stock, so I decided to take a look at it. It was on once on John Heinzl's Dividend Hog Portfolio, but has been taken off. It is interesting that this stock is not one of the 100 best Canadian Dividend Stocks on Money Sense.

When I was updating my spreadsheet, I noticed that the main question for Pizza Pizza Limited (PPL) is, can it afford the royalty that they have to pay the Pizza Pizza Royalty Corp? PPL had an earnings loss of $0.859M in 2021 and $3.835M in 2022 after paying Royalty to Pizza Pizza Royalty Corp (as well as other expenses). Over the past 5 years, their net loss is $7M. Over the past 17 years of this arrangement, PPL has a net income of $53M. Over the past 17 years that they have had 10 years of positive net income and 7 years of losses. PPL does have a net cash position of $7.7M and the cash flow is mostly coming from Investing Activities.

I also do not like the debt ratios for PPL. They have gone from bad to truly awful. The Liquidity Ratio is 0.57. This means that the current assets cannot cover the current liabilities. It is some $31M short. The Debt Ratio is low at just 1.25. I prefer both these to be at 1.50 or higher.

The good news is that most of the insider I am following have increased the number of shares they own over the past year. The Royalty Corp has increased dividends in 2021 and 2022.

If you had invested in this company in December 2011, $1000.35 you would have bought 117 shares at $8.55 per share. In December 2021, after 10 years you would have received $921.22 in dividends. The stock would be worth $1,406.34. Your total return would have been $2,327.56.

Cost Tot. Cost Shares Years Dividends Stock Val Tot Ret
$8.55 $1,000.35 117 10 $921.22 $1,406.34 $2,327.56

The dividend yields are good with dividend growth restarted. The current dividend yield is good (5% to 6% ranges) at 6.22%. The 5 and 10 year dividend yields are also good at 6.92% and 6.41%. The historical median dividend yield is high (7% and higher) at 7.92%. Dividends were cut 30% in 2021. They started to raise them again in 2022. The last dividend increase was for 8.3% and it was in 2022. Dividends have declined over the past 5 years by 4% per year. Dividends are not yet back to where they were in 2019.

The Dividend Payout Ratios (DPR) are fine, but what counts is can Pizza Pizza Limited pay royalties. The DPR for EPS for 2021 is 93% with 5 year coverage at 97%. The DPR for Cash Flow per Share for 2021 is $68% with 5 year coverage at 73%. The DPR for Free Cash Flow for 2021 is 94% with 5 year coverage at 99%. PZA can afford to pay all income to dividends because they are a company that just collects royalties.

Debt Ratios are very good for PZA. For PZA, the Liquidity Ratio for 2021 is 3.33. The Debt Ratio for 2021 is 4.98. The Leverage and Debt/Equity Ratios are 1.75 and 0.35. All these ratios a very good.

Debt Ratios are awful for PPL. For PPL, the Liquidity Ratio for 2021 is 0.65. This means that the current assets cannot cover the current liabilities. The Debt Ratio for 2021 is 0.70. This means that the Assets cannot cover the Liabilities. However, if you take the Deferred Gain (Royalty Payments paid but not yet earned) into consideration, the ratio is 1.25. This is low.

The Total Return per year is shown below for years of 5 to 16 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 -4.13% -2.23% -7.41% 5.18%
2011 10 -0.50% 11.56% 3.47% 8.10%
2006 15 -0.78% 11.82% 2.74% 9.07%
2005 16 8.88% 1.16% 7.72%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 10.53, 14.36 and 16.39. The corresponding 10 year ratios are 13.56, 15.76 and 18.15. The corresponding historical ratios are 12.32, 14.54 and 16.93. The current P/E Ratio is 15.49 based on a stock price of $12.55 and EPS estimate for 2022 of $0.81. The current ratio is between the low and the median 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 $12.41. The 10 year low, median, and high median Price/Graham Price Ratios are 0.89, 1.02 and 1.17. The current P/GP Ratio is 1.01 based on a stock price of $12.55. This ratio is between the low and median 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 1.43. The current P/B Ratio is 1.49 based on a stock price of $12.55, Book Value of $208M and Book Value per Share of $8.45. 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.

I get a 10 year median Price/Cash Flow per Share Ratio of 11.19. The current ratio is 12.17 based on a stock price of $12.55, Cash Flow from last 12 months of $25M and Cash Flow per Share of $1.03. 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 7.92%. The current Dividend yield is 6.22% based on dividends of $0.78 and a stock price of $12.55. The current dividend yield is 22% 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 6.41%. The current Dividend yield is 6.22% based on dividends of $0.78 and a stock price of $12.55. The current dividend yield is 3% below the 10 year 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 0.54. The current P/S Ratio is 0.60 based on Revenue estimate for 2022 of $519M, Revenue per Share of $21.08 and a stock price of $12.55. 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.

Results of stock price testing is that the stock price is reasonable but above the median. The 10 year dividend yield says this and it is confirmed by the P/S Ratio test. Note that the historical median dividend yield test says the stock price is expensive. All the other tests say above the median or expensive.

When I look at analysts’ recommendations, I find that Alpha Spread gives this stock an intrinsic Value of $13.90 CDN and a target price of $14.28 CDN. WSJ gives this stock a target of $14.00 and had one Hold recommendation. A target price of $14.00 implies a total return of 17.77% with 11.55% from capital gains and 6.22% from dividends.

Last entry on Stock Chase was in 2021. Seems analysts are not much interested in this stock. Stock Chase gives this stock 1 star out of 5 stars. Rajiv Nanjapla on Motley Fool says to buy this stock for passive income. Daniel Da Costa on Motley Fool says to buy this stock while yield is high. The company talks about their first quarter results on Newswire. The company talks about their fourth quarter of 2021 results on Newswire. A report on Simply Wall Street on this stock interestingly talks why this stock is not a multi-bagger stock on Yahoo Finance .

Pizza Pizza Royalty Corp., through its subsidiary, Pizza Pizza Royalty Limited Partnership, owns and franchises quick-service restaurants under the Pizza Pizza and Pizza73 brands. The business activity of the group primarily functions through Canada. Its web site is here Pizza Pizza Royalty Corp.

The last stock I wrote about was about was Canadian Utilities Ltd (TSX-CU, OTC-CDUAF) ... learn more. The next stock I will write about will be HLS Therapeutics Inc (TSX-HLS, OTC-HLTRF) ... learn more on Friday, May 27, 2022 around 5 pm. Tomorrow on my other blog I will write about Manulife Financial.... learn more on Thursday, May 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.

Monday, May 23, 2022

Canadian Utilities Ltd

Sound bite for Twitter and StockTwits is: Dividend Growth Utility. The stock price seems reasonable in my testing. Last two dividend increases were just 1%, so these increases seem rather nominal rather than showing faith in the future. The Dividend Payout Ratios (DPR) need improving and are moving that way. Debt Ratios need improving. See my spreadsheet on Canadian Utilities Ltd.

Is it a good company at a reasonable price? The stock price seems reasonable. I have no plans to sell my shares at this point, but this stock has not done well for a while. It is a utility so you expect low growth (5%) via capital gains, but growth over the past 5 years is very low (0.3%). For 2021 that had good growth in Revenue (8.7%), EPS (10.7%), and capital gains of 18%. Dividend growth has really slowed and it is currently at 1%.

I own this stock of Canadian Utilities Ltd (TSX-CU, OTC-CDUAF). I started to follow this stock in January of 2009 because it was on the Dividend Achievers list, the Dividend Aristocrats list and was also on Mike Higgs’ dividend growth list at that time. The Dividend Aristocrats list is now an index on the TSX. ATCO (TSX-ACO-X) owns 88% of this stock, so you would not buy both these stocks. It is still on the Canadian Dividend Aristocrats list. Money Sense gives it a C rating. See Money Senses list of 100 top Canadian Dividend Stocks.

When I was updating my spreadsheet, I noticed this is another stock I seemed to have paid too much for. I have had it for 4 years and my total return is 4.60% per year with 0.38% from capital gains and 4.22% from dividends. On the plus side I am making between 4% and 5% on my investment and 4.4% at the current value of my investment. If you look at the chart on Total Returns below, you will see that total return over the past 5, 10 and 15 years have been low (under 8% per year).

I note that analysts expected EPS of $2.02, an 53% increase, but EPS went down by 8% to $1.21. However, the adjusted EPS (AEPS) was better at 2.17. The EPS is expected to be $2.21 in 2022 and the AEPS is expected to be $2.27 in 2022.

On this stock, my spreadsheet looks at what would be the dividend yield after 5 years if you paid the high price or low price 5 years ago. 5 years ago, the dividend yield was on the high price was 3.23% and after 5 years your yield would be 4.37%. 5 years ago, the dividend yield was on the low price was 4.23% and after 5 years your yield would be 5.73%. Today the yield is 4.54%. If dividend keep increasing at the 6.24% rate, in 5 years’ time, at a purchase price of $39.14, the yield would be 6.14%.

If you had invested in this company in December 2011, $1015.41 you would have bought 33 shares at $30.77 per share. In December 2021, after 10 years you would have received $448.79 in dividends. The stock would be worth $1,210.74. Your total return would have been $1,659.56.

Cost Tot. Cost Shares Years Dividends Stock Val Tot Ret
$30.77 $1,015.41 33 10 $448.79 $1,210.74 $1,659.56

The dividend yields are moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 4.41%. The 5, 10 and historical dividend yield are also moderate 4.76%, 3.99% and 3.76%. The current dividend increase rate is low (below 8% per year) with increases at 6.24% per year over the past 5 years. The last dividend increase was in 2022 and it was for 1%. The dividends increase in 2021 was also just 1%. Increases seem nominal.

The Dividend Payout Ratios (DPR) need improving and are moving that way. The DPR for EPS for 2021 is 145% with 5 year coverage at 87%. The DPR for EPS is expected to fall to 80% in 2022. These rates are getting high because they are increasing the dividend while the EPS is going down. The DPR for AEPS is better at 81% for 2021 with 5 year coverage at 76%. The DPR for AEPS for 2022 is expected to be around 77%.

The DPR for Cash Flow per Share (CFPS) for 2021 is 29% with 5 year coverage at 26%. This is good as anything at or below 40% is good. The DPR for Free Cash Flow (FCF) for 2021 is 96% with 5 year coverage at 137%. The problem with FCF is that there is no agreement on what FCF is, but all seem to show DPRs that are too high.

Debt Ratios need improving. The Long Term Debt/Market Cap Ratio for 2021 is better than last years at 0.91. The Liquidity Ratio is low at 1.22, but if you add in cash flow after dividends, it is good at 2.10. The Debt Ratio is fine if a bit low at 1.48. I prefer these ratios to be at 1.40 or higher. The Leverage and Debt/Equity Ratios for 2021 are 3.09 and 2.09. I prefer these to be below 3.00 and 2.00 respectively.

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 6.24% 4.76% 0.27% 4.48%
2011 10 8.13% 5.74% 1.78% 3.96%
2006 15 7.74% 6.56% 2.91% 3.66%
2001 20 6.82% 9.86% 5.56% 4.30%
1996 25 6.44% 11.28% 6.48% 4.80%
1991 30 5.58% 12.05% 6.74% 5.31%
1988 33 5.20% 11.45% 6.28% 5.16%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 19.36, 25.32 and 27.44. The corresponding 10 year ratios are 15.51, 17.61 and 19.70. The corresponding historical ratios are 10.93, 13.04 and 10.93. The current P/E Ratio is 18.23 based on a stock price of $40.29 and EPS estimate for 2022 of $2.21. 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.

In testing the Adjusted Earnings per Share (AEPS) ratios, I find that the 5 year low, median, and high median P/AEPS Ratios are 13.83, 15.93 and 17.90. The corresponding 10 year ratios are 14.26, 16.74 and 18.52. The current P/AEPS Ratio is 17.59 based on a stock price of $40.29 and AEPS for 2022 of $2.29. The current ratio is above the 10 year high median ratio. This stock price testing suggests that the stock price is relatively expensive.

I get a Graham Price of $31.01. The 10 year low, median, and high median Price/Graham Price Ratios are 1.20, 1.38 and 1.51. The current P/GP Ratio is 1.30 based on a stock price of $40.29. The current ratio is between the low and the 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 2.10. The current P/B Ratio is 2.08 based on a stock price of $40.29, Book Value of $5,208M and Book Value per Share of $19.34. The current ratio is 0.6% 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 6.10. The current ratio is 6.81 based on Cash Flow per Share estimate for 2022 of $5.92, Cash Flow of $1,595M, and a stock price of $40.29. The current ratio is 12% 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 3.76%. The current dividend yield is 4.41% based on dividend of $1.7768 and a stock price of $40.29. The current yield is 17% 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 3.66%. The current dividend yield is 4.41% based on dividend of $1.7768 and a stock price of $40.29. The current yield is 20.3% 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 2.75. The current P/S Ratio is 2.94 based on Revenue estimate for 2022 of $3,693, Revenue per Share of $13.71 and a stock price of $40.29. The current ratio is 6.9% 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 10 year dividend yield tests say the stock price is cheap, but the P/S Ratio test says it is reasonable above the median. Most of the other testing is saying that the stock is 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 tests say the stock price is cheap and they may be right as dividend payments and increases show the confidence in the future of the management. However, the last increase was for just 1%. They are probably doing the increase because they have over a 40 year history of dividend increases. The P/S Ratio for 2022 is 1% below the 10 year median ratio. Most of the other testing is showing the stock price as reasonable and below the median.

When I look at analysts’ recommendations, I find Strong Buy (1), Buy (1) and Hold (6). The consensus would be a Hold. The 12 month stock price is $39.71. This implies a total return of 2.97% with a 1.44% capital loss and dividends of $2.97% based on a stock price of $40.29. Since the stock markets are down year to date, this may not be an unreasonable position.

When I look at analysts’ recommendations last year, I found Strong Buy (1), Buy (1), Hold (6) and Sell (1). So, it is a rather mixed bag. The consensus would be a Hold. The 12 month stock price consensus is $35.86. This implies a total return of 6.06% with 1.10% from capital gains and 4.96% from dividends based on a stock price of 35.47. Most of the total return is again expected from dividends. What happened was a current price of 40.29 and a total return of 18.55% with 13.59% from capital gains and 4.96% from dividends.

The last two analysts’ ratings on this stock on Stock Chase says their recommendation is a Hold. Stock Chase gives this stock 3 stars out of 5. Adam Othman on Motley Fool says that this stock is a dividend king after growing its dividends over the past 50 years. He admits that the DPR is too high but says the company has been through difficult times before. Rajiv Nanjapla on Motley Fool thinks this company is well positioned to continue its dividend growth. The company talks about its fourth quarter results on Newswire. The company talks about its first quarter of 2022 results on Newswire. A Simply Wall Street report on Yahoo Finance talks about Revenues for this company which have been upgraded.

Canadian Utilities Ltd, a subsidiary of holding company Atco, offers gas and electricity services. The company's main divisions include electricity (generation, transmission, and distribution), pipelines & liquid (natural gas and water), and Retail Energy. Headquartered in Calgary, Alberta, the firm mainly operates in Canada and Australia, along with some operations in the United States and Mexico. Its web site is here Canadian Utilities Ltd.

The last stock I wrote about was about was Mullen Group Ltd (TSX-MTL, OTC-MLLGF) ... learn more. The next stock I will write about will be Pizza Pizza Royalty Corp (TSX-PZA, OTC-PZRIF) ... learn more on Wednesday, May 25, 2022 around 5 pm. Tomorrow on my other blog I will write about Retiring and Investing.... learn more on May 24, 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, May 20, 2022

Mullen Group Ltd

Sound bite for Twitter and StockTwits is: Dividend Growth Industrial. The stock price seems cheap at present. It has a good dividend and Dividend Payout Ratios are improving. It does have an unstable dividend track record. Debt is a little high. The risk level would be high. See my spreadsheet on Mullen Group Ltd.

Is it a good company at a reasonable price? The stock price seems cheap at present. However, we should not forget that the stock price has been higher than the any current price in 2004 ($32.70) and 2013 ($29.60). There has been a lot of volatility with price and dividends in the past. Money Sense, in their top 100 Canadian dividend stocks gives this company a rating of C and for good reason. This is a rather risky stock.

I own this stock of Mullen Group Ltd (TSX-MTL, OTC-MLLGF). I like to look at recommended small cap dividend paying stock to see if they would be a possible good investment now or in the future. The other thing to mention about this stock is that it converted from an income trust and decreased it dividends. The reduction in dividend brought the Dividend Payout Ratios down to a place that would allow for the company to begin growing dividends again. This is not how things worked out. EPS went down, and then so did dividends.

When I was updating my spreadsheet, I noticed that the company had higher Revenue than expected. Revenue was expected to increase by 13%, but it increased by 27%. EPS was expected to rise by 8%, but rose by 17%. This company is also providing an Adjusted Earnings per Share (AEPS). AEPS basically gets ride of special items that according to IFRS accounting rules are part of EPS. AEPS is now quite popular.

If you had invested in this company in December 2011, $1000.05 you would have bought 59 shares at $16.95 per share. In December 2021, after 10 years you would have received $456.66 in dividends. The stock would be worth $761.10. Your total return would have been $1,217.76. As you can see, dividends can make a difference on whether or not you lose money on a stock investment. Here the value of the stock declined, but because of dividends, a profit was squeezed out.

Cost Tot. Cost Shares Years Dividends Stock Val Tot Ret
$16.95 $1,000.05 59 10 $456.66 $761.10 $1,217.76

I have had this stock for 7 years and my total return is a loss of 2.96% with a capital loss 6.42% and dividends of 3.46%. So, I have not done well, but I still have faith in this company and its future.

The dividend yields are good with dividend growth has returned. The current dividend yield is good (5% to 6% ranges) at 5.74%. The 5, 10 and historical dividend yields are moderate (2% to 4% ranges) at 4.13%, 4.60% and 4.06%. The dividends have declined by 5.7% per year over the past 5 years. However, what really happened, is that the dividends have gone up and down over this period. The last dividend increase was for 20% and it was made in 2022.

The Dividend Payout Ratios (DPR) are fine as they seem to be improving. The DPR for EPS for 2021 is 63% with 5 year coverage at 103%. This company also has Adjusted Earnings per Share (AEPS). For AEPS, the DPR for 2021 is 64% with 5 year cover at 87%. The DPR for 2022 is expected to be around 73%. The DPR for Cash Flow per Share (CFPS) for 2021 is 19% with 5 year coverage at 23%. These are fine as anything at 40% or lower is fine. The DPR for Free Cash Flow is 48% with 5 year coverage at 54%. However, different sites give different FCF values.

Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2021 is fine at 0.42. The Liquidity Ratio for 2021 is 1.20. If you add in Cash Flow after dividends it is 1.79. that is fine. The Debt Ratio for 2021 is good at 1.86. The Leverage and Debt/Equity Ratios are fine at 2.16 and 1.16

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 -5.69% -7.17% -10.12% 2.96%
2011 10 -6.03% 1.75% -3.70% 5.45%
2006 15 -8.51% 2.86% -3.11% 5.97%
2001 20 6.50% 10.09% 1.68% 8.40%
1997 24 6.18% 8.98% 2.14% 6.85%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 1.75, 14.67 and 18.58. The corresponding 10 year ratios are 12.99, 15.97 and 18.95. The corresponding historical ratios are 11.825, 14.90 and 18.58. The current P/E Ratio is 13.78, based on a stock price of $12.54 and EPS estimate for 2022 of $0.91. The current P/E Ratio is between the low and median 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 $13.77. The 10 year low, median, and high median Price/Graham Price Ratios are 1.06, 1.30 and 1.54. The current P/GP Ratio is 0.91 based on a stock price of $12.54. 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 1.80. The current P/B Ratio is 1.36 based on a Book Value of $875M, Book Value per Share of $9.25 and a stock price of $12.54. The current P/B Ratio is 25% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. What I do not like about the Book Value is that the Book Value per Share has not grown over the past 5 and 10 years.

I get a 10 year median Price/Cash Flow per Share Ratio of 6.28. The current ratio is 5.41 based on Cash Flow per Share estimate for 2022 of $2.32, Cash Flow of $219M and a stock price of $12.54. The current 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 an historical median dividend yield of 4.06%. The current dividend yield is 5.74% based on a stock price of $12.54 and Dividends of $0.72. The current yield is 41% 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 4.60%. The current dividend yield is 5.74% based on a stock price of $12.54 and Dividends of $0.72. The current yield is 25% above the historical dividend yield. This stock price testing suggests that the stock price is relatively cheap.

The 10 year median Price/Sales (Revenue) Ratio is 1.33. The current P/S Ratio is 0.64 based on Revenue estimate for 2022 of $1,849M, Revenue per Share of $19.56 and a stock price of $12.54. The current ratio is 52% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

Results of stock price testing is that the stock price is probably cheap. The dividend yield tests are showing the stock price as cheap and this is confirmed by the P/S Ratio test. Other tests are showing this stock as cheap or below the median.

When I look at analysts’ recommendations, I find Strong Buy (1), Buy (7) and Hold (2). The consensus would be a Buy. The 12 month stock price consensus is $15.90. This implies a total return of $32.54%, with 26.79% from capital gains and 5.74% from dividends.

Most of the analysts remarks for this year on Stock Chase are hidden. However, one mentions the company transforming from trucking for oil and gas to general trucking. Stock Chase gives this stock 4 stars out of 5. Karen Thomas on Motley Fool thinks the company has found its niche and the company’s fortunes are rising. Aditya Raghunath on Motley Fool says most stocks are lower this year, but this stock is not. The company talks about their fourth quarter results on Newswire. The company talks about their first quarter 2022 results on Newswire.

Simply Wall Street has a report on Yahoo Finance. They like that the company has just increased the dividend and that it is generating plenty of cash. Simply Wall Street gives 3 risks of has a high level of debt; unstable dividend track record, and large one-off items impacting financial results. The last reason is why companies are going for Adjusted Earnings per Share (AEPS).

Mullen Group is a company that owns a network of independently operated businesses. The company is the supplier of trucking and logistics services in Canada providing a wide range of service offerings including less-than-truckload, truckload, warehousing, logistics, transload, oversized and specialized hauling transportation. In addition, it provides a diverse set of specialized services related to the oil and natural gas industry in western Canada, water management, fluid hauling and environmental reclamation. Its web site is here Mullen Group Ltd.

The last stock I wrote about was about was Hammond Power Solutions Inc (TSX-HPS.A, OTC-HMDPF) ... learn more. The next stock I will write about will be Canadian Utilities Ltd (TSX-CU, OTC-CDUAF) ... learn more on Monday, May 23, 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, May 18, 2022

Hammond Power Solutions Inc

Sound bite for Twitter and StockTwits is: Dividend Growth Industrial. The stock price is probably expensive. Debt Ratios are good and this is a positive. The Dividend Payout Ratios (DPR) are currently good. See my spreadsheet on Hammond Power Solutions Inc.

Is it a good company at a reasonable price? The current price is probably relatively expensive. The company seems to be doing much better than it has in the past, but it has not yet passed the stock price it had in 2008. It has done well over the past two years, but it has done better for a couple of years before in the past and then not much for a while. However, I have no current plans to sell my shares.

I own this stock of Hammond Power Solutions Inc (TSX-HPS.A, OTC-HMDPF). I bought this stock as my main purchase for the TFSA in 2013 and 2014. I picked Hammond initially in 2013 as my main buy because it has good growth and reasonable dividend. Also, I think that it important to try out newer smaller companies for investment purposes. Companies on the TSX are always changing and it is good to get into new industries and new companies. The problem of this, of course, is you do not always know what industries and companies will be long lasting.

When I was updating my spreadsheet, I noticed I done mediocre on this stock. After 9 years, my total return is 7.86% per year with 5.13% from capital gains and $2.73% from dividends. I obvious did not buy it at a good time. If you look at the return over time, people who bought this stock 10 to 15 years ago, have not done well.

I note that analysts expected Sales to increase by 3%, but they instead increased by 18%. Analysts also expected the EPS to drop 25%, but EPS increased by 7%.

If you had invested in this company in December 2011, $1000.00 you would have bought 125 shares at $8.00 per share. In December 2021, after 10 years you would have received $330.00 in dividends. The stock would be worth $1,498.75. Your total return would have been $1,282.75.

Cost Tot. Cost Shares Years Dividends Stock Val Tot Ret
$8.00 $1,000.00 125 10 $330.00 $1,498.75 $1,828.75

The dividend yields are moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 2.68%. The 5, 10 and historical dividend yields are also moderate at 3.65%, 3.25% and 3.05%. The dividends have increased at a low rate (below 8%) over the past 5 years. The growth has been 7.21% per year. The last dividend increase was in 2022 and it was for 17.6%, but this was after no dividend increase in 2021.

The Dividend Payout Ratios (DPR) are currently good. The DPR for EPS for 27% with 5 year coverage at 50%. The DPR for Cash Flow per Share (CFPS) for 2021 is 13% with 5 year coverage at 13%. The DPR for Free Cash Flow (FCF) for 2021 is 28% with 5 year coverage at 37%. The sites, more or less, agree on FCF.

Debt Ratios are good. The Long Term Debt/Market Cap Ratio for 2021 is quite low and good at 0.05. The Liquidity Ratio for 2021 is currently good at 1.57. The Debt Ratio for 2021 is good at 2.15. The Leverage and Debt/Equity Ratios are also good at 1.87 and 0.87.

The Total Return per year is shown below for years of 5 to 20 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 7.21% 18.21% 14.62% 3.59%
2011 10 8.53% 6.86% 4.13% 2.73%
2006 15 10.74% 5.76% 3.72% 2.04%
2001 20 17.02% 14.15% 2.88%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 5.76, 7.61 and 9.45. The corresponding 10 year ratios are 8.62, 10.41 and 12.20. The corresponding historical ratios are 6.51, 8.06 and 9.52. The corresponding historical ratios are 6.51, 8.06 and 9.52. It would seem that this stock has always had rather low P/E Ratios. The current P/E Ratio is 9.20 based on a stock price of $14.90 and EPS estimate for 2022 of $1.62. The current ratio is between the low and the 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 $20.34. The 10 year low, median, and high median Price/Graham Price Ratios are 0.52, 0.66 and 0.81. The current P/GP Ratio is 0.73 based on a stock price of $14.90. This ratio, although low, 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 0.81. The current P/B Ratio is 1.31 based on a Book Value of $134M, Book Value per Share of $11.35 and a stock price of $14.90. The current ratio is 32% 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 5.10. The current P/CF Ratio is 6.31 based on Cash Flow for the last 12 months of $27.8M, Cash Flow per Share of $6.31 and a stock price of $14.90. The current ratio is 24% 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 3.05%. The current dividend yield is 2.68% based on a stock price of $14.90 and dividends of $0.40. The current dividend yield is 12% below the historical dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get a 10 year median dividend yield of 3.25%. The current dividend yield is 2.68% based on a stock price of $14.90 and dividends of $0.40. The current dividend yield is 17% below the historical 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 0.30. The current P/S Ratio is 0.38 based on a stock price of $14.90, Revenue estimate for 2022 of $460M and Revenue per Share of $39.02. The current ratio is 26% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.

Results of stock price testing is that the stock price is probably on the expensive side at the moment. The dividend yield tests are saying the stock price is above the median and the P/S Ratio test is saying it is expensive. The P/B Ratio and P/CF Ratio tests are also saying the stock price is expensive. The P/GP Ratio test says it is above the median. Currently, the Revenue is growing, but we may be heading into a recession so it is anyone guess if estimates will hold up in 2022.

Last year I said that the results of stock price testing were that the stock price was probably on the expensive side. I know the dividend yield tests are showing the stock price as reasonable, but the P/S Ratio test does not confirm this. The problem is lack of growth in Revenue. There also seems to be a lack of growth in cash flow too. The testing results is a mixed bag as some show the stock price as reasonable and other as expensive.

When I look at analysts’ recommendations, I find only a Strong Buy. The consensus would be a Strong Buy. The 12 month stock price consensus is $19.25. This implies a total return of 31.88% with 29.19% from capital gains and 2.68% from dividends.

When I looked at analysts’ recommendations last year, I found only one recommendation and it was a Buy. The consensus would be a Buy. I can find a target price of $9.50. This implies a total loss of 9.56%, with a capital loss of 12.68% and dividends of 3.13% based on a stock price of 10.88. The recommendation and the target price do not match up. What happened a price increase to $14.90 was a total return of 40.08% with 36.95% from capital gains and 3.13% from dividends.

There have been no analysts’ comments on Stock Chase since 2019. It is a small company that has not been doing well, so analysts lost interest. Stock Chase gives this company 1 star out of 5. The last comments on this stock via Motley Fool was even longer at 2013. Their fourth quarterly results are on Newswire. Their first quarter results are also on Newswire. A report by Simply Wall Street talks on Yahoo Finance about the increasing dividend. This is true, but their comment on decreasing EPS over the next year is not what I picked up. Analysts I looked at say EPS will increase in 2022 by 27%.

Hammond Power Solutions Inc is engaged in designing and manufacturing of custom electrical magnetics, cast resin, custom liquid filled distribution and power transformers and standard electrical transformers, serving the electrical and electronic industries. The company has manufacturing plants in Canada, the United States, Mexico, and India. Its web site is here Hammond Power Solutions Inc.

The last stock I wrote about was about was Ag Growth International (TSX-AFN, OTC-AGGZF) ... learn more. The next stock I will write about will be Mullen Group Ltd (TSX-MTL, OTC-MLLGF) ... learn more on Friday, May 20, 2022 around 5 pm. Tomorrow on my other blog I will write about DIY Investors.... learn more on Thursday, May 19, 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, May 16, 2022

Ag Growth International

Sound bite for Twitter and StockTwits is: Dividend Paying Industrial. Stock price seems cheap at the present. It will be a dividend growth stock again but expect dividends yields in the moderate range. Debt Ratios are a risk, but improved in first quarter. Dividend Payor Ratios are expected to improve. See my spreadsheet on Ag Growth International.

Is it a good company at a reasonable price? The stock price seems cheap at the present. I bought this stock for diversification and will continue to hold it. I am not planning on buying more at the present time. I worry about the debt ratios, especially the Liquidity Ratio.

I own this stock of Ag Growth International (TSX-AFN, OTC-AGGZF). I wanted to review all the income trust stocks touted in the Money Show of 2009. There was a lot of talk at this show about some of the Unit Trust being currently good buys with very good yields. Its median yield in 2009 was 7.9%. It was on the Canadian Dividend Aristocrats and this is why I first investigated this company. By 2011 when I bought this stock, I have been interested in AFN for some time. This stock is a play on the agricultural sector.

When I was updating my spreadsheet, I noticed that debt ratios are getting worse since 2019. The Liquidity Ratio for 2021 is 1.23. If you added in Cash Flow after Dividends, it is still low at 1.29. The Debt Ratio for 2021 is also very low at 1.20. I prefer both these ratios to be at least at 1.50. The problem with low ratios, especially for Liquidity Ratio is that if you need to raise cash and there is a recession going on, it can be difficult. You may have to sell assets at fire sale prices and this is never good.

If you had invested in this company in December 2011, $1,011.96 you would have bought 27 shares at $37.48 per share. In December 2021, after 10 years you would have received $855.36 in dividends. The stock would be worth $855.36. Your total return would have been $1,418.31.

If you had invested in this company in December 2016, $1,050.40 you would have bought 20 shares at $52.52per share. In December 2021, after 5 years you would have received $177.00 in dividends. The stock would be worth $633.60. Your total return would have been $810.60.

Cost Tot. Cost Shares Years Dividends Stock Val Tot Ret
$37.48 $1,011.96 27 10 $562.95 $855.36 $1,418.31
$52.52 $1,050.40 20 5 $177.00 $633.60 $810.60

The dividend yields are low with dividends have been declining. The current dividend yield is low (below 2%) at 1.88%. The 5 and 10 year median dividend yields are moderate (2% to 4% ranges) at 4.38% and 4.81%. The historical median dividend yield is good (5% to 6% ranges) at 5.82%. The dividends flat between 2011 and 2019 and then they declined. This is another income trust company that is having a hard time getting its dividend right with the change to a corporation.

The Dividend Payout Ratios (DPR) are moving to good values. The DPR for EPS for 2021 is 120% with 5 year coverage at 518%. Analysts expect the DPR for EPS to be around 18% this year (because of the lower dividend, and increase in EPS). The DPR for CFPS for 2021 is 14% with 5 year coverage at 47%. I also have Adjusted Earnings per Share (AEPS), and its DPR for 2021 is 21% with 5 year coverage also at 21%. There is also Funds from Operations (FFO). Its DPR for 2021 is 46% with 5 year coverage at 20%. The DPR for Free Cash Flow (FCF) for 2021 is negative because of negative FCF. Analysts expect the DPR for 2022 is be 13%.

Debt Ratios are generally awful and this could get the company into difficulties. The Liquidity Ratio is 1.23 and if you add in cash flow after dividends, it is still low at 1.29. The Debt Ratio is low at 1.20. I prefer both these to be at 1.50 or higher. The Leverage and Debt/Equity Ratios are too high at 5.93 and 4.93. I prefer these to be below 3.00 and 2.00.

The Total Return per year is shown below for years of 5 to 18 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 -24.21% -5.62% -9.62% 4.00%
2011 10 -12.94% 4.44% -1.67% 6.11%
2006 15 -6.09% 16.28% 5.11% 11.17%
2003 18 -1.54% 19.31% 6.50% 12.82%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 28.62, 34.82 and 41.02. The corresponding 10 year ratios are 21.56, 28.61 and 35.82. The corresponding historical ratios are 14.42, 21.36 and 26.57. The historical ratios are a better judge of stock price. The others are weird due to low and negative earnings. The current P/E Ratio is 9.59 based on a stock price of $31.95 and EPS for 2022 of $3.30. The current P/E Ratio is below the low of the historical median ratio. This stock price testing suggests that the stock price is relatively cheap. Also, a P/E Ratio below 10 is looked as a good price.

I get a Graham Price of $33.03. The 10 year low, median, and high median Price/Graham Price Ratios are 1.63, 2.23 and 3.01. The current P/GP Ratio is 0.97 based on a stock price of $31.95. This is below the low of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap. the P/GP Ratios are high, but any ratio below 1.00 is suggestive of a cheap stock price.

I get a 10 year median Price/Book Value per Share Ratio of 2.55. The current ratio is 2.19 based on a Book Value of $274M, Book Value per Share of $14.57 and a stock price of $31.95. The current 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 also have a Book Value per Share Ratio estimate for 2022. This gives a current ratio of 1.97 based on a Book Value of $305M, Book Value per Share estimate of $16.20 for 2022 and a stock price of $31.95. The current ratio is 23% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

I get a 10 year median Price/Cash Flow per Share Ratio of 15.57. The current P/CF Ratio is 5.34 based on Cash Flow per Share estimate for 2022 of $5.98, Cash Flow of $112.39 and a stock price of $31.95. The current ratio is 66% below the 10 year median ratio. I get a 10 year median Price/Book Value per Share Ratio of 2.55. This stock price testing suggests that the stock price is relatively cheap. I sort of wonder about the CFPS estimates, since the estimate for 2022 is an increase CFPS by 187% over the CFPS for 2022 and is also higher than any CFPS in the past. However, CFPS in the past has fluctuated a lot.

I get an historical median dividend yield of 5.82%. The current dividend yield is 1.88% based on dividends of $0.60 and a stock price of $31.95. The current dividend yield is 68% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.

I get an historical median dividend yield of 4.81%. The current dividend yield is 1.88% based on dividends of $0.60 and a stock price of $31.95. The current dividend yield is 61% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.

The 10 year median Price/Sales (Revenue) Ratio is 1.16. The current P/S Ratio is 0.44 based on a stock price of $31.95, Revenue estimate for 2022 of $1,357M and Revenue per Share of $72.11. The current ratio is 62% 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 cheap. It is not surprising that the dividend yield tests say the stock is expensive as dividends have been cut by 75%. It is never a good sign when dividends are cut. Analysts expect a nice increase in Revenue and the P/S Ratio test shows that the stock is cheap. Most of the testing, except for the P/B Ratio test, says the stock is cheap.

When I look at analysts’ recommendations, I find Strong Buy (2) and Buy (8). The consensus would be a Strong Buy. The 12 month stock price consensus is $51.20. This implies a total return of 62.32% with 60.44% from capital gains and 1.88% from dividends. Note that this company hit a high of $44.05 in March and have been falling ever since.

Analysts on Stock Chase really like this stock. Analysts expect the company to grow. One analyst says he thinks there will be a dividend increase or stock buyback within 2 years. Stock Chase gives this stock 5 stars out of 5. Amy Legate-Wolfe on Motley Fool says analysts think the stock has a great upside. Nikhil Kumar on Motley Fool takes a look at this company and talks about its business.

The company had a Press Release on their fourth quarter results. The company announces on Business Wire via Yahoo Finance new credit facility. Simply Wall Street reviews this company via Yahoo Finance. Simply Wall Street gives two warnings on this company of interest payments are not well covered by earnings and large one-off items impacting financial results. (This last item is why a number of companies, including this one, has Adjusted Earnings per Share (AEPS).

Ag Growth International Inc manufactures portable and stationary grain handling, storage, and conditioning equipment, including augers, belt conveyors, grain storage bins, grain handling accessories, grain aeration equipment, and grain drying systems. It has manufacturing facilities in Canada, the United States, Italy, Brazil, France, United Kingdom, and India. Its geographical segments are Canada, United States, and the International. Its web site is here Ag Growth International.

The last stock I wrote about was about was Power Corp of Canada (TSX-POW, OTC-PWCDF) ... learn more. The next stock I will write about will be Hammond Power Solutions Inc (TSX-HPS.A, OTC-HMDPF) ... learn more on Wednesday, May 18, 2022 around 5 pm. Tomorrow on my other blog I will write about A Future Worth Getting Excited About.... learn more on Tuesday, May 10, 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.

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