Is it a good company at a reasonable price? The stock price seems reasonable if not cheap. The dividends were increased by 31% last years. This would imply that the company expects to do quite well in the future. However, this is a small company, under $1B in market cap and so that is a risk in itself.
I do not own this stock of Algoma Central Corporation (TSX-ALC, OTC-AGMJF). I got the name off of the internet. The description was that Algoma Central Corporation is a Canadian shipping company. It operates Canadian flag fleet of dry and liquid bulk carriers operating on the Great Lakes. The company operates its business through six segments that are Domestic Dry-Bulk, Product Tankers, Ocean Self Unloaders, Corporate, Investment Properties, and Global Short Sea Shipping. This is a new stock for me to follow.
When I was updating my spreadsheet, I noticed this company has done well over the past 5 years, and not so well over the past 10 years. For example, Revenue is up by 8.9% per year over the past 5 years but only up by 0.27% per year over the past 10 years. EPS is up by 22% per year over the past 5 years but only by 1.8% per year over the past 10 years. The Chairman is Duncan Jackman. I wonder if he is part of the Jackman family. It would seem so as he is CEO of E-L Financial.
If you had invested in this company in December 1991, $1001.49 you would have bought 1512 shares at $0.66 per share. In December 2021, after 30 years you would have received $13,762.22 in dividends. The stock would be worth $26,157.60. Your total return would have been $39,919.82.
If you had invested in this company in December 2011, $1001.68 you would have bought 124 shares at $8.08 per share. In December 2021, after 10 years you would have received $874.20 in dividends. The stock would be worth $2,145.20. Your total return would have been $3,019.40.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $0.66 | $1,000.49 | 1,512 | 30 | $13,762.22 | $26,157.60 | $39,919.82 |
| $8.08 | $1,001.68 | 124 | 10 | $874.20 | $2,145.20 | $3,019.40 |
The dividend yields are moderate with dividend growth good. The current dividend yield is moderate (2% to 4% ranges) at 4.01%. The 5, 10 and historical median dividend yields are also moderate at 3.82%, 2.93% and 2.63%. The dividend increases are good (15% and above) with dividend increases at 19.4% per year over the past 5 years. Prior to this, dividend increases were moderate (8% to 14% ranges).
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2021 is 166% with 5 year coverage at 88%. Analysts expect the DPR for the future to move lower and expects it to be for EPS for 2022 to be 41%. The DPR for Adjusted EPS (AEPS) for 2021 is 51% with 5 year coverage at 38%. The DPR for Cash Flow per Share (CFPS) for 2021 is 76% with 5 year coverage at 38%. Analysts expect the DPR for CFPS to be around 35% in 2022. The DPR for Free Cash Flow (FCF) for 2021 is 94% with 5 year coverage at 413%. The company paid out a special dividend of $2.65 in 2021. This is why the DPRs for 2021 are high.
Debt Ratios are good. The Long Term Debt/Market Cap Ratio for 2021 is 0.60, and this is fine. Although some analysts prefer this ratio to be 0.50 or lower. The Liquidity Ratio for 2021 is 2.26. This higher than the immediate past. The 5 and 10 year median Liquidity Ratios are 1.25 and 2.69. The Debt Ratio for 2021 is 2.52. This is high and good. The Leverage and Debt/Equity Ratios for 2021 are 1.66 and 0.66. This are low and good
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 | 19.42% | 20.19% | 12.32% | 7.87% |
| 2011 | 10 | 14.22% | 12.77% | 7.91% | 4.86% |
| 2006 | 15 | 11.11% | 6.91% | 3.67% | 3.23% |
| 2001 | 25 | 10.06% | 15.21% | 10.73% | 4.48% |
| 1996 | 30 | 8.94% | 10.72% | 7.40% | 3.32% |
| 1991 | 35 | 0.00% | 16.35% | 11.49% | 4.86% |
| 1988 | 33 | 7.63% | 10.16% | 7.40% | 2.76% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 6.91, 8.42 and 9.65. The corresponding 10 year ratios are 8.12, 9.24 and 11.39. The corresponding historical ratios are 7.11, 8.42 and 10.31. The current P/E Ratio is 10.15 based on a stock price of $16.95 and EPS estimate for 2022 of $1.67. 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 also have Price/Adjusted Earnings per Share Ratios (AEPS). The 5 year low, median, and high median P/AEPS Ratios are 9.41, 12.25 and 11.74. The corresponding 6 year ratios are 9.89, 11.07 and 12.57. The current P/AEPS Ratio is 10.15 based on a stock price of $16.95 and EPS estimate for 2022 of $1.67. This 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 $26.84. The 10 year low, median, and high median Price/Graham Price Ratios are 0.49, 0.56 and 0.65. The current P/GP Ratio is 0.63 based on a stock price of $16.95. This 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 10 year median Price/Book Value per Share Ratio of 0.69. The current P/B Ratio is 0.88 based on a Book Value of $725M, Book Value per Share of $19.17 and a stock price of $16.95. The current ratio is 29% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. I know that the P/B Ratios are very low, but if you look at past history, they have been very low.
I get a 10 year median Price/Cash Flow per Share Ratio of 4.47. The current P/CF Ratio is 3.95 based on Cash Flow for the last 12 months of $162M, Cash Flow per Share of $4.30 and a stock price of $16.95. The current ratio is 12% 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 2.63%. The current dividend yield is 4.01% based on dividends of $0.68 and a stock price of 16.95. The current dividend yield is 53% 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 2.93%. The current dividend yield is 4.01% based on dividends of $0.68 and a stock price of 16.95. The current dividend yield is 37% 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 0.94. The current P/S Ratio is 0.95 based on Revenue estimate for 2022 of $615M, Revenue per Share of $16.27 and a stock price $16.95. The current ratio is 11% above 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, if not cheap. The dividend yield tests say it is cheap, but the P/S Ratio testing is saying it is reasonable but above the median. The company, last year, increased the dividend by 31%. This would imply that they good future results. However, most of the testing is returning a result of a stock price that is reasonable, but above the median.
When I look at analysts’ recommendations, I find Strong Buy (2) and Buy (1). The consensus would be a Strong Buy. The 12 month stock price consensus is $22.83. This implies a total return of 38.70% with 34.69% from capital gains and 4.01% from dividends.
There are few comments on this stock on Stock Chase. In August 2021 one analysts said it had a good cash flow, but was not very liquid. Stock Chase gives this stock 4 starts out of 5. Ambrose O'Callaghan on Motley Fool thinks that this stock has a favourable P/E Ratio. Nikhil Kumar on Motley Fool gives an overview of this stock in May 2021. The company has put out a News Release on their site for their fourth quarter of 2021.
A Simply Wall Street report on Yahoo Finance says the intrinsic value of this stock is $18.60 CDN$. Simply Wall Street gives two warnings of has a high level of debt and unstable dividend track record. Over the past 33 years, this company has raised their dividends 12 times and decreased them 2 times. The decreases occurred in the 1990’s. Perhaps this site is again confusing CDN$ paid dividends and exchange rates as it is a US site. They have also paid special dividends.
Algoma Central Corp owns and operates the fleet of dry and liquid bulk carriers operating on the Great Lakes, St. Lawrence Waterway. The company's Canadian flag fleet consists of self-unloading dry-bulk carriers, gearless dry-bulk carriers, and product tankers. Its web site is here Algoma Central Corporation.
The last stock I wrote about was about was Fortis Inc (TSX-FTS, OTC-FRTSF) ... learn more. The next stock I will write about will be WSP Global Inc (TSX-WSP, OTC-WSPOF) ... learn more on Friday, May 6, 2022 around 5 pm. Tomorrow on my other blog I will write about Something to Buy May 2022.... learn more on Thursday, May 5, 2022 around 5 pm.
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