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.
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