Is it a good company at a reasonable price? It would appear that the stock price is cheap. It is less important what they think the future value of the stock is than the fact the stock price is cheap. Another main question is, will the company again be a dividend growth stock. Analysts seem to think that they will again increase the dividends, either this year or next.
I do not own this stock of CI Financial Corp (TSX-CIX, NYSE-CIXX). I started to follow this stock originally because it was a Mutual Fund company. People talked about it being easier to make money from buying a Mutual Fund company than buying Mutual Funds. When they became a Unit Trust in 2006, dividends were significantly increased, but these dividends proved to be unsustainable. They changed back to a corporation in 2009 and dividends were decreased in 2010. Since that time, they have been increasing their dividends since 2011. In June 2014, MPL communications called this stock a Buy and advised that they were adding it to their list of Key Stock for the Investment reporter.
When I was updating my spreadsheet, I noticed that his company is suppling Adjusted Earnings Per Share (AEPS) data. What AEPS is to show is the real earnings from Sales. It can be quite different from EPS which can include such things as write-offs and gains or losses from asset sales.
I noticed that analysts had expected an increase in EPS of 24% to $2.73. However, EPS came in at $2.02 a decrease of 9%. Revenue came in at $2,727M just above the estimate of $2,697 so, this was close. The Ratio of Expenses to Revenue in 2022 was 0.79, which is higher than other years. This explains the increase in Revenue, but decrease in EPS.
I noticed also that this company has been buying back a lot of stock. Over the past 12 years they have bought back over 130M shares at the cost of $1,051M. They have issued shares over the period and mostly for share options. Over this period outstanding shares have gone from 291.82M to 197.42M. Personally, I prefer companies to give out dividends rather than do share buy backs. Dividends have decreased by 12% per year over the past 5 years, but are up by 10% per year over the past 10 years.
The other thing I noticed was that there was a lot of insiders buying. The CFO, CFO and Chairman all bought increased their shares over the past year.
If you had invested in this company in December 2010, $1,012.80 you would have bought 48 shares at $21.10 per share. In December 2021, after 10 years you would have received $504.12 in dividends. The stock would be worth $1,269.12. Your total return would have been $1,773.24.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $21.10 | $1,012.80 | 48 | 10 | $504.12 | $1,269.12 | $1,773.24 |
The dividend yields are good with dividend growth non-existent. The current dividend yield is good (5% and 6% ranges) at 5.12%. The 5, 10 and historical dividend yields are moderate (2% to 4%) at 3.93%, 3.94% and 3.59%. Dividends were decreased in 2018 by 49% and changed from monthly to quarterly dividends. The dividend has been flat ever since. Analysts do expect the dividend increases to be restarted this year or next, but at a very low rate.
The Dividend Payout Ratios (DPR) are good. The DPR for EPS for 2021 is 36% with 5 year coverage at 43%. The DPR for Adjusted Earnings per Share (AEPS) for 2021 is 23% with 5 year coverage at 18%. The DPR for Cash Flow per Share (CFPS) for 2021 is 22% with 5 year coverage at 35%. The DPR for Free Cash Flow (FCF) for 2021 is 24% with 5 year coverage at 40%.
Debt Ratios need improving. The Long Term Debt/Market Cap Ratio is fine at 0.64. The Liquidity Ratio is low at 0.68 and if you add in Cash Flow after Dividends, it is just 0.88. When this ratio is under 1.00 it means that the current assets cannot cover the current liabilities. This is a problem. The Debt Ratio is 1.23 and it is better if this is at 1.50 or better. The Leverage and Debt/Equity Ratios for 2021 are 5.36 and 4.36. These are too high and I prefer them to be below 3.00 and below 2.00.
The Total Return per year is shown below for years of 5 to 27 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 | -11.88% | 1.63% | -1.74% | 3.37% |
| 2011 | 10 | 9.56% | 6.91% | 2.28% | 4.63% |
| 2006 | 15 | 0.28% | 3.54% | -1.06% | 4.61% |
| 2001 | 20 | 18.30% | 8.84% | 3.25% | 5.59% |
| 1996 | 25 | 15.41% | 21.70% | 11.80% | 9.90% |
| 1994 | 27 | 17.88% | 19.69% | 11.35% | 8.33% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 7.48, 9.87 and 12.64. The corresponding 10 year ratios are 13.24, 14.74 and 16.24. The corresponding historical ratios are 14.84, 17.09 and 19.90. The current ratio is 4.93 base on a stock price of $14.06 and EPS estimate for 2022 of $2.85. This ratio is below the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I also have Adjusted Earnings per Share (AEPS) data. The 5 year low, median, and high median Price/Earnings per Share Ratios are 7.11, 8.10 and 10.39. The corresponding 10 year ratios are 11.94, 13.31 and 14.69. The current P/AEPS Ratio is 4.18 based on AEPS estimate for 2022 of $3.36 and a stock price of $14.06. 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 Graham Price of $23.10. The 10 year low, median, and high median Price/Graham Price Ratios are 1.44, 1.60 and 1.78. The current P/GP Ratio is 0.61 based on a stock price of $14.06. 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 3.92. The current P/B Ratio is 1.69 based on a stock price of $14.06, Book Value of $1,606M and Book Value per Share of $8.32. The current ratio is 57% 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 11.47. The current P/CF Ratio is 6.30 based on Cash Flow per Share estimate for 2022 of $2.23, Cash Flow of $430M and a stock price of $14.06. The current ratio is 45% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
The last 12 months of Cash Flow is much higher than the Cash Flow calculated above. The 12 month cash flow is $631M, the Cash Flow per Share is 3.27 and the stock price is $14.06 and this gives a P/CG Ratio of 4.30. This ratio is 63% 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 3.59%. The current dividend yield is 5.12% based on dividends of $0.72 and a stock price of $14.06. The current dividend yield is 43% 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 3.94%. The current dividend yield is 5.12% based on dividends of $0.72 and a stock price of $14.06. The current dividend yield is 30% 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 3.65. The current P/S Ratio is 0.90 based on a stock price of $14.06, Revenue estimate for 2022 of $3,011 and Revenue per Share of $15.60. The current ratio is 75% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (3) and Hold (3). The consensus would be a Buy. The 12 month stock price is $21.83. This implies a total return of 60.38% with 55.26% from capital gains and 5.12% from dividends.
There are various views on Stock Chase by analysts. Stock Chase gives this stock 4 stars out of 5. One analyst says it is cheap but there are better names to invest in. Adam Othman on Motley Fool says a bear phrase is right time to buy a decent company like CIX. Ambrose O'Callaghan on Motley Fool says it is time to buy cheap companies like CIX. The company put out a News Release on their fourth quarterly results. The company put out a News Release on their first quarterly results of 2022.
A Simply Wall Street report on Yahoo Finance talks about this stock’s decline. Simply Wall Street lists 4 risks for this stock of debt is not well covered by operating cash flow; unstable dividend track record; large one-off items impacting financial results; and profit margins (14.7%) are lower than last year (22.2%).
CI Financial is a diversified provider of wealth management products and services, primarily in the Canadian market. Its web site is here CI Financial Corp.
The last stock I wrote about was about was Intertape Polymer Group Inc (TSX-ITP, OTC-ITPOF) ... learn more. The next stock I will write about will be Computer Modelling Group Ltd (TSX-CMG, OTC-CMDXF) ... learn more on Monday, June 27, 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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