Is it a good company at a reasonable price? The stock price is probably reasonable. It is not much of a dividend growth stock. Dividends have been flat and decreased as well as being increased. So, there is no real consistency. You will probably not lose money on this stock. See below what has happened over the past 10 years.
I do not own this stock of Artis REIT (TSX-AX.UN, OTC-ARESF). Early in 2013, this company was mentioned as a good REIT to own. A number of people I correspond with mentioned this REIT. However, my first view of it is not positive. It is also not a dividend growth stock.
When I was updating my spreadsheet, I noticed Revenue expected was $461M and it came in at $419.5M. The Adjusted Funds from Operations (AFFO) expected was $1.02, and it came in at $0.96. The Funds from Operations (FFO) $1.38 and it came in at $1.34. Basically, why EPS went up was because of “Fair value gain (loss) on investment properties”. For REITs the better measurement than EPS is the AFFO and FFO values.
If you had invested in this company in December 2011, $1007.28 you would have bought 72 shares at $13.99 per share. In December 2021, after 10 years you would have received $661.25 in dividends. The stock would be worth $859.68. Your total return would have been $1,520.93.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $13.99 | $1,007.28 | 72 | 10 | $661.25 | $859.68 | $1,520.93 |
The dividend yields are good with dividend growth restarting. The current dividend yield is good (5% and 6% ranges) at 5.30%. The 5 year median dividend yield is also good at 5.62%. The 10 year and historical median dividend yields are high (7% and above) at 7.14% and 7.15%. The dividends were flat between 2009 and 2017. The dividends were decreased by 50% in 2018. They were raised in 2021 by 10%. There has been no raise so far in 2022, but analysts do expect an increase in 2022 or 2023.
The Dividend Payout Ratios (DPR) are fine (with DPR from AFFO and FFO the best measure). The DPR for EPS for 2021 is 21% with 5 year coverage at 64%. The DPR for Adjusted Funds from Operations (AFFO) for 2021 is 61% with 5 year coverage at 59%. The DPR for Funds from Operations (FFO) for 2021 is 44% with 5 year coverage at 43%. The DPR for Cash Flow per Share (CFPS) for 2021 is 46% with 5 year coverage at 54%. The DPR for Free Cash Flow (FCF) for 2021 is 62% with 5 year coverage at 61%.
Most Debt Ratios are fine, but I worry about the Liquidity Ratio. The Long Term Debt/Market Cap Ratio for 2021 is 0.70 and is fine. The Debt Ratio is good at 2.16. The Leverage and Debt/Equity Ratios are good at 1.86 and 0.86. The Liquidity Ratio at 0.36 is awful. If you add in Cash Flow after dividends, you are only up to 0.46. If this is below 1.00, it means that current assets cannot cover current liabilities. Only if you add back in the debt payable and credit facilities do you get a good number (2.85). However, if debt and credit facilities cannot be rolled over, then the company could be in trouble. This can sometime happen in recessions.
The Total Return per year is shown below for years of 5 to 17 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 | -11.42% | 4.99% | -1.23% | 2.88% |
| 2011 | 10 | -5.88% | 5.64% | -1.57% | 2.15% |
| 2006 | 15 | -3.78% | 4.83% | -2.07% | 2.53% |
| 2004 | 17 | -1.47% | 17.33% | 3.98% | 2.21% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 10.06, 13.19 and 16.33. The corresponding 10 year ratios are 10.23, 12.27 and 13.24. The corresponding historical ratios are 4.07, 4.46 and 4.85. The current P/E Ratio is 2.66 based on a stock price of $11.32 and EPS for the last 12 months of $4.26. This ratio is below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I also have Adjusted Funds from Operations (AFFO) data. The 5 year low, median, and high median P/AFFO are 9.62,11.67 and 13.40. The corresponding 10 year ratios are 10.15, 11.85 and 13.34. The current P/AFFO Ratio is 11.10 based on AFFO estimate for 2022 of $1.02 and a stock price of $11.32. The current 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 also have Funds from Operations (FFO) data. The 5 year low, median, and high median P/FFO are 7.08,836 and 9.70. The corresponding 10 year ratios are 7.82, 9.23 and 10.25. The current P/FFO Ratio is 7.92 based on FFO estimate for 2022 of $1.43 and a stock price of $11.32. The current 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 $42.21. The 10 year low, median, and high median Price/Graham Price Ratios are 0.55, 0.65 and 0.74. The current P/GP Ratio is 0.27 based on a stock price of $11.32. The current ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I also do the Graham Price calculation using AFFO in the formula instead of EPS. Here I get a Graham Price of $20.65. The 10 year low, median, and high median Price/Graham Price Ratios are 054, 0.64 and 0.74. The current P/GP Ratio is 0.55 based on a stock price of $11.32. The current ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median Price/Book Value per Share Ratio of 0.83. The current P/B Ratio is 0.61 based on a Book Value of $2,296M, Book Value per Share of $18.59 and a stock price of $11.32. The current ratio is 27% 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 8.43. The current P/CF Ratio is 8.53 based on last 12 month Cash Flow of $164M, Cash Flow per Share of $1.33 and a stock price of $11.32. The current ratio is 1% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get an historical median dividend yield of 7.15%. The current dividend yield is 5.30% based on dividends of $0.60 and a stock price of $11.32. The current dividend yield is 26% below the historical dividend yield. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 median dividend yield of 7.14%. The current dividend yield is 5.30% based on dividends of $0.60 and a stock price of $11.32. The current dividend yield is 26% below the 10 year dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10 year median Price/Sales (Revenue) Ratio is 3.49. The current P/S Ratio is 3.48 based on a stock price of $11.32, Revenue estimate for 2022 of $402 and Revenue per Share of $3.25. The current ratio is 0.4% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
Results of stock price testing is that the stock price is probably reasonable based on the P/S Ratio test. The problem with the dividend yield test is the declining dividend. (However, declining dividends are never a good sign.) The P/AFFO test and P/FFO test are better tests than the P/E Test (because this is a REIT). These tests also show a reasonable stock price. Other tests are showing stock from cheap to reasonable.
When I look at analysts’ recommendations, I find Buy (1) and Hold (7). The consensus would be a Hold. The 12 month stock price consensus is $13.38. This implies a total return of 23.50% with 18.20% from capital gains and 5.30% from dividends.
Some, but not all analysts on Stock Chase like this stock. It is not on the Money Sense list. Stock chase gives this company 4 stars out of 5. Adam Othman on Motley Fool says it is an undervalued dividend stock. Adam Othman on Motley Fool says this stock is a bargain. He has been recommending this stock since at least July 2021. The company released their fourth quarterly 2021 results on Newswire. The company released on Newswire their first quarter of 2022 results.
Simply Wall Street on Yahoo Finance reviews this stock. They like the recent insider buying. Simply Wall Street has two risk warnings of debt is not well covered by operating cash flow and large one-off items impacting financial results
Artis Real Estate Investment Trust is an unincorporated closed-end REIT based in Canada. Artis REIT's portfolio comprises properties located in Central and Western Canada and select markets throughout the United States, including regions such as Alberta, British Columbia, Manitoba, Ontario, Saskatchewan, Arizona, Minnesota, Colorado, New York, and Wisconsin. The properties are divided into three categories: office, retail, and industrial. Its web site is here Artis REIT.
The last stock I wrote about was about was Obsidian Energy Ltd (TSX-OBE, OTC-OBELF) ... learn more. The next stock I will write about will be Dorel Industries Inc (TSX-DII.B, OTC-DIIBF) ... learn more on Wednesday, July 20, 2022 around 5 pm. Tomorrow on my other blog I will write about Life Insurance.... learn more on Tuesday, July 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.
No comments:
Post a Comment