Is it a good company at a reasonable price? I would not like this company as it is not a dividend growth company. However, shareholders have done well in total return. When I have held a stock that is going to be bought out, I have sold after the initial price increase due to the buyout. You gain little if you hold on to a stock waiting for the buyout. If the buyout is not completed, the price of the stock will drop, often significantly.
I do not own this stock of LifeWorks Inc (TSX-LWRK, OTC-MSIXF). Every once in a while, I go through the stocks that my brokerage, TD Waterhouse, is recommending to find promising new stocks. In February 2013 this stock was rated a buy by TD Waterhouse. It was under Diversified Financials.
When I was updating my spreadsheet, I noticed Telus Corp (TSX-T, NYSE-TU) will buy out this company in June of 2022 and the closing of the transaction is to occur in the fourth quarter of 2022. See the News Release.
If you had invested in this company in December 2011, $1002.24 you would have bought 96 shares at $10.44 per share. In December 2021, after 10 years you would have received $748.80 in dividends. The stock would be worth $2,642.88. Your total return would have been $3,391.68.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $10.44 | $1,002.24 | 96 | 10 | $748.80 | $2,642.88 | $3,391.68 |
The dividend yields are moderate with dividend growth non-existent. The current dividend yield is moderate (2% to 4% ranges) at 2.52%. The 5 year, 10 year and historical median dividend yields are also moderate at 2.60%, 4.20% and 4.95%. (This stock was an income trust before changing to a corporation in 2011.) The dividend rate has not changed since 2012.
The Dividend Payout Ratios (DPR) could be improved. The DPR for EPS for 2021 cannot be calculated because of an earnings loss. The 5 year coverage is 227%. The DPR for Cash Flow per Share is 31% with 5 year coverage at 34%. This is a good rate and dividends are covered well by cash flow. The DPR for Free Cash Flow is 85% with 5 year coverage at 95%. However, there is a large discrepancy in what different site say for FCF and I picked the lowest one.
Debt Ratios are fine, but Liquidity Ratio needs improvement. The Long Term Debt/Market Cap Ratio for 2021 is low and good at 0.18. The Liquidity Ratio is too low at 0.94. This means that the current assets cannot cover the current liabilities. If you add in Cash Flow after dividends, it is still low at 1.23 and I prefer this to be at least 1.50 (or higher). The Debt Ratio is good at 1.67. The Leverage and Debt/Equity Ratios for 2021 are fine at 2.49 and 1.49.
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 | 0.00% | 11.04% | 7.48% | 3.55% |
| 2011 | 10 | -0.62% | 15.38% | 10.18% | 5.20% |
| 2006 | 15 | -0.41% | 12.40% | 6.70% | 5.70% |
| 2004 | 17 | -0.39% | 11.37% | 6.14% | 5.23% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 30.78, 37.46 and 44.15. The corresponding 10 year ratios are 30.23, 36.06 and 42.80. The corresponding historical ratios are 27.88, 34.66 and 37.88. The current P/E Ratio is 41.29 based on a stock price of $30.97 and EPS estimate of $0.75. 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.
I get a Graham Price of $11.89. The 10 year low, median, and high median Price/Graham Price Ratios are 1.94, 2.32 and 2.67. The current P/GP Ratio is 2.61 based on a stock price of $30.97. 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.
I get a 10 year median Price/Book Value per Share Ratio of 2.64. The current ratio is 3.70 based on a Book Value of $580.47, Book Value per Share of $8.37 and a stock price of $30.97. The current ratio is 40% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I also have Book Value per Share estimate for 2022. This estimate is $8.32. From this I get a ratio of 3.72 based on the Book Value per Share estimate of $8.32, Book Value of $577M, and a stock price of $30.97. This ratio is 41% 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 15.29. The current ratio 20.07 based on last 12 months Cash Flow of $107M, Cash Flow per Share of $1.54 and a stock price of $30.97. The current ratio is 31% 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 4.95%. The current dividend yield is 2.52% based on dividends of 0.78 and a stock price of $30.97. The current dividend yield is 49% above the historical dividend yield. This stock price testing suggests that the stock price is relatively expensive. The problem with this test is this company used to be an income trust and income trusts had high dividend yields. The dividends have been flat since 2012.
I get a 10 year median dividend yield of 4.20%. The current dividend yield is 2.52% based on dividends of 0.78 and a stock price of $30.97. The current dividend yield is 40% above the 10 year dividend yield. This stock price testing suggests that the stock price is relatively expensive. The problem with this test is that the dividends have been flat since 2012.
The 10 year median Price/Sales (Revenue) Ratio is 1.64. The current ratio is 2.02 based on Revenue estimate for 2022 of $1,063M, Revenue per Share of $15.34 and a stock price of $30.97. The current ratio is 23% 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 expensive. That is not surprising as the stock price increased significantly went it was to be bought out at a premium. The P/S Ratio test is saying the stock price is expensive. The 10 year dividend yield test is often good for old income trust companies, but this company has had a flat dividend since 2012.
When I look at analysts’ recommendations, I find Buy (1), Hold (1), Sell (1). The consensus would be a Hold. The 12 month target price of $30.50. This implies a total return of 1.00%, with a capital loss of 1.52% and dividends of 2.52% based on a current stock price of $30.97.
There are two recommendations on Stock Chase of Do Not Buy and Buy on Weakness. Stock Chase gives this stock 3 stars out of 5. Christopher Liew on Motley Fool talks about the takeover of this company by Telus. Adam Othman on Motley Fool in June thought this company was due for a breakout. The company talks about on Newswire their First Quarter 2022 results.
LifeWorks Inc is engaged in delivering technology-enabled solutions that help clients support the total wellbeing of their people and build organizational resiliency. Its solutions span employee and family assistance, health and wellness, recognition, pension and benefits administration, retirement consulting, actuarial and investment services. Its web site is here LifeWorks Inc .
The last stock I wrote about was about was Suncor Energy Inc (TSX-SU, NYSE-SU) ... learn more. The next stock I will write about will be TMX Group Ltd (TSX-X, OTC-TMXXF) ... learn more on Wednesday, July 13, 2022 around 5 pm. Tomorrow on my other blog I will write about Young People in the City.... learn more on Tuesday, July 12, 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