Is it a good company at a reasonable price? The stock price seems to be reasonable, but above the median. In a correction, you would hope to buy some stock that are relatively cheap. This stock is not cheap. I must admit that shareholders have done reasonably well in this stock over the years. Moderate dividends with moderate growth works out the best for shareholders and this is what this stock is providing.
I do not own this stock of TMX Group Ltd (TSX-X, OTC-TMXXF). I looked at this stock in 2008 after I found it on a list of Strongest Dividend Growth stocks. I am interested in such stocks.
When I was updating my spreadsheet, I noticed both Revenue and AEPS came differently than expect. Expected Revenue was $968M and it came in at $981M. Adjusted Earnings per Share (AEPS) was $6.57 and it came in at $7.10.
If you had invested in this company in December 2011, $1000.56 you would have bought 24 shares at $41.69 per share. In December 2021, after 10 years you would have received $490.80 in dividends. The stock would be worth $3,078.00. Your total return would have been $3,568.80.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $41.69 | $1,000.56 | 24 | 10 | $490.80 | $3,078.00 | $3,568.80 |
TMX Group Welcomes SEC Approval of BOX as National Securities Exchange and Self-Regulatory Organization (SRO) and takes an 40% economic and 20% voting interest in this new SRO. See information on Newswire. There is an increase in EPS for TMX in March 2022 quarter because of this. Analysts expect higher earnings in 2022 ($9.38) and then expects a drop of in earnings of some 24% ($7.16).
The dividend yields are moderate with dividend growth moderate. The current dividend yield is moderate (2% to 4% ranges) at 2.58%. The 5 year, 10 year and historical median dividend yields are also moderate at 2.62%, 2.88% and 2.94%. The dividend growth over the past 5 years was moderate (8% to 14% ranges) at 12.78% per year. The last dividend increase was in 2022 and it was low (below 8%) at 7.8%.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2021 was 50% with 5 year coverage at 46%. The DPR for Adjusted Earnings per Share (AEPS) for 2021 was 42% with 5 year coverage at 46%. The DPR for Cash Flow per Share was 29% with 5 year coverage also at 29%. The DPR for Free Cash Flow (FCF) for 2021 was 43% with 5 year coverage at 44%.
Debt Ratios need improving. The Long Term Debt/Market Cap Ratio is 0.14. It is fine and low. The Liquidity Ratio is very low at 1.00 and if you add in cash flow after dividends is it just 1.01. It is right on the end. If below 1.00, it means that the current assets cannot cover the current liabilities. It is preferable if this ratio is 1.50 or higher. The Debt to Cash Flow in years is 2.26 and it is better if this is at 3.00. The Debt Ratio is also low at 1.06. It is preferrable if this is 1.50 or higher.
The Total Return per year is shown below for years of 5 to 19 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 | 12.78% | 15.11% | 12.39% | 2.72% |
| 2011 | 10 | 6.52% | 14.82% | 11.89% | 2.92% |
| 2006 | 15 | 5.65% | 9.54% | 7.03% | 2.50% |
| 2002 | 19 | 12.70% | 21.09% | 13.99% | 7.10% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 16.06, 21.64 and 23.71. The corresponding 10 year ratios are 17.06, 21.69 and 24.25. The corresponding historical ratios are 16.71, 21.69 and 25.02. The current P/E Ratio is 13.71 based on a stock price of $128.58 and EPS estimate for 2022 of 9.38. 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 have Adjusted Earnings per Share (AEPS) data. The 5 year low, median, and high median Price/Earnings per Share Ratios are 15.08, 18.56 and 20.00. The corresponding 10 year ratios are 13.74, 15.49 and 17.25. The current P/AEPS Ratio is 17.81 based on a stock price of $128.58 and AEPS estimate for 2022 of $7.22. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $121.14. The 10 year low, median, and high median Price/Graham Price Ratios are 0.87, 1.07 and 1.24. The current ratio is 1.06 based on a stock price of $128.58. 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 1.14. The current P/B Ratio is 1.85 based on a stock price of $128.58, Book Value of $3885M and Book Value per Share of $69.53. The current ratio is 62% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I also have a Book Value per Share estimate for 2022. This estimate produces a ratio of 1.79 for 2022, based on a Book Value per Share estimate for 2022 of $71.80, Book Value of $4012M and a stock price of $128.58. This ratio for 2022 is 57% 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 12.30. The current P/CF Ratio is 10.54 based on Cash Flow per Share estimate for 2022 of 12.20, Cash Flow of $682M and a stock price of $128.58. 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 2.94%. The current dividend yield is 2.58% based on a stock price of $128.58 and dividends of $3.32. The current dividend yield is 12% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10 year median dividend yield of 2.88%. The current dividend yield is 2.58% based on a stock price of $128.58 and dividends of $3.32. The current dividend yield is 10% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
The 10 year median Price/Sales (Revenue) Ratio is 5.57. The current P/S Ratio is 6.17 based on Revenue estimate for 2022 of $1,165M, Revenue per Share of $20.85 and a stock price of $128.58. The current ratio is 11% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable above the median.
Results of stock price testing is that the stock price is reasonable, but above the median. Both the dividend yield tests and the P/S Ratio test says this. Other tests vary from expensive to cheap and in between. The price of this stock, after some ups and downs, is basically back to where it started at the beginning of the year. We seem to be in a stock market correction. So, it would be nice to pick up some cheap stock, but this stock is not cheap.
Last year, the results of my stock price testing were that the stock price would seem to be on the expensive side currently. Both the dividend yield tests say this and it is confirmed by the P/S Ratio test. All the other tests say the same thing except for the P/S Ratio test which says the stock price is still reasonable, but above the median.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (2). and Hold (4). The consensus is a Buy. The 12 month stock price consensus is $151.29. This implies a total return of 20.24% with 17.66% from capital gains and 2.58% from dividends based on a stock price of $128.58.
When I look at analysts’ recommendations last year, I found Strong Buy (1), Buy (2), and Hold (4) recommendations. The consensus was Buy. The 12 months stock price consensus is $150.00. This implies at total return of 17.59% with 15.23% from capital gains and 2.37% from dividends based on a stock price of $130.18. What happened was a total return of 1.14% with a capital loss of 1.23% and dividend of 2.37%.
Analysts vary on their views of this company on Stock Chase. Stock Chase gives it 3 stars out of 5. Money Sense rates the company a C. Christopher Liew on Motley Fool reviews this stock. Says that 2022 may not be a good a year as 2021 was for this company. The company is part of the list of Top TSX stocks for May 2022 on Motley Fool. The company reports on Newswire its fourth quarter results. The company reports on TMX their first quarterly results of 2022. .
Simply Wall Street reviews this stock via Yahoo Finance. Simply Wall Street has one warning on this stock of earnings are forecast to decline by an average of 13.6% per year for the next 3 years
TMX Group Ltd is a company that operates several global markets to provide investment opportunities for its clients. TMX Group's key operations include Toronto Stock Exchange, TSX Venture Exchange, TSX Alpha Exchange, The Canadian Depository for Securities, Montreal Exchange, Canadian Derivatives Clearing Corporation, and Trayport. TMX Group operates offices across North America (Montreal, Calgary, Vancouver, and New York), as well as in key international markets including London and Singapore. Its web site is here TMX Group Ltd.
The last stock I wrote about was about was LifeWorks Inc (TSX-LWRK, OTC-MSIXF) ... learn more. The next stock I will write about will be Obsidian Energy Ltd (TSX-OBE, NYSE-OBE) ... learn more on Friday, July 15, 2022 around 5 pm. Tomorrow on my other blog I will write about Buy Good Companies and Hold.... learn more on Thursday, July 14, 2022 around 5 pm.
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