Is it a good company at a reasonable price? The stock price is reasonable. It has mainly delivered good returns in both capital gains and dividends for its shareholders. For people who have held this stock for 15 years, they are getting 9.3% on their original investment. If the company keeps up the current increases from todays yield, investor could be getting 8.9% return on today’s purchase ($32.45). (Note that 15 years ago, yields were higher because the company was an income trust.)
I do not own this stock of Badger Infrastructure Solutions Ltd (TSX-BDGI, OTC-BADFF). I started to follow this stock after reading a couple of articles in February 2012 in the G&M that talked about the company. The first article looked at what the pros who manage small-cap funds are buying. Badger was one of 10 stocks mentioned and it looked like an interesting stock. It is a dividend paying small cap. The second article looked at why stocks might appeal to a conservative investor looking for income.
When I was updating my spreadsheet, I noticed that revenue was up only slightly, the Cost of Sales increased a lot. Last year the ratio of the Cost of Sales to Revenue was a ratio of 0.71 and this year the ratio was 0.79. The Revenue increased by 1.8%, but Cost of Sales was up 14%. Therefore, there is an earning loss.
If you had invested in this company in December 2011, $1,005.56 you would have bought 138 shares at $7.29 per share. In December 2021, after 10 years you would have received $622.13 in dividends. The stock would be worth $4,387.02. Your total return would have been $5,009.15.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $7.29 | $1,005.56 | 138 | 10 | $622.13 | $4,387.02 | $5,009.15 |
The dividend yields are moderate with dividend growth moderate. The current dividend yield is moderate (2% to 4%) at 2.07%. The 5 and 10 year median dividend yields are low (below 2%) at 1.65% and 1.58%. The historical median dividend yield is moderate at 2.98%. The dividend growth is good (8% to 14% ranges) at 10.3% per year for the past 5 years. The last dividend increase was for 4.76% in 2022 and dividends payments have changed from monthly to quarterly. Because of the timing of the change to quarterly, dividends are lower in 2022, but if you look at when dividends are declared, there really is no dip in dividends.
The Dividend Payout Ratios (DPR) are currently too high, but are expected to drop. The DPR for 2021 is negative. The 5 year coverage is 48%. The DPR for 2022 is expected to be around 60% and around 43% in 2023. The DPR for Cash Flow per Share for 2021 is 30% with 5 year coverage at 15%. The DPR for 2021 for Free Cash Flow (FCF) 234% with 5 year coverage at 87%. This is expected to drop to 87% in 2022.
Debt Ratios are fine. The Long Term Debt/Market Cap is 0.11 and is low and good. The Liquidity Ratio for 2021 is 1.42 which is a little low, but the current one is 1.77 and the 5 year median is 1.67. The Debt Ratio for 2021 is 1.86 and this is good. The Leverage 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 | 10.32% | 1.49% | -0.19% | 1.69% |
| 2011 | 10 | 6.03% | 19.11% | 15.87% | 3.24% |
| 2006 | 15 | 2.89% | 17.40% | 13.11% | 4.29% |
| 2001 | 20 | 7.51% | 30.31% | 20.12% | 10.19% |
| 1997 | 24 | 11.21% | 9.02% | 2.19% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 12.42, 16.39 and 20.35. The corresponding 10 year ratios are 14.87, 20.57 and 27.81. The corresponding historical ratios are 9.25, 11.39 and 14.26. The current P/E Ratio is 30.61 based on a stock price of $32.45 and EPS estimate for 2022 of $1.06. This ratio is above the high ratio of the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $12.13. The 10-year low, median, and high median Price/Graham Price Ratios are 1.47, 1.99 and 2.68. The current ratio is 2.86 based on a stock price of $32.45. The current ratio is above the high of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a 10-year median Price/Book Value per Share Ratio of 3.44. The current P/B Ratio is 5.26 based on a Book Value of $212.5M, Book Value per Share of $6.16 and a stock price of $32.45. The current ratio is 53% 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 12.33. The current P/CF Ratio is 10.54 based on Cash Flow per Share estimate for 2022 of $3.08 and a stock price of $32.45. The current ratio is 15% 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 2.98%. The current dividend yield is 2.03% based on a stock price of $32.45 and dividends of $0.66. The current dividend yield is 32% below the historical dividend yield. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median dividend yield of 1.58%. The current dividend yield is 2.03% based on a stock price of $32.45 and dividends of $0.66. The current dividend yield is 29% above the 10 year dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10-year median Price/Sales (Revenue) Ratio is 2.18. The current P/S Ratio is 1.57 based on Revenue estimate for 2022 of $712M, Revenue per Share of $19.64 and a stock price of $32.45. The current ratio is 28% 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 reasonable to cheap. The 10 year dividend yield test and the P/S Ratio tests say that the stock price is cheap and these are the best tests. I caution on saying it is cheap, because of the other tests that say the stock price is expensive, like to P/B Ratio and the P/GP Ratio test.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (1), Hold (3) and Sell (1). This is quite a wide range. The consensus would be a Hold because of the Sell rating. The 12 month stock price consensus us $35.28. This implies a total return of $1.76% with 8.72% from capital gains and 2.03% from dividends.
The only entry on Stock Chase is from 5i Research and they say sell. Stock Chase gives this stock 3 stars out of 5. It is not on the Money Sense list. Joey Frenette on Motley Fool says this battered stock could be ready for a rebound. The company announces its fourth quarter results on Newswire. The company announces its first quarterly results in a News Release.
Simply Wall Street has a report on Yahoo Finance about this stock. Simply Wall Street has two risk warnings of interest payments are not well covered by earnings and dividend of 2.04% is not well covered by earnings or forecast to be in the next 3 years. They also report on recent insider buying, which they like.
Badger Infrastructure Solutions Ltd is North America's provider of non-destructive excavating services. Its key technology is the Badger Hydrovac, which is used primarily for safe excavation around critical infrastructure and in congested underground conditions. Its web site is here Badger Infrastructure Solutions Ltd.
The last stock I wrote about was about was Superior Plus Corp (TSX-SPB, OTC-SUUIF) ... learn more. The next stock I will write about will be GFL Environmental Inc (TSX-GFL, NYSE-GFL) ... learn more on Wednesday, August 17, 2022 around 5 pm. Tomorrow on my other blog I will write about Three Oil Stocks .... learn more on Tuesday, August 16, 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.
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