Is it a good company at a reasonable price? The stock price is reasonable, but above the median. I looked to see what would have happened if I had held on to my shares to today, and figured I would have made a total return of 6.93% per year to 9.13%, depending on dividend values. I am not sorry I sold this stock and I very much doubt if I would buy it again. The stock price seems to be unusually volatile for a REIT.

I do not own this stock of Granite REIT (TSX-GRT.UN, NYSE-GRP.U). I first bought some of this stock in 2003 when it was called MI Developments (TSX-MIM.A). It was a company connected with Frank Stronach and Magna. TD bank also had an Action Buy Call (Strong Buy) on this stock. By the December 2006, it was doing well and my stock was up some 15% per year. I bought some more. The year of 2006 was the last time I did well on this stock. It kept going down and I sold it in 2009; being discourage it would ever do well again.

When I was updating my spreadsheet, I noticed that this stock has a big run up in price to the end of 2021 gaining 35%. However, so far this year the stock price has fallen 35%.

If you had invested in this company in December 2011, for $1,010.29 you would have bought 31 shares at $32.59 per share. In December 2021, after 10 years you would have received $813.13 in dividends. The stock would be worth $3,267.40. Your total return would have been $4,080.53.

Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
---|---|---|---|---|---|---|

$32.59 | $1,010.29 | 31 | 10 | $813.13 | $3,267.40 | $4,080.53 |

The dividend yields are moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 4.19%. The 5 and historical median dividend yield is also moderate at 4.90% and 4.80%. The 10 year median dividend yield is good (5% to 6%) at 5.19%. The dividend yield has varied a lot over time. During the past 18 years, it has had a high of 8.18% and a low of 1.25%. This is because of big changes in the stock price. The current dividend growth is low (below 8%) at 4.54% per year over the past 5 years. The last dividend increase was in 2022 and it was for 3.32%. Over the past 18 years yearly dividends have decreased 4 times and increased 14 times.

The Dividend Payout Ratios (DPR) are fine because for REITs it is generally believed that the DPR for AFFO and FFO are what counts. The DPR for EPS for 2021 is 15% with 5 year coverage at 28%. The DPR for Adjusted Funds from Operations (AFFO) for 2021 is 82% and 5 year coverage at 82%. The DPR Funds from Operations (FFO) for 2021 76% with 5 year coverage at 76%. The AFFO and FFO coverage is fine and more accurate than for EPS. The DPR for Cash Flow per Share is $63% and 70%. These are quite high. The DPR for Free Cash Flow (FCF) for 2021 is 52% with 5 year coverage at 78%.

Debt Ratios are good. The Long Term Debt/Market Cap Ratio for 2021 is 0.35. This is good. The Liquidity Ratio for 2021 is 2.96. The Debt Ratio for 2021 is 2.64. The Leverage and Debt/Equity Ratios are 1.61 and 0.61.

The Total Return per year is shown below for years of 5 to 19 to the end of 2021 in CDN$. 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 | 4.54% | 23.60% | 18.65% | 4.95% |

2011 | 10 | 13.89% | 17.29% | 12.45% | 4.84% |

2006 | 15 | 10.20% | 9.05% | 6.38% | 2.68% |

2002 | 19 | 10.91% | 10.10% | 7.47% | 2.62% |

The Total Return per year is shown below for years of 5 to 19 to the end of 2021 in US$. 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 | 5.74% | 25.07% | 20.03% | 5.04% |

2011 | 10 | 11.45% | 14.48% | 10.05% | 4.43% |

2006 | 15 | 9.58% | 8.55% | 5.81% | 2.74% |

2002 | 19 | 11.03% | 11.85% | 8.74% | 3.11% |

The 5-year low, median, and high median Price/Earnings per Share Ratios are 5.03, 5.50 and 5.97. The corresponding 10 year ratios are 6.48, 7.92 and 9.68. The corresponding historical ratios are 6.08, 7.887 and 8.85. The current P/E Ratio 3.94 based on a stock price of $68.66 and EPS for the last 12 months of $17.40. The current ratio is below the low of the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

I have Adjusted Fund from Operations (AFFO) data. The 5-year low, median, and high median Price/AFFO Ratios are 15.21, 17.38, and 19.55. The corresponding 10 year ratios are 13.26, 15.67 and 17.92. The current P/AFFO Ratio is 17.47 based on a stock price of $68.66 and AFFO estimate for 2022 of $3.93. The current ratio is between the median and high of the 10 year P/AFFO ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I have Fund from Operations (FFO) data. The 5-year low, median, and high median Price/FFO Ratios are 13.46, 15.17, and 19.06 . The corresponding 10 year ratios are 12.37, 14.37 and 15.63. The current P/FFO Ratio is 15.97 based on a stock price of $68.66 and FFO estimate for 2022 of $4.30. The current ratio is between the median and high of the 10 year P/AFFO ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get a Graham Price of $91.03. The 10-year low, median, and high median Price/Graham Price Ratios are 0.72, 0.79 and 0.88. The current P/GP Ratio is 0.75 based on a stock price of $68.66. The current ratio is between the low and median P/GP 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 1.05. The current P/B Ratio is 0.80 based on a stock price of $68.66, Book Value of $5,627M, and a Book Value per Share of $85.65. The current ratio is 24% 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 14.68. The current P/CF Ratio is 16.90 based on Cash Flow for the last 12 months of $267M, Cash Flow per Share of $4.06 and a stock price of $68.66. The current ratio is 15% 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 4.56%. The current dividend yield is 4.51% based on a stock price of $68.66 and dividends of $3.0996. The current dividend yield is 1% 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 4.47%. The current dividend yield is 4.51% based on a stock price of $68.66 and dividends of $3.0996. The current dividend yield is 17.5% below the historical 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 9.41. The current P/S Ratio is 10.18 based on Revenue estimate for 2022 of $443M, Revenue per Share of $3.59 and a stock price of $68.66. The current ratio is 8% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.

Results of stock price testing is that the stock price is reasonable. It also seems to be above the median. Both the dividend yield tests say this and it is confirmed by the P/S Ratio test. The P/AFFO and P/FFO tests are also showing a reasonable, but above the median results and these, for REITs, are better tests than a P/E Ratio test.

When I look at analysts’ recommendations, I find Strong Buy (5) and Buy (6). The consensus would be a Strong Buy. The 12 months stock price consensus is $97.64. This implies a total return of 46.72% with 42.21% from capital gains and 4.51% from dividends. Note that a stock price of $97.64 is below the 2021 year end price of $105.40 and also below the 2020 year end price of $77.90. Alpha Spread target is $98.3025.

Not everyone likes this stock on Stock Chase. Last analyst says Do Not Buy. Others like it. Stock Chase gives this stock 4 stars out of 5. Money Sense list has no REITs. Adam Othman on Motley Fool says this REIT should provide capital gains. Daniel Da Costa on Motley Fool also says this stock has good long term growth potential. The company results for the fourth quarter of 2021 is in a press release on Business Wire. The company on Business Wire has a press release on the second quarter of 2022 results.

Simply Wall Street on Yahoo Finance talk about who owns this company. Simply Wall Street has two warning signs for this company of debt is not well covered by operating cash flow and large one-off items impacting financial results.

Granite Real Estate Investment Trust is engaged in the acquisition, development, and management of primarily industrial properties in North America and Europe. Granite's portfolio comprises various manufacturing, corporate office, warehouse and logistics, and product engineering facilities. The company's largest tenant is Magna International, which accounts for most of Granite's lease income. Its web site is here Granite REIT.

The last stock I wrote about was about was Great-West Lifeco Inc (TSX-GWO, OTC-GWLIF) ... learn more. The next stock I will write about will be K-Bro Linen Inc (TSX-KBL, OTC-KBRLF) ... learn more on Monday, September 26, 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.

Thanks for your review. Could you please review NorthWest Healthcare REIT, particularly the potential risk of it?

ReplyDeleteSorry, but NorthWest is not a stock I follow and it takes me a lot of work for my reviews.

ReplyDelete