Is it a good company at a reasonable price? I think that the stock price is reasonable. This stock has long term reasonable returns. I think that dividend growth portfolios should have one of the Telecoms in them.
I do not own this stock of Telus Corp (TSX-T, NYSE-TU). I started to follow this stock because of a list of stock John Sartz talked about in 2008. At the Toronto Money Shows in 2009 and 2010 Aaron Dunn from KeyStone Financial Publishing Corp talked about having recommended this stock. Aaron Dunn says he likes companies with resilient business models, which are profitable and are growing their earnings. He also like companies with strong management teams, health balance sheets and compelling valuations. They look at the P/E and the Price/Cash Flow ratios. Telus Corp (TSX-T) was one of three stocks he recommended in 2009.
When I was updating my spreadsheet, I noticed Revenue estimate for 2022 increased from $18,044M in 2021 to $18,210M in 2022. I also note that EPS estimate for 2022 increased from $1.17 in 2021 and is now $1.21 in 2022.
If you had invested in this company in December 2011, $1,008.70 you would have bought 70 shares at $14.41 per share. In December 2021, after 10 years you would have received $647.14 in dividends. The stock would be worth $2,085.30. Your total return would have been $2,732.44.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $14.41 | $1,008.70 | 70 | 10 | $647.14 | $2,085.30 | $2,732.44 |
The dividend yields are moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 4.73%. The 5, 10 and historical median dividend yields are also moderate at 4.56%, 4.34% and 4.07%. The Dividend growth over the past 5 years is low (below 8% per year) at 6.87%. Dividend growth has varied a lot in the past. The last dividend increase was in 2022 and it was for 3.42%. This is the second raise for 2022 and the two increases gives a total increase of 7.08%.
Some Dividend Payout Ratios (DPR) are high, but they are expected to improve. The DPR for EPS for 2021 is 103% with 5 year coverage at 89%. Analysts do not expect this DPR to be under 100% until 2024. The DPR for Adjusted Earning per Share (AEPS) for 2021 is 117% with 5 year coverage at 90%. Analyst expect the DPR for AEPS to be under 100% in 2023 at 94% and then down to 79% in 2024.
The DPR for Cash Flow per Share (CFPS) is good at 38% with 5 year coverage at 33%. Any rate at 40% or lower is good. The DPR for Free Cash Flow (FCF) for 2021 is negative. The 5 year coverage is 208%. Analyst expect this DPR to be below 100% at 68% in 2023. Analysts generally like this DPR to be below 70%.
Debt Ratios for Liquidity is low and that can be a problem. Other ratios are fine. The Long Term Debt/Market Cap Ratio for 2021 is 0.44 and is good. The Liquidity Ratio for 2021 is very low at 0.61. A ratio below 1.00 means that the current assets cannot cover the current liabilities. Even adding in Cash Flow less Dividends the ratio is only 0.93. To get over 100% you must add back the current portion of the long term debt and then the ratio is 1.44. Low Liquidity Ratio can be a problem for companies in a recession. The Debt Ratio is good at 1.50. The Leverage and Debt/Equity Ratios are fine at 2.99 and 1.99, respectively.
The Total Return per year is shown below for years of 5 to 31 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 | 6.87% | 11.38% | 6.86% | 4.51% |
| 2011 | 10 | 18.67% | 12.03% | 7.53% | 4.49% |
| 2006 | 15 | 10.65% | 9.15% | 5.48% | 3.67% |
| 2001 | 20 | 7.42% | 12.20% | 8.29% | 3.91% |
| 1996 | 25 | 5.72% | 9.19% | 5.82% | 3.37% |
| 1991 | 30 | 5.94% | 9.18% | 5.64% | 3.54% |
| 1990 | 31 | 10.61% | 9.92% | 6.06% | 3.86% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 17.20, 18.51 and 19.83. The corresponding 10 year ratios are 16.86, 17.97 and 19.29. The corresponding historical ratios are 14.35, 16.76 and 18.82. The current P/E Ratio is 23.67 based on a stock price of $28.64 and EPS estimate for 2022 of 1.21. This 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 also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median P/AEPS Ratios are 16.08, 17.32 and 18.55. The corresponding 10 year ratios are 15.67, 16.61 and 17.69. The current ratio is 22.55 based on a stock price of $28.64 and AEPS estimate for 2022 of $1.27. 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 Graham Price of $17.60. The 10-year low, median, and high median Price/Graham Price Ratios are 1.43, 1.58 and 1.73. The current P/GP Ratio is 1.63 based on a stock price of $28.64. 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 2.76. The current P/B Ratio is 2.52 based on a Book Value of $15,716M, Book Value per Share of $11.38 and a stock price of $28.64. The current ratio is 9% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I also have Book Value per Share estimate for 2022. Here the current P/B Ratio is 2.51 based on a Book Value per Share of $11.40, Book Value of $15,743M and a stock price of $28.64. The current ratio is 9% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10-year median Price/Cash Flow per Share Ratio of 7.02. The current ratio is 8.40 based on Cash Flow per Share estimate for 2022 of $3.41, Cash Flow of $4,709M and a stock price of $28.64. The current ratio is 19.6% 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 4.07%. The current dividend yield is 4.73% based on a stock price of $28.64 and dividends of $1.3544. The current dividend yield is 16% above the historical dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median dividend yield of 4.34%. The current dividend yield is 4.73% based on a stock price of $28.64 and dividends of $1.3544. The current dividend yield is 9% above the historical dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10-year median Price/Sales (Revenue) Ratio is 2.00. The current P/S Ratio is 2.16 based on Revenue estimate for 2022 of $18,286M, Revenue per Share of $13.24 and a stock price of $28.64. 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 probably reasonable. The dividend yield tests say it is reasonable and below the median and the P/S Ratio test says it is reasonable but above the median. Most of the testing is showing the stock price as reasonable, but the P/E Ratio and the P/AEPS Ratio tests. These are the least reliable tests.
When I look at analysts’ recommendations, I find Strong Buy (4), Buy (9) and Hold (4). The consensus would be a Buy. The 12 month stock price target is $34.21. This implies a total return of $21.18% with 19.45% from capital gains and 4.73% from dividends based on a stock price of $28.64.
Some analysts on Stock Chase like this company and some are not very keen on it. Stock Chase gives this company 5 stars out of 5. Money Sense gives the company a C rating. Kay Ng on Motley Fool talks about why she will not sell this company. I agree with the idea of buying good companies and holding this for the long term. Andrew Walker on Motley Fool thinks that the stock price is relatively cheap. The company released a report on Global Newswire about their fourth quarter of 2021. The company put out a news release about their second quarter results of 2022.
Simply Wall Street reviews this stock on Yahoo Finance. Simply Wall Street gives three warnings signs of dividend of 4.6% is not well covered by earnings or forecast to be in the next 3 years; has a high level of debt; and shareholders have been diluted in the past year
Telus is one of the Big Three wireless service providers in Canada with about 30% of the total market. It is the incumbent local exchange carrier in the western Canadian provinces of British Columbia and Alberta, where it provides internet, television, and landline phone services. It also has a small wireline presence in eastern Quebec. Telus' other businesses participate in the international business services, health, security, and agriculture industries. Its web site is here Telus Corp.
The last stock I wrote about was about was Accord Financial Corp (TSX-ACD, OTC-ACCFF) ... learn more. The next stock I will write about will be Wajax Corp (TSX-WJX, OTC-WJXFF) ... learn more on Friday, September 16, 2022 around 5 pm. Tomorrow on my other blog I will write about Glenn Loury Substack .... learn more on Thursday, September 15, 2022 around 5 pm.
Also, on my book blog I have put a review of the book Land by Simon Winchester learn more...
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