Is it a good company at a reasonable price? There is nothing wrong with investing in the company, but there are risks of volatility because it is in the construction business and debt ratios are not ideal. They seem now to have the Dividend Payout Ratios under control, so they will probably grow their dividends in the future. The stock price is certainly reasonable and is probably cheap.
I do not own this stock of Bird Construction Inc (TSX-BDT, OTC-BIRDF). This was listed as a top stock in ETF of iShares S&P TSX Canadian Dividend Aristocrats Index. I had not heard of it before, so I decided to do a spreadsheet on this stock.
When I was updating my spreadsheet, I noticed the long slow recovery from 2008 bear seemed to have affected this company. So has the problems of covid. The long term investors have still done fine, but the return has not been good for the past 5 and 10 years. See chart below. The stock price high was hit in 2012 and stock price was sort of flat until 2016 and then the stock price went into a decline. Dividends were cut in 2017 and have been flat ever since.
If you had invested in this company in December 2011, for $1,003.11 you would have bought 87 shares at $11.53 per share. In December 2021, after 10 years you would have received $497.14 in dividends. The stock would be worth $854.34. Your total return would have been $1,351.48.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $11.53 | $1,003.11 | 87 | 10 | $497.14 | $854.34 | $1,351.48 |
The dividend yields are good with dividend growth non-existent. The current dividend yield is good (5% to 6% ranges) at 5.31%. The 5, 10 and historical dividend yields are also good at 5.06%, 5.70% and 5.93%. They decreased the dividends in 2017 and they have been flat ever since. Over the past 21 years, dividends have increased 11 times and declined 4 times. The problem is that this stock used to be an income trust company. All income trust companies paid much higher dividends that corporation can and all companies that were income trusts have had a hard time getting the dividends right.
The Dividend Payout Ratios (DPR) are fine as they are expected to improve. The DPR for EPS for 2021 is 49% with 5 year coverage at 96%. The DPR for 2022 is expected to be 37% and decline in the future. The DPR for Adjusted Earnings per Share (AEPS) for 2021 is 41% with 5 year coverage at 92%. This DPR is expected to decline to 48% in 2022 and continue to decline. The DPR for Cash Flow per Share (CFPS) for 2021 is 20% with 5 year coverage at 39%. The DPR for Free Cash Flow (FCF) for 2021 is 53% with 5 year coverage at 132%. This DPR is expected to decline to 21% in 2022. (The FCF is not the same depending on what site you look at.)
Debt Ratios need to be improved, but the company has a long history of questionable debt ratios. The Long Term Debt/Market Cap for 2021 is 0.14 and it is low and good. The Accounts Payable has also been high for this company and the Accts Payable/Market Cap Ratio for 2021 is high at 0.98. The Liquidity Ratio for 2021 is low at 1.21 and does not improve much if you add in cash flow after dividends (1.23). I prefer this to be 1.50 or higher. The Debt Ratio for 2021 is low at 1.27. I also prefer this to be 1.50 or higher. The Leverage and Debt/Equity Ratios for 2021 are 4.67 and 3.67 and are high. I prefer these to be under 3.00 and under 2.00.
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 | -12.48% | 5.87% | 1.62% | 4.25% |
| 2011 | 10 | -5.05% | 3.85% | -1.59% | 5.45% |
| 2006 | 15 | 1.26% | 14.06% | 4.79% | 9.27% |
| 2001 | 20 | 6.48% | 26.56% | 9.18% | 17.37% |
| 1997 | 24 | 49.60% | 18.13% | 31.47% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 9.80, 11.51, and 13.23. The corresponding 10 year ratios are 14.14, 17.54 and 20.94. The corresponding historical ratios are 7.12, 10.03 and 11.38. The current P/E Ratio is 6.99 based on a stock price of $7.34 and EPS estimate for 2023 of $1.05. The current ratio is below the low the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I have Adjusted Earning per Share (AEPS) data. The 5-year low, median, and high median Price/Earnings per Share Ratios are 8.17, 9.59 and 11.02. The corresponding 10 year ratios are 11.47, 13.95 and 16.43. The current ratio is 9.06 based on a stock price of $7.34 and AEPS estimate for 2023 of $81. 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 Graham Price of 10.76 . The 10-year low, median, and high median Price/Graham Price Ratios are 1.24, 1.54 and 1.83. The current P/GP Ratio is 0.68 based on a stock price of $7.34. The current ratio is below the low of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I get a 10-year median Price/Book Value per Share Ratio of 2.72. The current P/B Ratio is 1.50 based on a stock price of $7.34, Book Value of $263M and Book Value per Share of $4.90. The current ratio is 45% 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 6.65. The current P/CF Ratio is 6.89 based on Cash Flow per Share estimate for 2022 of $1.07, Cash Flow of $57M and a stock price of $7.34. The current ratio is 3.5% above the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get an historical median dividend yield of 5.93%. The current dividend yield is 5.31% based on a stock price of $7.34 and dividends of $0.39. The current dividend yield is 10% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median. This stock used to be an income trust and income trusts have high yields.
I get a 10 year median dividend yield of 5.70%. The current dividend yield is 5.31% based on a stock price of $7.34 and dividends of $0.39. The current dividend yield is 6.8% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median. This stock used to be an income trust and income trusts have high yields.
The 10-year median Price/Sales (Revenue) Ratio is 0.29. The current P/S Ratio is 0.17 based on a stock price of $7.34, Revenue estimate for 2023 of $2,360M and Revenue per Share of $43.95. The current ratio is 43% 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 cheap. The P/S Ratio test is saying this. The dividend yield tests are saying reasonable, but the company used to be an income trust and the dividend yield tests are not reliable for these sorts of companies. The rest of the tests vary from cheap to reasonable.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (2) and Hold (3). The consensus would be a Buy. The 12 month stock price is $9.56. This implies a total return of 35.56% with 30.25% from capital gains and 5.31% from dividends based on a stock price of $7.34.
Analysts on Stock Chase think that construction is a tough business to be in. Stock Chase gives this stock 4 stars out of 5. It is not on Money Sense list. Christopher Liew on Motley Fool thinks that this stock may benefit from the future construction boom. Ambrose O'Callaghan on Motley Fool thinks this is a good stock to buy for passive income. The company put out a Press Release on their fourth quarter of 2021. The company put out a Press Release on their third quarter of 2022.
Simply Wall Street reviewed this stock via Yahoo Finance. Simply Wall Street has two warnings of high level of non-cash earnings and dividend of 5.5% is not well covered. Simply Wall Street gives this stock 4 stars out of 5.
Bird Construction Inc is a construction company operating from coast-to-coast and servicing all of Canada's major markets. The group provides a comprehensive range of construction services from new construction for industrial, commercial, institutional, and civil infrastructure markets; to industrial maintenance, repair and operations services, heavy civil construction, and mine support services. It also provides vertical infrastructure including, electrical, mechanical, and specialty trades. Its web site is here Bird Construction Inc.
The last stock I wrote about was about was Sienna Senior Living Inc (TSX-SIA, OTC-LWSCF) ... learn more. The next stock I will write about will be Element Fleet Management Corp (TSX-EFN, OTC-ELEEF) ... learn more on Wednesday, December 21, 2022 around 5 pm. Tomorrow on my other blog I will write about Renting or Home Ownership.... learn more on Tuesday, December 20, 2022 around 5 pm.
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