Is it a good company at a reasonable price? This is not my sort of stock. I would pick a lower yield for higher increases. I do not like the Liquidity Ratio at all. Very low Liquidity Ratios can cause companies to go bankrupt in recessionary times. The Liquidity Ratio does not even get to 1.00. Shareholders have not done very well in the past. I like a stock to have a total return of a average of 8% per year. I do not think the rewards for this stock are worth the risks. The stock price is reasonable and is testing as cheap.
I do not own this stock of Chartwell Retirement Residences (TSX-CSH.UN, OTC-CWSRF). I saw this stock on a dividend investing blog and looked it up on Stock Chase.
When I was updating my spreadsheet, I noticed this stock is classified as a Health Care, Consumer stock, but it is more a real estate company. That is why they talk about Adjusted Funds from Operations (AFFO) and Funds from Operations (FFO)
If you had invested in this company in December 2011, for $1,006.50 you would have bought 122 shares at $8.25 per share. In December 2021, after 10 years you would have received $695.70 in dividends. The stock would be worth $1,422.04. Your total return would have been $2,137.74.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $8.25 | $1,006.50 | 122 | 10 | $695.70 | $1,442.04 | $2,137.74 |
The dividend yields are high with dividend growth low. The current dividend yield is high (7% and above) at 7.48%. The 5, and 10 year dividend median yields are moderate (2% to 4% ranges) at 4.04%, and 4.80%. The historical median dividend yield is good (5% to 6% ranges) at 5.74%. The dividend increases are low with the dividend increasing at a rate of 1.8% per year over the past 5 years. The last dividend increase was in 2020 and it was for 2%.
The Dividend Payout Ratios (DPR) are too high, but some are expected to be better in 2023 or 2024. The DPR for EPS for 2021 is 1397% with 5 year coverage at 1108%. This is not expected to improve over the next while as analysts expect earning loses in 2022 and 2023. The DPR for AFFO for 2021 is 104% with 5 year coverage at 72%. DPR for AFFO is expected to go below 100% in 2023. The DPR for FFO for 2021 is 115% with 5 year coverage at 79%. This DPR is expected to go below 100% in 2024. The DPR for Free Cash Flow (FCF) for 2021 is 323% with 5 year coverage at 392%. This is not expected to go below 100% anytime soon.
Debt Ratios are awful, especially the Liquidity Ratio. The Long Term Debt/Market Cap for 2021 is 0.74. That is a good one. The Liquidity Ratio for 2021 is awful at 0.29. It has a history of being awful. Even if you add in cash flow after dividends it is 0.48. This means that current assets cannot cover current liabilities. This is an important ratio as in hard times it can help bankruptcy you. The Debt Ratio for 2021 is low at 1.32. I prefer both these ratios to be at 1.50 or higher. Leverage and Debt/Equity Ratios for 2021 are too high at 4.14 and 3.14. 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 18 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 | 1.83% | 0.21% | -4.20% | 4.42% |
| 2011 | 10 | 1.26% | 9.60% | 3.66% | 5.94% |
| 2006 | 15 | -3.63% | 4.07% | -0.90% | 4.97% |
| 2003 | 18 | -3.25% | 5.98% | -0.20% | 6.18% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 230.43, 245.40 and 260.37. The corresponding 10 year ratios are 154.80, 172.18 and 200.59. These are very high because of very low EPS over the past while. The corresponding historical ratios are all negative and therefore not useable. The current P/E Ratio is negative and not useable. The next time a positive EPS is expected is 2014 and that P/E Ratio is 116.86. It is high because of a low EPS. It is lower than the low of the 10 year median ratios.
I have Funds from Operations (FFO) data. The 5-year low, median, and high median Price/FFO Ratios are 15.03, 16.48 and 18.21. The corresponding 10 year ratios are 13.21, 15.10 and 17.30. The current P/FFO ratio 14.61 based on a stock price of $18.18 and FFO estimate for 2022 of $0.56. This 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 have Adjusted Funds from Operations (AFFO) data. The 5-year low, median, and high median Price/AFFO Ratios are 16.08, 17.55 and 19.28. The corresponding 10 year ratios are 14.20, 16.23 and 18.59. The current P/FFO ratio 16.69 based on a stock price of $18.18 and AFFO estimate for 2023 of $0.49. This 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 Graham Price of $6.36. The 10-year low, median, and high median Price/Graham Price Ratios are 1.34, 1.51 and 1.72. The current P/GP Ratio is 1.29 based on a stock price of $18.18. The current ratio is below the low ratio of the 10 year median ratio. 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 3.30. The current P/B Ratio is 2.55 based on a stock price of $18.18, Book Value of $749M and Book Value per Share of $3.21. The current ratio is 23% 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 15.72. The current P/CF Ratio is 16.56 based on the Cash Flow of the last 12 months of $147M, Cash Flow per Share of $0.63 and a stock price of $18.18. the current ratio is 17% 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 5.74%. The current dividend yield is 7.48% based on a stock price of $18.18 and dividends of $0.612. The current dividend yield is 30% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 4.80%. The current dividend yield is 7.48% based on a stock price of $18.18 and dividends of $0.612. The current dividend yield is 55% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10-year median Price/Sales (Revenue) Ratio is 3.09. The current P/S Ratio is 1.87 based on Revenue estimate for 2022 of $1,023M, Revenue per Share of $4.38 and a stock price of $18.18. The current ratio is 39% 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. Both the dividend yield tests say this and it is confirmed by the P/S Ratio test. The rest of the testings says that the stock price is either reasonable or cheap.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (3) and Hold (1). The consensus would be a Buy. The 12 month stock price is $11.33. This implies a total return of $45.99%, with 38.51% from capital gains and 7.48% from dividends.
Most analysts on Stock Chase do not like this stock. Stock Chase gives this stock 5 stars out 5. It is not on the Money Sense list. Kay Ng on Motley Fool reviews this stock and Sienna. Thinks that there could be good future return for high risk investors. Ambrose O'Callaghan on Motley Fool thinks this is a good stock for passive income. The company put out a press release via newswire on their 2021 results. The company put out a press release via newswire on their third quarter of 2022.
Simply Wall Street reviews this stock via Yahoo Finance. Simply Wall Street gives this stock 3 stars out of 5. It lists 3 risks of interest payments are not well covered by earnings; dividend of 7.63% is not well covered by earnings or cash flows; and large one-off items impacting financial results.
Chartwell Retirement Residences is an unincorporated open-ended trust. The company is engaged in the ownership, operation, and management of retirement and long-term care communities in Canada. It operates its retirement and long-term care facilities separately. Its web site is here Chartwell Retirement Residences.
The last stock I wrote about was about was Richards Packaging Income Fund (TSX-RPI.UN, OTC-RPKIF) ... learn more. The next stock I will write about will be Sienna Senior Living Inc (TSX-SIA, OTC-LWSCF) ... learn more on Friday, December 16, 2022 around 5 pm. Tomorrow on my other blog I will write about Canadian Pipeline Companies .... learn more on Thursday, December 15, 2022 around 5 pm.
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