Is it a good company at a reasonable price? The stock price seems cheap. It is never a good sign when a company cuts their dividends. Although they have recently increased it, but still the dividends are 50% below where they were. It was taken off of Money Sense list of 100 Best Canadian Dividend Stocks. There is no real consensus by Analysts on this stock. It has not always produced at least an 8% return over a longer term. I would not be a stock that I would be currently interested in.
I do not own this stock of Methanex Corp (TSX-MX, NASDAQ-MEOH). I started a spreadsheet in November 2010 as I had read some good reports on the stock at that time. It is also got a solid “C” grade in a 2009 Money Sense review of stocks. Money Sense rated the top 100 Canadian Dividend Paying stocks. Money Sense was looking for stocks that provided generous income at reasonable prices.
When I was updating my spreadsheet, I noticed that analyst expected a big jump in Revenue (63%) and they were right. Revenue jumped 66% between 2020 and 2021.
If you had invested in this company in December 2011, for $1,021.19 you would have bought 38 shares at $26.87 per share. In December 2021, after 10 years you would have received $446.26 in dividends. The stock would be worth $2,560.86.59. Your total return would have been $3,007.11.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $26.87 | $1,021.19 | 38 | 10 | $446.26 | $2,560.86 | $3,007.11 |
The dividend yields are low with dividend growth restarted. The current dividend yield is low (below 2%) at 1.83%. The 5, 10 and historical dividend yields are moderate (2% to 4% ranges) at 2.05%, 2.18% and 2.33%. Dividends hit a high in 2019 and then in 2020 they were cut 90%. They started to raise dividends again in 2021. The last dividend increase was in 2022 and it was for 20.7%. Dividends are still 50% lower in 2022 than they were in 2019.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2021 is 4% with 5 year coverage at 30%. The DPR for 2022 is expected to be around 13% and rising to 22% in 2023. The DPR for Adjusted Earnings per Share (AEPS) for 2021 is 5% with 5 year coverage at 32%. The DPR for AEPS for 2022 is expected to be around 13%. The DPR for Cash Flow per Share (CFPS) is 2% with 5 year coverage at 9%. The DPR for Free Cash Flow (FCF) for 2021 is 14% with 5 year coverage at 21%.
Some Debt Ratios are problematic, but Liquidity Ratio, a very important ratio is good. The Long Term Debt/Market Cap Ratio for 2021 is 0.73. It is fine, if a bit high. The Liquidity Ratio for 2021 is good at 2.06. The Debt Ratio for 2021 is fine at 1.47. The Leverage and Debt/Equity Ratios are too high at 3.62 and 2.46. I prefer them to be below 3.00 and 2.00. A good thing is that they are lower than last year.
The Total Return per year is shown below for years of 5 to 26 to the end of 2021 in CDN$. 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 | -22.53% | -1.00% | -3.20% | 2.21% |
| 2011 | 10 | -4.83% | 11.61% | 7.93% | 3.68% |
| 2006 | 15 | -2.08% | 5.50% | 3.05% | 2.45% |
| 2001 | 20 | 5.18% | 13.03% | 9.07% | 3.97% |
| 1996 | 25 | 7.85% | 5.72% | 2.13% | |
| 1995 | 26 | 8.55% | 6.39% | 2.16% |
The Total Return per year is shown below for years of 5 to 26 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 | -21.64% | 0.22% | -2.02% | 2.24% |
| 2011 | 10 | -6.91% | 8.95% | 5.65% | 3.30% |
| 2006 | 15 | -2.63% | 4.99% | 2.48% | 2.50% |
| 2001 | 20 | 6.40% | 15.22% | 10.33% | 4.89% |
| 1996 | 25 | 8.44% | 6.10% | 2.34% | |
| 1995 | 26 | 9.07% | 6.71% | 2.37% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 6.70, 8.96 and 11.23. The corresponding 10 year ratios are 7.69, 10.67 and 13.21. The corresponding historical ratios are 9.55, 10.01 and 15.19. The current P/E Ratio is 8.16 based on a stock price of $51.35 and EPS estimate for 2022 of $6.29 (4.61 US$). The current ratio is between the low and median ratios for the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in CDN$.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 6.70, 9.31 and 11.92. The corresponding 10 year ratios are 9.51, 12.40 and 15.51. The current P/AEPS Ratio is 8.00 based on AEPS estimate for 2022 of $4.71 and a stock price of $37.69. This ratio is between the low and median ratios for the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$. You will get a similar answer in CDN$.
I get a Graham Price of $76.96. The 10-year low, median, and high median Price/Graham Price Ratios are 0.89, 1.21 and 1.48. The current Ratio is 0.67 based on a stock price of $51.35. The current ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap. This testing is in CDN$.
I get a 10-year median Price/Book Value per Share Ratio of 2.53. The current P/B Ratio is 1.23 based on a stock price of $37.69, Book Value of $30.65 and a Book Value of $2,148M. The current ratio is 51% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$. You will get a similar answer in CDN$.
I also have an estimate for Book Value per Share for 2022. That Book Value per Share is $29.60 and gives a P/B Ratio of 1.27 based on a stock price of $37.69 and a Book Value of $2,074M. This ratio is 49% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$.
I get a 10-year median Price/Cash Flow per Share Ratio of 6.37. The current P/CF Ratio is 3.04 based on Cash Flow per Share estimate for 2022 of $12.40, Cash Flow $869M and a stock price of $37.69. The current ratio is 55% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$.
I get an historical median dividend yield of 2.33%. The current dividend yield is 1.86% based on dividends of $0.70 and a stock price of $37.69. The current yield is 20% below the historical median dividend yield. This stock price testing suggests that the stock price is expensive. This testing is in US$. The problem with this test is that this company used to be an income trust with very high yields and dividends have been cut recently.
I get an historical median dividend yield of 2.18%. The current dividend yield is 1.86% based on dividends of $0.70 and a stock price of $37.69. The current yield is 15% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$. The problem with this test is that dividends have been cut recently.
The 10-year median Price/Sales (Revenue) Ratio is 1.32. The current P/S Ratio is 0.62 based on Revenue estimate for 2022 of $4,247M, Revenue per Share of $60.61 and a stock price of $37.69. The current ratio is 53% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$ and you will get a similar result in CDN$.
Results of stock price testing is that the stock price is probably cheap. The P/S Ratio testing is showing this result. Most of the other tests are too, with a few says it is reasonable and below the median. The exceptions are the Dividend Yield Tests, but dividends have been cut and the company used to be an income trust.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (3), Hold (6), Underperform (1) and Sell (1). The consensus would be a Hold, but there is little consensus on this stock. The stock price consensus is $61.30 ($44.91 US$). This implies a total return of 21.25% with 19.37% from capital gains and 1.86% from dividends.
Some analysts on Stock Chase give a Sell recommendation. Stock Chase gives this stock 3 stars out of 5. Christopher Liew on Motley Fool talks about this stock in June 2022, although it has fallen since then. Christopher Liew on Motley Fool thinks this stock will rise from obscurity. The company put out a Press Release on their fourth quarter of 2021 results. The company put out a Press Release on their third quarter of 2022.
Simply Wall Street on Yahoo Finance talks about this stock. Simply Wall Street puts out 3 warnings on this stock of earnings are forecast to decline by an average of 34.9% per year for the next 3 years, has a high level of debt and unstable dividend track record.
Methanex Corp manufactures and sells methanol. Methanex's customers use methanol as a feedstock to produce end-products including adhesives, foams, solvents, and windshield washer fluids. Methanex distributes its products through a global supply chain that includes the operation of port terminals, tankers, barges, rail cars, trucks, and pipelines. China generates the most revenue of any geographical segment. Its web site is here Methanex Corp .
The last stock I wrote about was about was Stantec Inc (TSX-STN, NYSE-STN) ... learn more. The next stock I will write about will be Magna International Inc (TSX-MG, NYSE-MGA) ... learn more on Friday, December 9, 2022 around 5 pm. Tomorrow on my other blog I will write about Something to Buy December 2022.... learn more on Thursday, December 08, 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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