Is it a good company at a reasonable price? Since it will be bought by Rogers, I see no point in a small individual investor investing in this stock. The stock price is close to the buy out price. The gain has been made already. There is not much upside for small investors. It will be interesting how this all turns out. If for any reason the sale does not go through, the price for this stock will fall.
I do not own this stock of Shaw Communications Inc (TSX-SJR.B, NYSE-SJR). I am following this stock because it was a stock on Investment Reporter’s list, a MPL Communications Publication.
When I was updating my spreadsheet, I noticed that they site does not work very well. Menu lines at top right do not work. I could not open previous annual reports as they would not come up. Good job that there are other places to find Annual Reports, like Annual Reports. I also could not find the list of Directors or the Leadership and had to google to get this information. This is supposed to be a tech company selling internet services? The site was most annoying.
The other thing to note is that Rogers Communications Inc (TSX-RCI.B, NYSE-RCI) is trying to buy Shaw Communications Inc (TSX-SJR.B, NYSE-SJR). It will probably happen. I also noticed that last year in estimates, analysts expected the company to start to raise dividends in 2023. Now they do not see any raising of dividends any time soon.
If you had invested in this company in December 2012, for $1,004.96 you would have bought 44 shares at $22.84 per share. In December 2022, after 10 years you would have received $505.67 in dividends. The stock would be worth $1,716.44. Your total return would have been $2,222.11.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $22.84 | $1,004.96 | 44 | 10 | $505.67 | $1,716.44 | $2,222.11 |
The dividend yields are moderate with dividend growth non-existent. The current dividend yield is moderate (2% to4% ranges) at 2.98%. The 5 and 10 year median dividend yields are also moderate at 4.39% and 4.27%. The historical dividend yield is low (below 2%) at just 1.66%. I have dividend information covering 32 years and until 2008, the dividend yield was below 2%. The dividends have been flat since 2017. It does not look like any analyst expect future dividend increases.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2022 is 78% with 5 year coverage at 94%. The DPR for Cash Flow per Share (CFPS) for 2022 is 30% with 5 year coverage at 32%. There is disagreement about what the Free Cash Flow (FCF) is. However, for the FCF put out by the company, the DPR for 2022 is 73% with 5 year coverage also at 73%.
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2022 is good at 0.27. The Liquidity Ratio is low at 0.86. If you add in cash flow after dividends, it is 1.49 and not quite up to the ratio I like of 1.50. The Debt Ratio is good at 1.65. The Leverage and Debt/Equity Ratios for 2022 are fine at 2.53 and 1.53.
The Total Return per year is shown below for years of 5 to 32 to the end of 2022. 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. |
|---|---|---|---|---|---|
| 2017 | 5 | 0.00% | 10.02% | 6.34% | 3.68% |
| 2012 | 10 | 2.29% | 9.52% | 5.50% | 4.02% |
| 2007 | 15 | 5.99% | 6.86% | 3.40% | 3.47% |
| 2002 | 20 | 21.28% | 12.27% | 8.16% | 4.11% |
| 1997 | 25 | 18.37% | 14.29% | 10.41% | 3.88% |
| 1992 | 30 | 15.68% | 12.99% | 9.93% | 3.07% |
| 1990 | 32 | 15.29% | 14.78% | 11.44% | 3.34% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 16.96, 18.42 and 20.93. The corresponding 10 year ratios are 13.44, 15.96 and 18.42. The corresponding historical ratios are 14.58, 16.53 and 19.08. The current P/E Ratio is 25.49 based on a stock price of $39.76 and EPS estimate for 2023 of $1.56. The current ratio is above the high of the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $21.22 . The 10-year low, median, and high median Price/Graham Price Ratios are 1.18, 1.31 and 1.48. The current P/GP Ratio is 1.87 based on a stock price of $39.76. 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 10-year median Price/Book Value per Share Ratio of 2.42. The current P/B Ratio is 3.10 based on a stock price of $39.76, Book Value of $6,411M and a Book Value per Share of $12.83. The current ratio is 38% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I have a Book Value per Share estimate for 2023 of $13.00. This implies a book value of $6,496M and a P/B Ratio 3.06 based on a stock price of $39.76. The is ratio of 3.06 is 26% above the 10 year median P/B Ratio of 2.42. This stock price testing suggests that the stock price is relatively expensive.
I get a 10-year median Price/Cash Flow per Share Ratio of 8.10. The current P/CF Ratio is 9.56 based on Cash Flow per Share (CFPS) estimate for 2023 of $4.16, Cash Flow of $2,079M, and a stock price of $39.76. The current ratio is 18% 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 1.66%. The current dividend yield is 2.98% based on dividends of $1.185 and a stock price of $39.76. The current yield is 80% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year dividend yield of 4.27%. The current dividend yield is 2.98% based on dividends of $1.185 and a stock price of $39.76. The current yield is 30% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10-year median Price/Sales (Revenue) Ratio is 2.52. The current P/S Ratio is 3.65 based on Revenue estimate for 2023 of $5,444M, Revenue per Share of $10.89 and a stock price of $39.76. This ratio is 45% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
Results of stock price testing is that the stock price is probably expensive. The 10 year dividend yield test says this and is confirmed by the P/S Ratio test. I am disregarding the historical dividend yield test, as yields change from low to moderate in around 2006 and around 16 years ago and so quite a while ago. All the other testing is supporting an expensive stock price.
When I look at analysts’ recommendations, I find only Hold (10) recommendations. The 12 month stock price target is $40.17. This implies a total return of 4.01% with 1.03% from capital gains and 2.98% from dividends based on a current stock price of $39.76.
Most comments from analysts on Stock Chase is about the Rogers’ deal. They think it will close. Stock Chase gives this stock 4 stars out of 5. It is on the Money Sense list with a C Rating. Vineet Kulkarni on Motley Fool talks about Rogers and the deal to buy Shaw. Jitendra Parashar on Motley Fool talks about Shaw jumping in price after the Canadian competition tribunal approved the proposed Rogers Communications-Shaw merger deal. The company put out a press release on Global Newswire about their fourth quarter of 2022.
The company put out a press release on Global Newswire about their first quarter for 2023. There is an article from the Financial Post on Yahoo Finance about the Commissioner of Competition’s appeal of a tribunal decision to approve their $26-billion merger. Simply Wall Street gives this stock 3 stars out of 5 and list one risk of a high level of debt.
Shaw Communications is a Canadian cable company that is one of the biggest providers of internet, television, and landline telephone services in British Columbia, Alberta, Saskatchewan, Manitoba, and northern Ontario. Its web site is here Shaw Communications Inc.
The last stock I wrote about was about was Enghouse Systems Ltd (TSX-ENGH, OTC-EGHSF) ... learn more. The next stock I will write about will be Exco Technologies Ltd (TSX-XTC, OTC-EXCOF) ... learn more on Wednesday, February 1, 2023 around 5 pm. Tomorrow on my other blog I will write about Hydro One Ltd.... learn more on Tuesday, January 31, 2023 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.
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