Is it a good company at a reasonable price? The company hit a peak in 2007 and then had problems. They continued to increase the dividends long after they should have frozen them or cut them. Revenue is still some 40% below its peak of 2007. I did hold this company from 2001 to 2008 and had a total return of 2% per year. Shareholders have not done well over the past 25 years. See the Total Return chart below. I would not be interested in holding this company again.
I do not own this stock of AGF Management Ltd (TSX-AGF.B, OTC-AGFMF). I used to own this stock. I bought it in 2001 and sold half in 2006 and the rest in 2008. It used to be a dividend growth stock, but has not been one for some time now. I sold because I did not see that the stock would improve. It was raising dividends still but at the expense of DPR. In 2008 I was lucky that I sold before it crashed. It has yet to recover.
When I was updating my spreadsheet, I noticed that this stock is doing better over the last 5 years than over the previous 5 year (i.e., years 6 to 10). For Example, over the past 5 years EPS has grown 50% and 8.5% per year and over the past 10 years, EPS grew 75% or 5.7% per year. The exception is for stock price which is still going lower.
| Year | Item | Tot. Growth | Per Year |
|---|---|---|---|
| 5 | Revenue Growth | 14.41% | 1.04% |
| 5 | EPS Growth | 50.00% | 8.45% |
| 5 | Net Income Growth | 28.52% | 5.15% |
| 5 | Cash Flow Growth | 7.44% | 1.44% |
| 5 | Dividend Growth | 21.88% | 4.04% |
| 5 | Stock Price Growth | -21.60% | -3.84% |
| 10 | Revenue Growth | -4.34% | -0.84% |
| 10 | EPS Growth | 74.55% | 5.73% |
| 10 | Net Income Growth | 27.53% | 2.46% |
| 10 | Cash Flow Growth | 160.00% | 10.03% |
| 10 | Dividend Growth | -176.92% | -9.68% |
| 10 | Stock Price Growth | -30.62% | -2.64% |
If you had invested in this company in December 2012, for $1,001.92 you would have bought 101 shares at $9.92 per share. In December 2022, after 10 years you would have received $505.00 in dividends. The stock would be worth $714.07. Your total return would have been $1,219.07. Dividend payments stopped shareholders from losing money.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $9.92 | $1,001.92 | 101 | 10 | $505.00 | $714.07 | $1,219.07 |
The dividend yields are moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 4.42%. The 5 and 10 year median dividend yields are good (5% to 6% ranges) at 5.56% and 6.36%. The historical dividend yield is moderate at 4.66%. Lately, dividends have been increasing at a low rate (below 8% per year) at 4% per year. The last dividend increase was in 2022 and it was for 11%. But as you can see from the Total Return chart below, there were several years when the dividends were decreasing.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2022 is 41% with 5 year coverage at 32%. The DPR for Cash Flow per Share (CFPS) for 2022 is 27% with 5 year coverage at 34%. The DPR for Free Cash Flow (figures provided by the company) for 2022 is 37% with 5 year coverage at 52%.
Debt Ratios are good. The Long Term Debt/Market Cap Ratio for 2022 is 0.05 and so low and good. The Liquidity Ratio for 2022 is good at 1.62. The Debt Ratio for 2022 is good at 4.04. The Leverage and Debt/Equity Ratios for 2022 are low and good at 1.33 and 0.33.
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 | 4.04% | 1.49% | -2.87% | 4.37% |
| 2012 | 10 | -9.68% | 2.66% | -3.33% | 5.99% |
| 2007 | 15 | -4.52% | -4.91% | -9.00% | 4.09% |
| 2002 | 20 | 2.15% | 1.98% | -3.85% | 5.83% |
| 1997 | 25 | 6.28% | 5.17% | -1.03% | 6.20% |
| 1992 | 30 | 6.44% | 15.52% | 5.01% | 10.50% |
| 1990 | 32 | 6.02% | 16.08% | 5.62% | 10.46% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 5.89, 7.04 and 7.31. The corresponding 10 year ratios are 7.89, 9.76 and 11.63. The corresponding historical ratios are 10.21, 13.94 and 18.42. The current P/E Ratio is 7.25 based on a stock price of $9.06 and EPS estimate for 2023 of $1.25. 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 Graham Price of $21.20. The 10-year low, median, and high median Price/Graham Price Ratios are 0.38, 0.46 and 0.56. The current P/GP Ratio is 0.43 based on a stock price of $9.06. 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 10-year median Price/Book Value per Share Ratio of 0.50. The current P/B Ratio is 0.57 based on a stock price of $9.06, Book Value of $1,031M, and Book Value per Share of $15.99. The current P/B Ratio is 13% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I also have a Book Value per Share estimate for 2023 of $17.40. This implies a ratio of 0.52 with a stock price of $9.06 and a Book Value of $1,122M. This ratio is 4% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10-year median Price/Cash Flow per Share Ratio of 8.63. The current ratio is 9.85 based on a stock price of $9.06, Cash Flow per Share estimate for 2023 of $0.92 and Cash Flow of $59M. The current ratio is 14% 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 4.66%. The current dividend yield is 4.42% based on a stock price of $9.06 and dividends of $0.40. The current dividend yield is 5% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10 year median dividend yield of 6.36%. The current dividend yield is 4.42% based on a stock price of $9.06 and dividends of $0.40. The current dividend yield is 31% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. A problem is that dividends were being cut some 70% in 2015 and then were flat until 2022 when the company again started to raise them.
The 10-year median Price/Sales (Revenue) Ratio is 1.10. The current P/S Ratio is 1.23 based on Revenue estimate for 2023 of $474M, Revenue per Share of $7.35 and a stock price of $9.06. The current ratio is 12% 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, but above the median. This shows up in the historical median dividend yield test and the P/S Ratio test. The problem with dividend yield tests, especially the 10 year one is the cut in dividends in 2015.
When I look at analysts’ recommendations, I find Buy (2) and Hold (6). The consensus would be a Hold. The 12 month stock price consensus is $9.34. This implies a total return of 7.51% with 3.09% from capital gains and 4.42% from dividends.
This company is not well followed on Stock Chase. However, the two entries for 2022 show it is not well liked. Stock Chase gives this stock 3 stars out of 5. It is not on the Money Sense list. Adam Othman on Motley Fool thought this stock was a buy in 2021. This stock is not well followed on Motley Fool. The company put out a Press Release about their 2022 results.
Simply Wall Street on Yahoo Finance talk about who owns this company. Simply Wall Street on Yahoo Finance talk about dividends on this stock. Simply Wall Street has one warning of significant insider selling over the past 3 months for this stock.
AGF Management is a Canada-based asset manager with operations and investments in Canada, the United States, the United Kingdom, Ireland, and Asia. Its web site is here AGF Management Ltd.
The last stock I wrote about was about was Canadian National Railway (TSX-CNR, NYSE-CNI) ... learn more. The next stock I will write about will be Canadian Pacific Railway (TSX-CP, NYSE-CP) ... learn more on Friday, February 10, 2023 around 5 pm. Tomorrow on my other blog I will write about Something to Buy February 2023 .... learn more on Thursday, February 9, 2023 around 5 pm.
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