Is it a good company at a reasonable price? I still like this company. It would be nice if it began to raise their dividends again. That would be a very good sign. I plan to hold on to the shares I have and I am satisfied with my current investment in this stock. The stock price is probably cheap.
I own this stock of Ag Growth International (TSX-AFN, OTC-AGGZF). I wanted to review all the income trust stocks touted in the Money Show of 2009. There was a lot of talk at this show about some of the Unit Trust being currently good buys with very good yields. Its median yield in 2009 was 7.9%. It was on the Canadian Dividend Aristocrats and this is why I first investigated this company. Of course, now all the income trusts have changed to corporation because of changes in Canadian law. By 2011 when I bought this stock, I have been interested in AFN for some time. This stock is a play on the agricultural sector.
When I was updating my spreadsheet, I noticed I have had this stock for 11.5 years and I have made a total return of 9.73% per year with 4.69% from capital gains and 5.04% from dividends.
If you had invested in this company in December 2012, for $1,003.52 you would have bought 32 shares at $31.36 per share. In December 2022, after 10 years you would have received $609.60 in dividends. The stock would be worth $1,387.20. Your total return would have been $1,996.80.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $31.36 | $1,003.52 | 32 | 10 | $609.60 | $1,387.20 | $1,996.80 |
However, if you had invested in this company in December 2017, for $1,013.46 you would have bought 19 shares at $53.34 per share. In December 2022, after 5 years you would have received $133.95 in dividends. The stock would be worth $823.65. Your total return would have been $957.60.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $53.34 | $1,013.46 | 19 | 5 | $133.95 | $823.65 | $957.60 |
In terms of growth, Revenue and Adjusted Earnings per Share (AEPS) and Cash Flow are growing. In 2022 they had a Net Income loss (and EPS loss). Dividends and Stock prices are not growing or not growing much.
| Year | Item | Tot. Growth | Per Year |
|---|---|---|---|
| 5 | Revenue Growth | 93.20% | 14.08% |
| 5 | AEPS Growth | 59.15% | 9.74% |
| 5 | Net Income Growth | 0.00% | 0.00% |
| 5 | Cash Flow Growth | 127.06% | 17.82% |
| 5 | Dividend Growth | -75.00% | -24.21% |
| 5 | Stock Price Growth | -18.73% | -4.06% |
| 10 | Revenue Growth | 363.85% | 16.58% |
| 10 | AEPS Growth | 144.44% | 9.35% |
| 10 | Net Income Growth | 0.00% | 0.00% |
| 10 | Cash Flow Growth | 223.38% | 12.45% |
| 10 | Dividend Growth | -75.00% | -12.94% |
| 10 | Stock Price Growth | 38.23% | 3.29% |
This company started to cut their dividends in 2020 and since 2021, the dividends have been flat. This company used to be an income trust. All ex-Income Trust companies are having a hard time getting their dividends at the right level.
The current dividend yield is low with dividend growth negative. The current dividend yield is low (below 2%) at 1.14%. It was flat from 2011 and then the company started to decrease it in 2020. The problem is that this company used to be an income trust. Old income trust companies are having a hard time getting the dividend levels right. Dividends were cut some 75%. The problem is that income trust companies can pay much higher dividends than corporations.
The Dividend Payout Ratios (DPR) are currently fine. The DPR for Earnings per Share (EPS) for 2022 are negative. The DPR for Adjusted Earnings per Share (AEPS) is 16% with 5 year coverage at 19%. This is an important ratio. The DPR for Cash Flow per Share (CFPS) for 2022 is 7% with 5 year coverage at 29%. The DPR for Free Cash Flow (CFC) for 2022 is 23% with 5 year coverage at 240%.
| Item | Cur | Years |
|---|---|---|
| EPS | -22.39% | -223.81% |
| AEPS | 16.04% | 19.49% |
| CFPS | 6.53% | 29.46% |
| FCF | 22.72% | 240.19% |
Some Debt Ratios are fine, but the company has too much debt. The Long Term Debt/Market Cap Ratio for 2022 is good at 0.54. The Liquidity Ratio is high and good at 1.56. The Debt Ratio is fine at 1.19, but I prefer it to be at 1.50 or higher. The Leverage Debt/Equity Ratios are far too high at 6.20 and 5.20. I prefer them to be less than 3.00 and 2.00.
| Type | Ratio |
|---|---|
| Lg Term | 0.54 |
| Liquidity | 1.56 |
| Liq. + CF | 1.78 |
| Debt Ratio | 1.19 |
| Leverage | 6.20 |
| D/E Ratio | 5.20 |
The Total Return per year is shown below for years of 5 to 19 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 | -24.21% | -1.22% | -4.06% | 2.84% |
| 2012 | 10 | -12.94% | 9.04% | 3.29% | 5.75% |
| 2007 | 15 | -6.63% | 7.57% | 1.85% | 5.72% |
| 2003 | 19 | -1.45% | 19.62% | 7.91% | 11.71% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 28.62, 34.82 and 41.02. The corresponding 10 year ratios are 21.00, 28.45 and 34.25. The corresponding historical ratios are 14.34, 21.29 and 25.65. The current P/E Ratio is 12.79 based on a stock price of $52.58 and EPS estimate for 2023 of $4.11. This ratio is below the low ratio of the 10 year median ratio and the low ratio of the historical median ratios. This stock price testing suggests that the stock price is relatively cheap.
I also have Adjusted Earnings per Share Ratios. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 9.13, 12.46 and 15.79. The corresponding 10 year ratios are 12.60, 17.59 and 22.54. The current P/AEPS ratio is 11.87 based on a stock price of $52.58 and AEPS estimate for 2023 of $4.43. 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.
I also have Funds from Operations (FFO) data. The 5-year low, median, and high median Price/Funds from Operations Ratios are 4.18, 7.32 and 10.98. The corresponding 10 year ratios are 7.25, 9.58 and 11.59. The current P/FFO Ratio is 6.50 based on FFO for the last 12 months of $8.09 and a stock price of $52.58. 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.
I get a Graham Price of $37.25. The 10-year low, median, and high median Price/Graham Price Ratios are 1.02, 1.43 and 1.86. The current P/GP Ratio is 1.41 based on a stock price of $52.58. 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 2.60. The current P/B Ratio is 3.78 based on a stock price of $52.58, Book Value of $264M and Book Value per Share of $22.85. The current ratio is 45% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I also have an estimated Book Value per Share of $13.80. Because the analyst calculates the Book Value differently from me, using their method the 10 year median P/B Ratio is 2.52. The current BVPS of $13.80 implies a Book Value of $262M with a ratio of 3.81 and a stock price of $52.58. The current ratio of 3.81 is 51% above the 10 year median ratio of 2.52. 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 15.41. The current P/CF Ratio is 7.59 based on a Cash Flow per Share estimate of $6.93, Cash Flow of $131M and a stock price of $52.58. The current ratio is 51% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 5.58%. The current dividend yield is 1.14% based on a stock price of $52.58 and dividends of $0.60. The current dividend yield is 80% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. However, this testing works best when dividends are increasing and dividends on this stock have been cut by 75%.
I get a 10 year median dividend yield of 4.60%. The current dividend yield is 1.14% based on a stock price of $52.58 and dividends of $0.60. The current dividend yield is 75% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively expensive. However, this testing works best when dividends are increasing and dividends on this stock have been cut by 75%.
The 10-year median Price/Sales (Revenue) Ratio is 1.10. The current P/S Ratio is 0.62 based on Revenue estimate for 2023 of $1,613M, Revenue per Share of $85.11 and a stock price of $52.58. The current ratio is 44% 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 dividend yields tests do not work when dividends are cut. The P/S Ratio says that the stock price is cheap. Most of the other testing, except for the P/B Ratio tests, shows the stock price to be cheap.
It is generally not a good thing for dividends to be cut. This generally points to management being negative about the future. However, this company started out as an income trust with high dividend yields, as all income trust had. A lot of the old income trust companies that are now corporations are having a hard time adjusting the dividends level to an appropriate one for them.
When I look at analysts’ recommendations, I find Strong Buy (2) and Buy (8). The consensus would be a Strong Buy. The 12 month stock price consensus is $72.40. This implies a total return of 38.84% with 37.69% from capital gains and 1.14% from dividends based on a current stock price of $52.58.
Some analysts on Stock Chase like this stock and others think it has reached a peak and so will decline. Stock Chase gives this stock 4 stars out of 5. It is not on the Money Sense List of top 100 dividend stocks. Christopher Liew on Motley Fool thinks this small cap has massive potential. Aditya Raghunath on Motley Fool thinks that this stock cheap with potential. The company put out a press release on Business Newswire about their 2022 results. The company put out a Press Release on their first quarter of 2023 results.
Simply Wall Street on Yahoo Finance talks about who owns shares in this company. Simply Wall Street put out 2 warnings on this stock of interest payments are not well covered by earnings; and significant insider selling over the past 3 months. The chairman has increased his shares by 21% over the past year. The other officers or directors I follow have made no changes. Simply Wall Street gives this stock 3 stars out of 5.
Ag Growth International Inc manufactures portable and stationary grain handling, storage, and conditioning equipment, including augers, belt conveyors, grain storage bins, grain handling accessories, grain aeration equipment, and grain drying systems. It has manufacturing facilities in Canada, the United States, Italy, Brazil, France, United Kingdom, and India. Its geographical segments are Canada, United States, and the International. Its web site is here Ag Growth International.
The last stock I wrote about was about was Power Corp of Canada (TSX-POW, OTC-PWCDF) ... learn more. The next stock I will write about will be Hammond Power Solutions Inc (TSX-HPS.A, OTC-HMDPF) ... learn more on Friday, May 19, 2023 around 5 pm. I am on a 2 day holiday tomorrow.
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 site for an index to these blog entries and for stocks followed. 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. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
No comments:
Post a Comment