Is it a good company at a reasonable price? This is an interesting company and shareholders have done well. However, it is a small company with few analysts following it. The risk level would be relatively high. However, they do have good debt ratios and this counts a lot for small companies. The stock price seems rather cheap by the dividend growth testing.
I do not own this stock of Algoma Central Corporation (TSX-ALC, OTC-AGMJF). I got the name of the internet. The description was that Algoma Central Corporation is a Canadian shipping company. It operates Canadian flag fleet of dry and liquid bulk carriers operating on the Great Lakes. The company operates its business through six segments that are Domestic Dry-Bulk, Product Tankers, Ocean Self Unloaders, Corporate, Investment Properties, and Global Short Sea Shipping.
When I was updating my spreadsheet, I noticed this company has done well for its shareholders over the longer term. See chart on Total Return below. Also, the company gave out a special dividend of $2.65 per share in 2021 and has given out another special dividend in 2023 of $1.35 per share. This company is not well followed. It is a relatively small cap worth around $583M.
The chart below shows that they have had relatively good growth over the past 5 years.
| Year | Item | Tot. Growth | Per Year |
|---|---|---|---|
| 5 | Revenue Growth | 50.30% | 8.49% |
| 5 | AEPS Growth | 192.68% | 23.96% |
| 5 | Net Income Growth | 113.48% | 16.38% |
| 5 | Cash Flow Growth | 112.11% | 16.23% |
| 5 | Dividend Growth | 112.50% | 16.27% |
| 5 | Stock Price Growth | 43.78% | 7.53% |
| 10 | Revenue Growth | 20.98% | 1.92% |
| 10 | AEPS Growth | 118.18% | 8.11% |
| 10 | Net Income Growth | 173.78% | 10.60% |
| 10 | Cash Flow Growth | 58.08% | 4.69% |
| 10 | Dividend Growth | 209.09% | 11.95% |
| 10 | Stock Price Growth | 63.33% | 5.03% |
If you had invested in this company in December 2012, for $1,003.98 you would have bought 90 shares at $11.16 per share. In December 2022, after 10 years you would have received $675.90. in dividends. The stock would be worth $1,639.80. Your total return would have been $2,315.70.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $11.16 | $1,003.98 | 90 | 10 | $675.90 | $1,639.80 | $2,315.70 |
If you had invested in this company in December 1992, for $1,000.44 you would have bought 1013 shares at $0.99 per share. In December 2022, after 30 years you would have received $9,909.17. in dividends. The stock would be worth $18,456.86. Your total return would have been $28,366.03.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $0.99 | $1,000.44 | 1,013 | 30 | $9,909.17 | $18,456.86 | $28,366.03 |
The current dividend yield is moderate with dividend growth good. The current dividend yield is moderate (2% to 4% ranges) at 4.71%. The 5, 10 year and historical median dividend yields are moderate at 4.04%, 3.31% and 2.65%. The dividends have increased at a good rate (15% and over) at 16.3% per year over the past 5 years.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2022 is 24% with 5 year coverage at 76%. The DPR for Adjusted Earnings per Share (AEPS) for 2022 is 28% with 5 year coverage at 36%. The DPR for Cash Flow per Share (CFPS) is 23% with 5 year coverage at 36%. The DPR for Free Cash Flow (FCF) for 2022 is 40% with 5 year coverage at 107%. There is disagreement on what the FCF is.
Debt Ratios are good. The Long Term Debt/Market Cap Ratio for 2022 is 0.57 and is fine. The Liquidity Ratio for 2022 is good and high at 1.66. The Debt Ratio is good and high at 2.15. The Leverage and Debt/Equity Ratios are good and low at 1.87 and 0.87.
The Total Return per year is shown below for years of 5 to 34 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 | 16.27% | 15.37% | 7.53% | 7.83% |
| 2012 | 10 | 11.95% | 9.64% | 5.03% | 4.62% |
| 2007 | 15 | 11.11% | 6.93% | 3.58% | 3.35% |
| 2002 | 20 | 10.06% | 12.40% | 8.51% | 3.89% |
| 1997 | 25 | 7.97% | 7.21% | 4.61% | 2.61% |
| 1992 | 30 | 0.00% | 14.65% | 10.20% | 4.45% |
| 1988 | 34 | 7.40% | 10.14% | 7.34% | 2.80% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 6.91, 8.42 and 9.65. The corresponding 10 year ratios are 8.12, 9.17 and 11.28. The corresponding historical ratios are 7.01, 8.34 and 9.98. The current P/E Ratio is 8.01 based on a stock price of $15.30 and EPS estimate for 2023 of $1.91. The current ratio is below the low ratio for the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I also have Adjusted Earnings per Share (AEPS) Ratios. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 8.76, 10.21 and 11.02. The corresponding 10 year ratios are 9.73, 10.82 and 12.24. The current PAEPS Ratio is 8.01 based on a stock price of $15.30 and AEPS estimate for 2023 of $1.91. This 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 Graham Price of $28.09. The 10-year low, median, and high median Price/Graham Price Ratios are 0.53, 0.60 and 0.67. The current P/GP Ratio is 0.54 based on a stock price of $15.30. 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 get a 10-year median Price/Book Value per Share Ratio of 0.69. The current P/B Ratio is 0.83 based on a stock price of $15.30, Book Value of $729M and Book Value per Share of $18.36. The current ratio is 21% above the 10 year ratio. 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 5.58. The current P/CF Ratio is 4.44 based on a stock price of $15.30, Cash Flow per Share $3.45 and Cash Flow for the last 12 months of $133M. The current ratio is 3% 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 2.65%. The current dividend yield is 4.71% based on dividends of $0.72 and a stock price of $15.30. The current dividend yield is 78% above the historical median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 3.31%. The current dividend yield is 4.71% based on dividends of $0.72 and a stock price of $15.30. The current dividend yield is 42% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
The 10-year median Price/Sales (Revenue) Ratio is 0.95. The current P/S Ratio is 0.84 based on Revenue estimate for 2023 of $703M, Revenue per Share of $18.21 and a stock price of $15.30. The current ratio is 11% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
Results of stock price testing is that the stock price is reasonable and probably even cheap. The dividend yield tests are saying that the stock price is cheap. A problem maybe that the dividend growth is quite fast. The P/S Ratio testing is saying the stock price is reasonable and below the median. Most of the rest of the testing of stock price is either say the stock price is cheap or reasonable and below the median.
When I look at analysts’ recommendations, I find on Investing.com Buy (3) recommendations. The Consensus is a Buy. The 12 month consensus stock price is $23.25. This implies a total return of 56.67% with 51.96% from capital gains and 4.71% from dividends.
This stock is not much followed on Stock Chase. Stock Chase gives this stock 4 stars out 5. There is one recommendation of Buy for 2023. This stock is not well followed. Ambrose O'Callaghan on Motley Fool thought this stock was a buy in February 2022. The company put out a Press Release on their 2022 results via Business Wire. The company put out a Press Release on Business Wire about their first quarter of 2023.
Simply Wall Street via Yahoo Finance talks about this company’s dividends. Simply Wall Street via Yahoo Finance reviews this stock and think it deserves investor’s attention. Simply Wall Street gives 4 warnings of has a high level of debt; unstable dividend track record; large one-off items impacting financial results; and shareholders have been diluted in the past year. Note: this stock only has an unstable dividend track record if you are receiving dividends in US$ because dividends are paid in CDN$. For Canadians, the dividend track record is not unstable. Also, note that company do Adjusted Earnings per Share (AEPS) to handle the problem of large one-off items affecting financial results.
Algoma Central Corp owns and operates a fleet of dry and liquid bulk carriers operating on the Great Lakes, St. Lawrence Waterway. The company's Canadian flag fleet consists of self-unloading dry-bulk carriers, gearless dry-bulk carriers, and product tankers. Its web site is here Algoma Central Corporation.
The last stock I wrote about was about was Fortis Inc (TSX-FTS, OTC-FRTSF) ... learn more. The next stock I will write about will be WSP Global Inc (TSX-WSP, OTC-WSPOF) ... learn more on Monday, May 8, 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.
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.
Thanks for a good review of a stock that I was unaware of
ReplyDelete