Is it a good company at a reasonable price? I own this stock and I still like it. However, I must wonder if it is truly a dividend stock because the dividend yield is so low at just 0.48%. If they do not do any dividend increases soon, I might just sell it. The stock price seems expensive currently.
I own this stock of WSP Global Inc (TSX-WSP, OTC-WSPOF). This company used to be called Genivar. Genivar was in an article I read so I investigated it and decided to buy.
When I was updating my spreadsheet, I noticed I have done well with this stock. My Total Return is 24.23% per year with 21.29% from capital gains and 2.94% from dividends. I have had this stock for 12 years.
The growth rate on this stock seems to be slowing. See chart below on 5 and 10 year growth rates.
| Year | Item | Tot. Growth | Per Year |
|---|---|---|---|
| 5 | Revenue Growth | 71.89% | 11.44% |
| 5 | AEPS Growth | 152.19% | 20.32% |
| 5 | Net Income Growth | 102.44% | 15.15% |
| 5 | Cash Flow Growth | 110.65% | 16.07% |
| 5 | Dividend Growth | 0.00% | 0.00% |
| 5 | Stock Price Growth | 162.21% | 21.26% |
| 10 | Revenue Growth | 848.94% | 25.23% |
| 10 | AEPS Growth | 400.00% | 17.46% |
| 10 | Net Income Growth | 832.61% | 25.02% |
| 10 | Cash Flow Growth | 748.75% | 23.84% |
| 10 | Dividend Growth | 0.00% | 0.00% |
| 10 | Stock Price Growth | 719.03% | 23.40% |
< If you had invested in this company in December 2012, for $1,016.54 you would have bought 53 shares at $19.18 per share. In December 2022, after 10 years you would have received $795.90. in dividends. The stock would be worth $8,325.80. Your total return would have been $9,120.77.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $19.18 | $1,016.54 | 53 | 10 | $795.00 | $8,325.77 | $9,120.77 |
If you had invested in this company in December 2005 when this stock was first issued, for $1,000.00 you would have bought 100 shares at $10.00 per share. In December 2022, after 17 years you would have received $2,395.20. in dividends. The stock would be worth $15,709.80. Your total return would have been $18,104.20.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $10.00 | $1,000.00 | 100 | 17 | $2,395.20 | $15,709.00 | $18,104.20 |
The current dividend yield is low with dividend growth non-existent. The current dividend is low (below 2%) at 0.84%. The 5 year median dividend yield is also low at 1.60%. The 10 year and historical median dividend yields are moderate (2% to 4%) at 2.58% and 4.31%. The dividends have been flat since 2009. The problem is that this company started out as an Income Trust and such company paid high dividends. At this point I wonder about even calling this stock a dividend stock.
The Dividend Payout Ratios (DPR) are fine, but not particularly low considering how low the dividend yield is. The DPR for EPS for 2022 is 37% with 5 year coverage at 48%. The DPR for Adjusted Earnings per Share (AEPS) for 2022 is 26% with 5 year coverage at 40%. The DPR for Cash Flow per Share (CFPS) is 15% with 5 year coverage at 18%. The DPR for Free Cash Flow (FCF) for 2022 is 29% with 5 year coverage at 15%.
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio is good and low at 0.14. The Liquidity Ratio is low at 1.09 and still low at 1.23 if you had in cash flow after dividends. The Debt Ratio is good at 1.68. The Leverage and Debt/Equity Ratios are fine at 2.47 and 1.47.
The Total Return per year is shown below for years of 5 to 17 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% | 23.04% | 21.26% | 1.78% |
| 2012 | 10 | 0.00% | 27.20% | 23.40% | 3.80% |
| 2007 | 15 | 2.77% | 15.66% | 12.65% | 3.00% |
| 2005 | 17 | 6.88% | 22.92% | 17.59% | 5.33% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 24.65, 36.77 and 44.61. The corresponding 10 year ratios are 22.50, 27.48 and 32.50. The corresponding historical ratios are 16.51, 20.60 and 24.55. Lately there has been a big run up in P/E Ratios. The current P/E Ratio is 35.13 based on a stock price of $178.81, and EPS estimate for 2023 of $5.09. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 20.22, 26.14 and 31.42. The corresponding 10 year ratios are 18.69, 23.56 and 27.88. The current P/AEPS Ratio is 27.51 based on a stock price of $178.81 and AEPS estimate for 2023 of $6.50. The current ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a Graham Price of $84.01. The 10-year low, median, and high median Price/Graham Price Ratios are 1.18, 1.49 and 1.69. The current P/GP Ratio is 1.99 based on a stock price of $178.81. This ratio is above the high ratio 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 1.96. The current P/B Ratio is 3.71 based on a Book Value of $6,006M, Book Value per Share of $3.50 and a stock price of $178.81. The current ratio is 89% above the 10 year median 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 12.48. The current P/CF Ratio is 18.25 based on a Cash Flow per Share estimate for 2023 of $9.80, Cash Flow of $1,220M and a stock price of $178.81. The current ratio is 46% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 4.31%. The current dividend yield is 0.84% based on dividends of $1.50 and a stock price of $178.81. The current dividends are 81% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. Problem is that the company used to be an income trust with high dividends and they have not raised the dividends since 2009.
I get a 10 year median dividend yield of 2.58%. The current dividend yield is 0.84% based on dividends of $1.50 and a stock price of $178.81. The current dividends are 68% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively expensive. Problem is that the company used to be a income trust with high dividends and they have not raised the dividends since 2009.
The 10-year median Price/Sales (Revenue) Ratio is 1.14. The current P/S Ratio is 2.12 based on Revenue estimate for 2023 of $10,518M, Revenue per Share of $84.51 and a stock price of $178.81. The current ratio is 68% 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 relatively expensive. The dividend yield testing should probably be excluded because of lack of dividend increases since 2009. However, the P/S Ratio test say the stock price is relatively expensive and so do almost all the stock price testing.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (8), Hold (1) and Sell (1). The consensus would be a Buy. Ross Healy on Stock Chase says that the stock is selling above its Fair Market Value (FMV) and it is expensive. He thinks there will be setback in price. In January 2023, Simply Wall Street via Yahoo Finance gave a FMV of $155.51 CDN$.
Analysts on Stock Chase believe this stock is a buy. Stock Chase gives this stock 5 stars out of 5. Adam Othman on Motley Fool thinks you can use this stock to build your nest egg. Aditya Raghunath on Motley Fool thinks that this company is a current smart buy. The company put out a Press Release on their 2022 results.
Simply Wall Street put out a report on this stock via Yahoo Finance. Simply Wall Street has 3 warnings of has a high level of debt; large one-off items impacting financial results; and shareholders have been diluted in the past year. Simply Wall Street gives this stock 3 and one half stars out of 5.
WSP Global Inc provides engineering and design services to clients in the Transportation and Infrastructure, Property and Buildings, Environment, Power and Energy, Resources, and Industry sectors. It also offers strategic advisory services. The firm operates through four reportable segments namely, Canada, Americas (US and Latin America), EMEIA (Europe, Middle East, India, and Africa), and APAC (Asia Pacific, comprising Australia, New Zealand and Asia). Its web site is here WSP Global Inc.
The last stock I wrote about was about was Algoma Central Corporation (TSX-ALC, OTC-AGMJF) ... learn more. The next stock I will write about will be Thomson Reuters Corp (TSX-TRI, NYSE-TRI) ... learn more on Wednesday, May 10, 2023 around 5 pm. Tomorrow on my other blog I will write about The Psychology of Money.... learn more on Tuesday, May 9, 2023 around 5 pm.
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