Is it a good company at a reasonable price? They had a good year in 2022 and analysts expect both 2023 and 2024 will be better. For example, they expect EPS will increase by 135% in 2023 and another 38% in 2024. A low dividend is best if you are building a portfolio. The stock price seems to be cheap at present, so a reasonable return on an investment would be expected. The risk level on this stock is considered to be High, so caution in investing in this company would be necessary.
I do not own this stock of Badger Infrastructure Solutions Ltd (TSX-BDGI, OTC-BADFF). I started to follow this stock after reading a couple of articles in February 2012 in the G&M that talked about the company. The first article looked at what the pros who manage small-cap funds are buying. Badger was one of 10 stocks mentioned and it looked like an interesting stock. It is a dividend paying small cap. The second article looked at why stocks might appeal to a conservative investor looking for income.
When I was updating my spreadsheet, I noticed the company has changed their reporting to US$. Note that not everyone has noticed this. All the estimates I got were in CDN$. Some sites that show financials are showing the values in CDN$ for 2021 and in US$ in 2022 without acknowledging the currency change. They are still paying the dividends in CDN$.
If you had invested in this company in December 2012, for $1,008.09 you would have bought 98 shares at $10.29 per share. In December 2022, after 10 years you would have received $461.97 in dividends. The stock would be worth $2,612.68. Your total return would have been $3,074.65. This is a total return would be 12.94% per year with 9.99% from capital gains and 2.95% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $10.29 | $1,008.09 | 98 | 10 | $461.97 | $2,612.68 | $3,074.65 |
You can see from the chart below, that growth has slowed down. They still have better revenue growth than cash flow or earnings growth. Cash Flow and earnings are expected to be better in the future.
| Year | Item | Tot. Growth | Per Year |
|---|---|---|---|
| 5 | Revenue Growth CDN$ | 54.86% | 9.14% |
| 5 | OCFFO Growth | 18.76% | 3.50% |
| 5 | Net Income Growth | -62.38% | -17.76% |
| 5 | Cash Flow Growth | 5.89% | 1.15% |
| 5 | Dividend Growth | 31.61% | 5.65% |
| 5 | Stock Price Growth | -1.91% | -0.39% |
| 10 | Revenue Growth CDN$ | 223.17% | 12.45% |
| 8 | OCFFO Growth | 45.94% | 3.85% |
| 10 | Net Income Growth | -11.69% | -1.23% |
| 10 | Cash Flow Growth | 100.31% | 7.19% |
| 10 | Dividend Growth | 60.24% | 4.83% |
| 10 | Stock Price Growth | 159.17% | 9.99% |
The differences between growth in US$ and CDN$ is, basically, with currency exchange rates.
| Year | Item | Tot. Growth | Per Year |
|---|---|---|---|
| 5 | Revenue Growth US$ | 43.44% | 7.48% |
| 5 | OCFFO Growth | 10.00% | 1.93% |
| 5 | Net Income Growth | -65.16% | -19.01% |
| 5 | Cash Flow Growth | -1.92% | -0.39% |
| 5 | Dividend Growth | 21.90% | 4.04% |
| 5 | Stock Price Growth | -9.89% | -2.06% |
| 10 | Revenue Growth US$ | 137.39% | 9.03% |
| 8 | OCFFO Growth | 25.00% | 2.26% |
| 10 | Net Income Growth | -35.13% | -4.24% |
| 10 | Cash Flow Growth | 47.14% | 3.94% |
| 10 | Dividend Growth | 17.71% | 1.64% |
| 10 | Stock Price Growth | 101.86% | 7.28% |
The current dividend yield is Low with dividend growth Low. The current dividend yield is low (below 2%) at 1.99%. The 5 and 10 year median yields are also low at 1.83% and 1.58%. The historical dividend yield is moderate (2% to 4% ranges) at 2.02%. The dividend growth is low (below 8% per year) with dividend growth at 5.7% per year over the past 5 years. The last dividends increase in 2023 and it was for 4.6%. This company also change dividend payments from monthly to quarterly in 2022. Shareholders got less dividends in 2022 than in 2021 (by 12%), but more in 2023 (by 25%). This is due to dividend timing.
The Dividend Payout Ratios (DPR) are fine. The DPR for 2022 for Earnings per Share (EPS) is 76% with 5 year coverage at 62%. The DPR for 2022 for Adjusted Cash Flow from Operations (ACFFO) is 14% with 5 year coverage at 15%. The DPR for 2022 for Cash Flow per Share (CFPS) is 14% with 5 year coverage at 15%. The DPR for 2022 for Free Cash Flow (FCF) is 456% with 5 year coverage at 31%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 76.27% | 61.70% |
| ACFFO | 13.84% | 17.01% |
| CFPS | 13.93% | 15.34% |
| FCF | 456.05% | 30.60% |
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2022 is 0.21 and is low and fine. The Liquidity Ratio for 2022 is 1.74 and this is good. The Debt Ratio for 2022 is 1.72 and this is good. The Leverage and Debt/Equity Ratios for 2022 are 2.39 and 1.39 and these are fine. These ratios would be good if under 2.00 and under 1.00, respectively.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.21 | 0.18 |
| Intang/GW | 0.03 | 0.03 |
| Liquidity | 1.74 | 1.64 |
| Liq. + CF | 2.26 | 2.44 |
| Debt Ratio | 1.72 | 1.62 |
| Leverage | 2.39 | 2.62 |
| D/E Ratio | 1.39 | 1.62 |
The Total Return per year is shown below for years of 5 to 25 to the end of 2022 in CDN$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2017 | 5 | 5.65% | 1.72% | -0.39% | 2.10% |
| 2012 | 10 | 4.83% | 12.94% | 9.99% | 2.95% |
| 2007 | 15 | 1.78% | 12.62% | 9.09% | 3.53% |
| 2002 | 20 | 6.32% | 41.67% | 21.16% | 20.51% |
| 1997 | 25 | 10.36% | 7.88% | 2.47% |
The Total Return per year is shown below for years of 5 to 18 to the end of 2022 in US$. 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. |
|---|---|---|---|---|---|
| 2016 | 5 | 4.04% | 0.03% | -2.06% | 2.09% |
| 2011 | 10 | 1.64% | 10.04% | 7.28% | 2.76% |
| 2006 | 15 | -0.33% | 10.19% | 6.79% | 3.40% |
| 2004 | 18 | 2.17% | 14.32% | 9.18% | 5.14% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 18.74, 24.16 and 29.57. The corresponding 10 year ratios are 17.33, 23.42 and 29.17. The corresponding historical ratios are 9.99, 13.86 and 16.19. The current P/E Ratio is 20.74 based on a stock price of $34.64 and EPS estimate for 2023 of $1.67. 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 also have Adjusted Cash Flow from Operations (ACFFO) data. The 5-year low, median, and high median Price/ Adjusted Cash Flow from Operations per Share Ratios are 6.23, 8.10 and 11.07. The corresponding 10 year ratios are 7.13, 9.10 and 11.43. The current P/ACFFO Ratio is 9.19 based on a stock price of $26.00 and ACFFO estimate for 2023 of $2.83. This is the only US$ estimate. 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. This testing is in US$ and you will get similar results in CDN$.
I get a Graham Price of $18.18. The 10-year low, median, and high median Price/Graham Price Ratios are 1.60, 2.20 and 2.76. The current P/GP Ratio is 1.91 based on a stock price of $34.64. 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 3.44. The current P/B Ratio is 3.94 based on a stock price of $34.64, Book Value of $303M and Book Value per Share of $8.79. The current ratio is 15% 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 $9.58. This implies a Book Value of $330M and P/B Ratio of 3.62 with a stock price of $34.64. This ratio is 5% 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 12.33. The current P/CF Ratio is 7.70 based on Cash Flow per Share estimate for 2023 of $4.50, Cash Flow of $115.5M and a stock price of $34.64. The current ratio is 38% 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 2.02%. The current dividend yield is 1.99% based on a dividend of $0.69 and a stock price of $34.64. The current dividend yield is 1.4% 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 1.58%. The current dividend yield is 1.99% based on a dividend of $0.69 and a stock price of $34.64. The current dividend yield is 26% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10-year median Price/Sales (Revenue) Ratio is 2.21. The current P/S Ratio if 1.33 based on Revenue estimate for 2023 of $674.6M, Revenue per Share of $19.57 and a stock price of $34.64. The current ratio is 40% 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 10 year median dividend yield test says the stock price is cheap and it is confirmed by the P/S Ratio test. Most analysts prefer the 10 year median dividend yield test over the historical one. The rest of the tests are showing the stock price as reasonable or cheap.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (2) and Hold (4). The consensus would be a Buy. The 12 month stock price consensus is $39.00 CDN$. This implies a total return of 14.58% with 12.59% from capital gains and 1.99% from dividends.
The three analyst’s comments from 2022 on Stock Chase are negative. One liked WSP better. Stock Chase gives this stock 3 stars out of 5. This stock is on both the Money Sense list and the Aristocrat list. Ambrose O'Callaghan on Motley Fool thinks this stock is promising. Amy Legate-Wolfe on Motley Fool thinks this stock is a hidden gem. The company put out a press release via Global Newswire about their 2022 results. The company put out a press release via Global Newswire about their second quarter of 2023 results.
Simply Wall Street put out a report on this stock. Simply Wall Street gives this stock 4 stars out of 5. They list 2 warnings of has a high level of debt; and dividend of 1.99% is not well covered.
Badger Infrastructure Solutions Ltd is North America's provider of non-destructive excavating services. Its key technology is the Badger Hydrovac, which is used primarily for safe excavation around critical infrastructure and in congested underground conditions. Badger's two reportable segments are Canada and the United States. Its web site is here Badger Infrastructure Solutions Ltd.
The last stock I wrote about was about was Superior Plus Corp (TSX-SPB, OTC-SUUIF) ... learn more. The next stock I will write about will be GFL Environmental Inc (TSX-GFL, NYSE-GFL) ... learn more on Monday, August 14, 2023around 5 pm. Tomorrow on my other blog I will write about xxxxx .... learn more on xxxxx around 5 pm.
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