Is it a good company at a reasonable price? I do not like the debt ratios. The dividends are probably now safe from further decreases. I like dividend growth stocks, so this would not be a favourite of mine and not one I would currently want to purchase. The dividends are quite high so the stock has this in its favour. The stock price seems currently reasonable.
I do not own this stock of Chemtrade Logistics Income Fund (TSX-CHE.UN, OTC-CGIFF). I decided to investigate this stock after reading an article in the G&M in February 2012 about investing in small cap stocks that pay dividends. This was one of the stocks mentioned that I had never heard of before.
When I was updating my spreadsheet, I noticed the company had a good year in 2022 with Revenue up 33% and EPS going from losses in the previous 4 years to earnings of $0.99. Analysts expect earnings to continue to rise in 2023 to $1.22. However, there has not been much growth in the past except for Revenue and Cash Flow.
| Year | Item | Tot. Growth | Per Year |
|---|---|---|---|
| 5 | Revenue Growth | 23.43% | 4.30% |
| 5 | AFFO Growth | -21.09% | -4.63% |
| 5 | Dis. Cash Growth | 44.53% | 7.64% |
| 5 | Net Income Growth | -25.95% | -5.83% |
| 5 | Cash Flow Growth | 144.02% | 19.53% |
| 5 | Dividend Growth | -50.00% | -12.94% |
| 5 | Stock Price Growth | -53.76% | -14.30% |
| 10 | Revenue Growth | 97.24% | 7.03% |
| 10 | AFFO Growth | -39.76% | -4.94% |
| 10 | Dis. Cash Growth | -4.35% | -0.44% |
| 10 | Net Income Growth | 179.59% | 10.83% |
| 10 | Cash Flow Growth | 240.88% | 13.05% |
| 10 | Dividend Growth | -50.00% | -6.70% |
| 10 | Stock Price Growth | -45.04% | -5.81% |
If you had invested in this company in December 2012, for $1,011.84 you would have bought 62 shares at $16.32 per share. In December 2022, after 10 years you would have received $641.70 in dividends. The stock would be worth $556.14. Your total return would have been $1,197.84. This is a total return would be 2.38% per year with 5.81% from capital loss and 8.19% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $16.32 | $1,011.84 | 62 | 10 | $641.70 | $556.14 | $1,197.84 |
The current dividend yield is high with dividend growth non-existent. The dividend yield is high (7% and higher) at 7.22%. The dividends were flat for over 10 years and then in 2020, the company started to cut them. The cut was a 50% cut. The dividends are back to being flat. Analysts expect that they will continue at the same level.
The Dividend Payout Ratios (DPR) are improving and are currently fine. The DPR for 2022 for EPS is 61% with 5 year coverage non-calculable because of EPS losses. The DPR for 2022 for Adjusted Funds from Operations (AFFO) is 36% with 5 year coverage at 56%. The DPR for 2022 for Distributable Cash (DC) is 30% with 5 year coverage at 91%. The DPR for 2022 for Cash Flow per Share is 16% with 5 year coverage at 30%. The DPR for 2022 for Free Cash Flow is 20% with 5 year coverage at 51%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 60.61% | 0.00% |
| AFFO | 35.70% | 56.05% |
| DC | 30.30% | 90.81% |
| CFPS | 16.09% | 29.84% |
| FCF | 20.45% | 51.19% |
Debt Ratios are need improving. The Long Term Debt/Market Cap for 2022 is 0.87. It is a bit high for fine. The Liquidity Ratio for 2022 is low at 0.92. If you add in Cash Flow after dividends it is fine at 1.69, but is a bit low in the second quarter at 1.48. I prefer this to be 1.50 or higher. The Debt Ratio for 2022 is low at 1.36 and I prefer this to be 1.50 or higher. The Leverage and Debt/Equity Ratios are too high at 3.81 and 2.81. I prefer these to be below 3.00 and below 2.00.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.87 | 0.84 |
| Intang/GW | 0.57 | 0.58 |
| Liquidity | 0.92 | 0.92 |
| Liq. + CF | 1.69 | 1.48 |
| Debt Ratio | 1.36 | 1.45 |
| Leverage | 3.81 | 3.21 |
| D/E Ratio | 2.81 | 2.21 |
The Total Return per year is shown below for years of 5 to 21 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 | -12.94% | -8.39% | -14.30% | 5.91% |
| 2012 | 10 | -6.70% | 2.38% | -5.81% | 8.19% |
| 2007 | 15 | -4.52% | 13.47% | 0.25% | 13.22% |
| 2002 | 20 | -3.28% | 13.91% | -0.55% | 14.47% |
| 2001 | 21 | 0.91% | 12.73% | -1.28% | 14.01% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are negative and therefore useless. The corresponding 10 year ratios are also negative and useless. The corresponding historical ratios are 9.48, 10.97 and 13.01. The current P/E Ratio is 6.81 based on a stock price of $8.31 and EPS estimate for 2023 of $1.22. The current ratio is below the low ratio of the historical median ratios. Also, it is a very low ratio as anything less than 10.00 is considered low. This stock price testing suggests that the stock price is relatively cheap.
I also have Distributable Cash (DC) data. The 5-year low, median, and high median Price/ Distributable Cash Ratios are 7.00, 11.18 and 13.26. The corresponding 10 year ratios are 8.86, 10.51 and 12.19. The current ratio is 3.41 based on DC for the last 12 months of $2.44 and a stock price of $8.31. 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 $17.77. The 10-year low, median, and high median Price/Graham Price Ratios are 0.74, 0.86 and 1.01. The current P/GP Ratio is 0.47 based on a stock price of $8.31. The current 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 10-year median Price/Book Value per Share Ratio of 1.51. The current 1.44 based on a stock price of $8.31, Book Value of $664.8M and Book Value per Share of $5.75. The current ratio is 4% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10-year median Price/Cash Flow per Share Ratio of 6.75. The current P/CF Ratio is 3.55 based on Cash Flow per Share estimate for 2023 of $2.34, Cash Flow of $270.4M and a stock price of $8.31. The current ratio is 47% 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 8.30%. The current dividend yield is 7.22% based on a stock price of $8.31 and dividends of $0.60. The current ratio is 13% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median. The company used to be an income trust and income trust companies have very high dividend yields and much higher than corporations.
I get a 10 year median dividend yield of 7.16%. The current dividend yield is 7.22% based on a stock price of $8.31 and dividends of $0.60. The current ratio is 0.87% above the 10 year dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10-year median Price/Sales (Revenue) Ratio is 0.87. The current P/S Ratio is 0.50 based on a stock price of $8.31, Revenue estimate for 2023 of $1,912M and Revenue per Share of $16.55. The current ratio is 42% below the 10 year median ratio. I get an historical median dividend yield of 8.30%. The current dividend yield is 7.22% based on a stock price of $8.31 and dividends of $0.60. The current ratio is 13% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
Results of stock price testing is that the stock price is probably reasonable. The 10 year median dividend yield says this. The P/S Ratio test says the stock price is cheap. A problem with the dividend yield tests on this stock is that the company used to be an income trust and they can have much higher dividends than corporations. The dividends and dividend yield has become lower over time.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (5) and Hold (1). The consensus is a Buy. The 12 months stock price is $11.57. This implies a total return of $46.45% with 39.23% from capital gains and 7.22% from dividends.
Surprisingly analysts generally like this stock on Stock Chase. However, one analyst says that it is painful to own. It is not on any of my dividend lists. Stock Chase give this stock 4 stars out of 5. Christopher Liew on Motley Fool likes the dividend on this stock. Rajiv Nanjapla on Motley Fool thinks this is a good passive income stock. The company put out a press release on Business Wire about their results for 2022. The company put out a press release on Business Wire about their second quarter of 2023.
There is a report on this stock on Simply Wall Street talking about this stock’s debt. Simply Wall Street gives this stock 3 and one half stars out of 5. They give 3 warnings of earnings are forecast to decline by an average of 63.5% per year for the next 3 years; has a high level of debt; and shareholders have been diluted in the past year.
Chemtrade Logistics Income Fund provides industrial chemicals and services to customers in North America and around the world. The company is organized into four main operating segments: Sulphur Products & Performance Chemicals (SPPC), Water Solutions & Specialty Chemicals (WSSC), Electrochemicals, and Corporate. Its geographical segments are Canada, the United States, and South America. Its web site is here Chemtrade Logistics Income Fund.
The last stock I wrote about was about was Aecon Group Inc (TSX-ARE, OTC-AEGXF) ... learn more. The next stock I will write about will be Alimentation Couche-Tard Inc (TSX-ATD, OTC-ANCUF) ... learn more on Monday, August 21, 2023 around 5 pm.
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