Is it a good company at a reasonable price? This is a cyclical stock, and so on the risky side. If I bought it, I would buy at the bottom or near the bottom of its range. It appears to be in the top of its range and so if you are thinking about this stock, you should be very cautious. I know the analysts have come out with a rating of a Strong Buy, but when I was testing this stock’s price it came out mostly expensive. Since it is at the top of its range, I would not personally buy it, even with fooling around money.
I do not own this stock of Teck Resources Ltd (TSX-TECK.B, NYSE-TECK), but I did for a short time in the between 2008 and 2009. I bought this stock in 2008 because the company purchased Fording Canadian Coal Trust at exactly the wrong time and got into financial difficulties and the stock price dropped off a cliff as they had to cut dividends. When the stock recovered somewhat in 2009, I sold for a profit.
When I was updating my spreadsheet, I noticed that there are lots of officers in this company on INK, but few of them have any shares. They do have options.
If you had invested in this company in December 2012, for $1,012.20 you would have bought 28 shares at $36.15 per share. In December 2022, after 10 years you would have received $140.00 in dividends. The stock would be worth $1,432.76. Your total return would have been $1,572.76. This is a total return would be a loss of 4.77% per year with 3.54% from capital gain and 1.23% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $36.15 | $1,012.20 | 28 | 10 | $140.00 | $1,432.76 | $1,572.76 |
The current dividend yield is low with dividend growth good currently but has varied greatly in the past. The current dividend yield is low (below 2%) at 0.88%. The 5, 10 and historical dividend yields are also low at 0.83%, 0.96%, and 1.26%. The dividend growth over the past 5 years is 20.11% per year. However, that is because there was one increase in 2022 for 150%. Dividend growth over the past 10 and 15 years is negative. The last dividend increase was in 2022 and it was for 150%.
The Dividend Payout Ratios (DPR) are fine. The DPR for 2022 for Earnings per Share (EPS) is 8%, with 5 year coverage at 13%. The DPR for 2022 for Adjusted Earnings per Share (AEPS) is 5.5%, with 5 year coverage at 9%. The DPR for 2022 for Cash Flow per Share (CFPS) is 3%, with 5 year coverage at 4%. The DPR for 2022 for Free Cash Flow (FCF) is 21%, with 5 year coverage at 44%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 8.08% | 13.44% |
| AEPS | 5.50% | 9.10% |
| CFPS | 3.18% | 4.30% |
| FCF | 21.13% | 44.29% |
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio is good and low at 0.25. The Liquidity Ratio is low but fine in 2022, but too low currently at 1.29. However, the Liquidity Ratio moves to 2.73 for 2022 and 2.10 currently when you add in cash flow less dividends. The Debt Ratios are good in 2022 at 2.03 and currently at 20.8. The Leverage and Debt/Equity Ratios are fine at 2.03 and 1.00 for 2022 and 2.01 and 0.96 currently.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.25 | 0.21 |
| Intang/GW | 0.04 | 0.04 |
| Liquidity | 1.41 | 1.29 |
| Liq. + CF | 2.73 | 2.10 |
| Debt Ratio | 2.03 | 2.08 |
| Leverage | 2.03 | 2.01 |
| D/E Ratio | 1.00 | 0.96 |
The Total Return per year is shown below for years of 5 to 29 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 | 14.87% | 10.17% | 9.26% | 0.91% |
| 2012 | 10 | -10.40% | 4.77% | 3.54% | 1.23% |
| 2007 | 15 | -10.17% | 3.81% | 2.56% | 1.25% |
| 2002 | 20 | 3.53% | 15.53% | 11.46% | 4.07% |
| 1997 | 25 | 2.81% | 8.44% | 6.59% | 1.85% |
| 1993 | 29 | 2.51% | 6.74% | 5.30% | 1.44% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 4.27, 5.62 and 6.96. The corresponding 10 year ratios are 4.43, 6.11 and 7.63. The corresponding historical ratios are 6.21, 10.63 and 13.23. The current P/E Ratio is 10.86 based on a stock price of $56.79 and EPS estimate for 2023 of $5.23. the current ratio is higher than the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive. Although, generally a P/E Ratio of 10.86 is not considered to be a high one.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 4.92, 8.07, 11.21. The corresponding 10 year ratios are 5.40, 11.28 and 15.83. The current P/AEPS Ratio is 10.60 based on AEPS estimate for 2023 of $5.36. The current ratio is between the median and high ratio 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 $78.34. The 10-year low, median, and high median Price/Graham Price Ratios are 0.32, 0.49 and 0.74. The current P/GP Ratio is 0.73 based on a stock price of $56.79. The current ratio is between the median and high ratio 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 10-year median Price/Book Value per Share Ratio of 0.67. The current P/B Ratio is 1.12 based on a stock price of $56.79, Book Value of $26,415M and a Book Value per Share of $50.83. The current ratio is 67% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I also have Book Value per Share (BVPS) estimate for 2023 of $52.70. This BVPS with a Book Value of $27,388M and stock price of $56.79 gives a P/B Ratio of 1.08. This ratio is 61% 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 3.74. The current P/CF Ratio is 6.68 based on Cash Flow per Share estimate for 2023 of $8.50, Cash Flow of $4,417M and a stock price $56.79. The current ratio is 79% 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 1.26%. The current dividend yield is 0.88% based on a dividend of $0.50 and a stock price of $56.79. The current dividend yield is 30% below the historical year median yield. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median dividend yield of 0.96%. The current dividend yield is 0.88% based on a dividend of $0.50 and a stock price of $56.79. The current dividend yield is 9% below the historical year median yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
The 10-year median Price/Sales (Revenue) Ratio is 1.25. The current P/S Ratio is 1.95 based on Revenue estimate for 2023 of $15,117M, Revenue per Share of $29.09 and a stock price of $56.79. The current ratio is 57% 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 that the stock price is probably on the expensive side, but it could be within a reasonable range, but at the top end. The 10 year median dividend yield test says that the stock price is reasonable but above the median. This is not confirmed by the P/S Ratio test. A lot of the tests are saying the stock is expensive. The other thing is that stock tends to be cyclical and it really is close to the top end of its range.
There are problems with testing. Most of the ratios are really low, and the current ones are in a higher range than in the past. For example, the P/E Ratio is 10.86. Normally, a P/E Ratio of 10 is considered low. However, some stocks always have very low P/E Ratio (and others always have very high P/E Ratios), so basically you have to deal with reality, that is that some stocks just do not fit into what is considered normal ranges. This can apply to other ratios as well.
When I look at analysts’ recommendations, I find Strong Buy (8), Buy (5) and Hold (4). The consensus would be a Strong Buy. The 12 month stock price consensus is $67.50 with a high of $80.00 and low of $50.00. The implies total return for a stock price of $67.50 is 19.74% with 18.86% from capital gains and 0.88% from dividends.
There are mixed views about this company on Stock Chase, but mostly it is not liked. Stock Chase gives this stock 5 stars out of 5. This company is on the Money Sense dividend list and on the Maple Money list. Amy Legate-Wolfe on Motley Fool likes it for its dividend and growth potential. Jitendra Parashar on Motley Fool talks about some stock declining with Teck rose. The company put out a Press Release on their fourth quarter of 2022. The company put out a Press Release on their second quarter of 2023 results.
Simply Wall Street via Yahoo Finance reviews this company. They talk about the fact that Institutional investors owning more than 50% of this company. They have two warnings of earnings are forecast to decline by an average of 8.5% per year for the next 3 years; and profit margins (18.1%) are lower than last year (32.2%). Simply Wall Street gives this sock 2 and one half stars out of 5.
Teck Resources is a diversified miner with coal, copper, and zinc operations in Canada, the United States, Chile, and Peru. Metallurgical coal is Teck's primary commodity in terms of EBITDA contribution, followed by copper, with zinc contributing a smaller amount to earnings. Its web site is here Teck Resources Ltd.
The last stock I wrote about was about was Linamar Corporation (TSX-LNR, OTC-LIMAF) ... more. The next stock I will write about will be Logistec Corp (TSX-LGT.B, OTC-LTKBF) ... learn more on Wednesday, October 4, 2023 around 5 pm. Tomorrow on my other blog I will write about Dividend Stocks October 2023.... learn more on Tuesday, October 3, 2023 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. I am not a licensed professional investment advisor. 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.
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