Is it a good company at a reasonable price? This company seems more of a Real Estate play than and Health Care play to me. The Debt Ratios are a negative to me. They pay good dividends, but total return is too low for me. They would not be a favourite stock for me. Analyst seem to like it and the price seems reasonable.
I do not own this stock of Chartwell Retirement Residences (TSX-CSH.UN, OTC-CWSRF). I saw this stock on a dividend investing blog and looked it up on Stock Chase. It seemed like a good stock in the health care sector.
When I was updating my spreadsheet, I noticed analysts do not expect this stock to do well with earnings over the next couple of years. Next year they expect the earnings to be $0.00 (or close to it) and then $0.05 in 2025. However, analysts do expect the Adjusted Funds from Operations (AFFO) and Funds from Operations (FFO) to increase in 2024 and 2025. The AFFO and FFO are good measurements for this stock.
If you had invested in this company in December 2012, for $1,002.25 you would have bought 95 shares at $10.55 per share. In December 2022, after 10 years you would have received $548.57 in dividends. The stock would be worth $801.80. Your total return would have been $1,350.37. This is a total return would be a total return of 3.76% per year with a 2.21% from capital loss and 5.97% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $10.55 | $1,002.25 | 95 | 10 | $548.57 | $801.80 | $1,350.37 |
The current dividend yield is good with dividend growth non-existent. The current dividend yield is good (5% to 6% ranges) at 5.62%. The 5 year and historical median dividend yields are good at 5.06% and 5.78%. The 10 year median dividend yield is moderate (2% to 4% ranges) at 4.80%. The last dividend increase was in 2020 and it was for 2%. The dividends are increase over time, but not every year. Analysts do not expect any dividend increases over the next two years.
The important Dividend Payout Ratios of AFFO and FFO are currently too high, but they are expected to improve in 2024 and 2025. The DPR for 2022 for Earnings per Share (EPS) are awful, but not that important at 290% with 5 year coverage at 723%. The DPR for 2022 for Adjusted Funds from Operations (AFFO) is 130% with 5 year coverage acceptable at 89%. This ratio is expected to be 91 in 2024. The DPR for 2022 for Funds from Operations (FFO) is 116% with 5 year coverage acceptable at 81%. This ratio is expected to be 83 in 2024. The DPR for 2022 for Cash Flow per Share (CFPS) is 63% with 5 year coverage at 53%. The DPR for 2022 for Free Cash Flow (FCF) is 585% with 5 year coverage at 401%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 290.06% | 722.86% |
| AFFO | 130.21% | 88.68% |
| FFO | 115.47% | 81.49% |
| CFPS | 63.54% | 52.81% |
| FCF | 585.23% | 400.80% |
Debt Ratios show that they have a lot of debt. The Long Term Debt/Market Cap Ratio for 2022 is a bit high at 0.89 with the current one better at 0.58. I also looked at Long Term Debt/Corresponding Assets Ratio and they are good at 0.45 and 0.50. The Liquidity Ratio for 2022 is awful at .38 and 0.08 currently. If you added in Cash Flow after dividends, the ratios are not much better at 0.49 and 0.24. If you add back in also the current portion of the long term debt, they are still far too low at 1.10 and 1.05. I prefer them to be 1.50 or higher.
The Debt Ratio for 2022 is low at 1.28 and 1.34 currently. I also prefer them to be 1.50 or higher. The Leverage and Debt/Equity Ratios for 2022 are too high at 4.56 and 3.56 and currently at 3.93 and 2.93. I prefer them to be below 3.00 and 2.00.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.89 | 0.58 |
| Lg Term R A | 0.45 | 0.50 |
| Intang/GW | 0.01 | 0.01 |
| Liquidity | 0.38 | 0.08 |
| Liq. + CF | 0.49 | 0.24 |
| Liq. + CF+D | 1.10 | 1.05 |
| Debt Ratio | 1.28 | 1.34 |
| Leverage | 4.56 | 3.93 |
| D/E Ratio | 3.56 | 2.93 |
The Total Return per year is shown below for years of 5 to 18 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 | 1.35% | -7.45% | -12.29% | 4.84% |
| 2012 | 10 | 1.26% | 3.76% | -2.21% | 5.97% |
| 2007 | 15 | -3.63% | 4.26% | -1.76% | 6.03% |
| 2003 | 19 | -3.07% | 4.97% | -1.94% | 6.91% |
Price/Earnings per Share Ratios are ridiculously high, being over 100, so no point in looking at them. I have Adjusted Funds from Operations (AFFO) data to look at and the 5-year low, median, and high median Price/ Adjusted Funds from Operations per Share Ratios are 16.08, 17.55 and 21.03. The corresponding 10 year ratios are 15.09, 16.83 and 18.89. The current P/AFFO Ratio is 21.78 based on AFFO estimate for 2023 of $0.50 and a stock price of $10.89. The current ratio is above the high ratio of the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
The 5-year low, median, and high median Price/ Funds from Operations per Share Ratios are 14.94, 16.58 and 19.09. The corresponding 10 year ratios are 13.88, 15.73 and 17.56. The current P/FFO Ratio is 19.45 based on FFO estimate for 2023 of $0.56 and a stock price of $10.89. The current ratio is above the high ratio of the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $6.63. The 10-year low, median, and high median Price/Graham Price Ratios are 1.34, 1.55 and 1.74. The current P/GP Ratio is 1.64 based on a stock price of $10.89. 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 3.30. The current P/B Ratio is 3.12 based on a Book Value of $831M, Book Value per Share of $3.49 and a stock price of $10.89. The current ratio is 5.5% 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 16.42. The current P/CF Ratio is 18.28 based on a stock price of $1.89, Cash Flow for the last 12 months of $141.7M and Cash Flow per Share of $0.60. The current ratio is 11% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get an historical median dividend yield of 5.78%. The current dividend yield is 5.62% based on a stock price of $10.89 and dividends of $0.612. The current yield is 2.8% 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 4.80%. The current dividend yield is 5.62% based on a stock price of $10.89 and dividends of $0.612. The current yield is 17% above the 10 year median 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 3.27. The current P/S Ratio is 2.59 based on Revenue estimate for 2023 of $999, Revenue per Share of $4.20 and a stock price of $10.89. The current ratio is 21% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. Although, I wonder about the Revenue estimate for 2023 because that is a 41% jump, the Revenue estimate for 2024 is $878M and the Revenue for the last 12 months is $727M.
Results of stock price testing is that the stock price is probably reasonable. The 10 year median dividend yield test says this. It is confirmed by the P/S Ratio test, although this test says cheap, I wonder about it. Other tests vary from reasonable and below the median to expensive.
When I look at analysts’ recommendations, I find Strong Buy (1) and Buy (3). The consensus would be a Strong Buy. The 12 month stock price consensus is $13.25 with a high of $14.00 and a low of $12.50. The consensus price of $13.25 implies a total return of 27.29% with 21.67% from capital gains and 5.62% from dividends.
Analysts like this stock on Stock Chase and feel it will do better in the future. Stock Chase give this stock 4 stars out of 5. It is on all three of the dividends lists I follow. Jitendra Parashar on Motley Fool likes this stock for its dividends. Ambrose O'Callaghan on Motley Fool thinks retirees should buy this for their TFSA. The company put out a Press Release on their 2022 results. The company put out a press release on Newswire about their third quarter of 2023.
Simply Wall Street reviews this stock via Yahoo Finance. Simply Wall Street has two warnings out of earnings are forecast to decline by an average of 59.7% per year for the next 3 years; and dividend of 5.67% is not well covered by earnings or cash flows. Note for this stock the important value for determining dividend payments is FFO and AFFO. Simply Wall gives this stock 2 and one half stars out of 5.
Chartwell Retirement Residences is an unincorporated open-ended real estate trust that is engaged in the ownership, operations, and management of retirement residences and long-term care homes in Canada. The company has two operating segments; The Retirement Operations segment and the Long-Term Care Operations segment. Its web site is here Chartwell Retirement Residences.
The last stock I wrote about was about was Richards Packaging Income Fund (TSX-RPI.UN, OTC-RPKIF) ... learn more. The next stock I will write about will be Sienna Senior Living Inc (TSX-SIA, OTC-LWSCF) ... learn more on Wednesday, December 13, 2023 around 5 pm. Tomorrow on my other blog I will write about Estate Planning.... learn more on Tuesday, December 12, 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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