Is it a good company at a reasonable price? It all depends on why you buy a stock. I bought this stock for its dividend and it pays a good dividend in the 5% to 6% range. I do currently like dividend growth stocks, but I invested in the past for various reasons. It is in my TFSA, which is my fooling around money. I see no reason to sell this at the present time. Although, I must admit that analysts keep thinking this stock will make a strong recovery and it does not. The stock price seems cheap.
I own this stock of Transcontinental Inc (TSX-TCL.A, OTC-TCLAF). This is a dividend growth stock. It was on a number of dividend lists. However, it fell on hard times after 2008, but was recovering but then hit another low in 2019 and its recovery is uneven. It is was on the Canadian Dividend Aristocrats Index when I bought it in 2015.
When I was updating my spreadsheet, I noticed the stock price has been going down over the past two years. They also have not raised their dividends since 2020.
If you had invested in this company in December 2013, for $1,008.78 you would have bought 69 shares at $14.62 per share. In December 2023, after 10 years you would have received $558.90 in dividends. The stock would be worth $945.30. Your total return would have been $1,504.20. This is a total return would be a total return of 4.95% per year with 0.65% from capital loss and 5.60% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $14.62 | $1,008.78 | 69 | 10 | $558.90 | $945.30 | $1,504.20 |
The current dividend yield is good with dividend growth non-existent, but they are expected in the future. The current dividend yield is good (5% to 6% range) at 6.54%. The 5 and 10 year median dividend yields are moderate (2% to 4% ranges) at 4.98% and 4.22%. The historical median dividend yield is low (below 2%) at 1.97%.
The Dividend Payout Ratios (DPR) are fine. The DPR for 2023 for Earnings per Share (EPS) is too high at 90.9% but better at 5 year coverage at 59%. It is expected to be 43% in 2024. The DPR for 2023 for Adjusted Earnings per Share (AEPS) is good at 44% with 5 year coverage at 38%. The DPR for 2023 for Cash Flow per Share (CFPS) is good at 19% with 5 year coverage at 17%. The DPR for 2023 for Free Cash Flow (FCF) is good at 26% with 5 year coverage at 32%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 90.91% | 59.30% |
| AEPS | 44.33% | 38.44% |
| CFPS | 19.00% | 17.22% |
| FCF | 26.44% | 32.82% |
Some Debt Ratios are in need improving and others are good. The Long Term Debt/Market Cap Ratio for 2023 is too high at 1.06 and better currently at 0.76. You want this under 1.00 and best under 0.50. The Intangible and Goodwill/Market Cap Ratio is goo high at 1.86 and currently at 1.33. The Liquidity Ratio for 2023 is good at 2.09. The Debt Ratio for 2023 is fine at 1.68 and 1.68 currently. The Leverage and Debt/Equity Ratios for 2023 are good at 1.94 and 0.94.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 1.06 | 0.76 |
| Intang/GW | 1.86 | 1.33 |
| Liquidity | 2.09 | 2.09 |
| Liq. + CF | 2.84 | 2.55 |
| Debt Ratio | 2.06 | 2.06 |
| Leverage | 1.94 | 1.94 |
| D/E Ratio | 0.94 | 0.94 |
The Total Return per year is shown below for years of 5 to 35 to the end of 2023. 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. |
|---|---|---|---|---|---|
| 2018 | 5 | 1.63% | -8.38% | -13.97% | 5.60% |
| 2013 | 10 | 4.49% | 1.18% | -4.77% | 5.95% |
| 2008 | 15 | 2.49% | 5.45% | -1.03% | 6.48% |
| 2003 | 20 | 9.75% | 0.35% | -3.68% | 4.03% |
| 1998 | 25 | 10.17% | 7.08% | 1.98% | 5.10% |
| 1993 | 30 | 8.89% | 6.10% | 1.93% | 4.17% |
| 1988 | 35 | 8.94% | 4.52% | 4.42% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 9.05, 11.08 and 13.12. The corresponding 10 year ratios are 8.31, 9.73 and 11.66. The corresponding historical ratios are 10.26, 13.12 and 15.38. The current P/E Ratio is 6.65 based on a stock price of $13.77 and EPS estimate for 2024 of 2.07. 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 also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Earnings per Share Ratios are 5.30, 7.11 and 8.91. The corresponding 10 year ratios are 6.29, 7.40 and 8.58. The current P/AEPS Ratio is 6.65 based on a stock price of $13.77 and AEPS of $2.07. 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 Graham Price of $31.97. The 10-year low, median, and high median Price/Graham Price Ratios are 0.51, 0.65 and 0.77. The current P/GP Ratio is 0.43 based on a stock price of $13.77. This 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 10-year median Price/Book Value per Share Ratio of 1.19. The current P/B Ratio is 0.63 based on a stock price of $13.77, Book Value of $1,901M, and Book Value per Share of $21.95. The current ratio is 47% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I also have a Book Value per Share estimate of $22.30 for 2024. This implies a ratio of 0.62 based on a stock price of $13.77 and Book Value of $1,931M. This ratio is 48% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a 10-year median Price/Cash Flow per Share Ratio of 5.03. The current P/CF Ratio is 3.74 based on Cash Flow per Share estimate for 2024 of $3.68, Cash Flow of $319M, and a stock price of $13.77. The current ratio is 26% 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 1.97%. The current dividend yield is 6.54% based on dividends of $0.90 and a stock price of $13.77. The current dividend yield is 232% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap. The company used to have very low dividend yields.
I get a 10 year median dividend yield of 4.22%. The current dividend yield is 6.54% based on dividends of $0.90 and a stock price of $13.77. The current dividend yield is 55% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10-year median Price/Sales (Revenue) Ratio is 0.63. The current P/S Ratio is 0.41 based on Revenue estimate for 2024 of $2,920M, Revenue per Share of $33.71 and a stock price of $13.77. The current ratio is 35% 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 this and it is confirmed by the P/S Ratio test. Most of the rest of the testing is saying the same thing.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (3) and Hold (1). The consensus would be a Buy. The 12 months stock price consensus is $17.70, with a high of $21.50 and low of $14.00. The consensus stock price implies a total return of 35.08% with 28.54% from capital gains and 6.54% from dividends.
Last year when I look at analysts’ recommendations, I found Buy (3) and Hold (3) recommendations. The consensus would be a Buy. The 12 month stock price of $21.50. This implies a total return of $47.08% with 41.17% from capital gains and 5.91% from dividends based on a current stock price of $15.23. What happened was a drop in price to $13.77 and a loss of 3.68% with a capital loss of 9.59% and dividends of 5.91%.
The year before when I look at analysts’ recommendations, I found Strong Buy (1), Buy (3) and Hold (2). The consensus would be a Buy. The 12 month stock price was $26.50. This implied a total return of 37.14% with 32.63% from capital gains and 4.50% from dividends based on a stock price of $19.98. What happened was a drop in price to $15.23 and a loss of 19.27% with a capital loss of 23.77% and dividends of 4.50%. So, this is the third year in a row that analysts expected a strong price rise.
All the analysts’ recommendations on Stock Chase in 2023 are a sell. Stock Chase gives this stock 3 stars out of 5. Amy Legate-Wolfe on Motley Fool likes this stock for its strong dividend. Christopher Liew on Motley Fool likes this stock because it is a strong dividend provider. The company put out a press release on Newswire about their fourth quarter of 2023.
Simply Wall Street via Yahoo Finance reviews this stock. Simply Wall Street lists 4 risks of large one-off items impacting financial results; profit margins (2.9%) are lower than last year (4.8%); dividend of 6.6% is not well covered by earnings; and has a high level of debt. Simply Wall Street gives this stock 3 and one half stars out of 5.
Transcontinental Inc is a Canadian printer and flexible packaging provider that operates in three segments: packaging, printing, and other. The smaller other segment focuses on the media sector, which generates revenue from print and digital publishing products. Its web site is here Transcontinental Inc.
The last stock I wrote about was about was Canadian Imperial Bank of Commerce (TSX-CM, NYSE-CM) ... learn more. The next stock I will write about will be Enghouse Systems Ltd (TSX-ENGH, OTC-EGHSF) ... learn more on Wednesday, January 24, 2024 around 5 pm. Tomorrow on my other blog I will write about Evaluate a Stock.... learn more on Tuesday, January 23, 2024 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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