Is it a good company at a reasonable price? Personally, I do not like their debt level, but they have been buying other business and rebuying their shares. Another thing I do not like is that their total return for long term holders is under 8% per year in most years. I do like companies that can manage a total return of at least 8% per year over the long term. This company does not do that, see Total Return chart below. An advantage is that the stock is cheap and the current dividend yield is high. They can afford their dividend payments as the DPRs are under 40%.
I do not own this stock of Cogeco Communications Inc (TSX-CCA, OTC-CGEAF). This stock was on the Money Sense list when I was looking for a new stock to follow.
When I was updating my spreadsheet, I noticed was that there has been a lot of volatility in the stock and in dividends. For dividends, over the past 26 years they have decreased 4 times and increased 17 times. There was also a couple of years of no dividends. However, dividends have been steadily increasing over the past 10 years. A lot of the big swings in stock price also happened more than 10 years ago. See chart below from August 2000 to 2002 when price went from 42.50 to 11.50. Also, see the second chart that is as recent as 2021, stock price went from 100.42 in December 2021 to 59.35 in December 2023.
| Aug-00 | Aug-01 | Aug-02 |
|---|---|---|
| $42.50 | $27.00 | $11.50 |
| 82.40% | -36.47% | -57.41% |
| Dec-21 | Dec-22 | Dec-23 |
|---|---|---|
| $100.42 | $76.79 | $59.35 |
| 1.86% | -23.53% | -22.71% |
If you had invested in this company in December 2013, for $1,007.58 you would have bought 21 shares at $47.98 per share. In December 2023, after 10 years you would have received $434.36 in dividends. The stock would be worth $1,246.35. Your total return would have been $1,680.71. This would be a total return of 5.91% per year with 2.15% from capital gain and 3.77% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $47.98 | $1,007.58 | 21 | 10 | $434.36 | $1,246.35 | $1,680.71 |
The current dividend yield is good with dividend growth moderate. The current dividend yield is good (5% to 6% ranges) at 5.58%. The 5, 10 dividend yields are moderate at 2.50%, and 2.40%. The historical median dividend yield is low (below 2%) at 1.69%.
The Dividend Payout Ratios (DPR) are good. The DPR for 2023 for Earnings per Share (EPS) is good at 35% with 5 year coverage at 31%. The DPR for 2023 for Adjusted Earnings per Share (AEPS) is good at 33% with 5 year coverage at 31%. The DPR for 2023 for Cash Flow per Share (CFPS) is good at 10% with 5 year coverage at 10%. The DPR for 2023 for Free Cash Flow (FCF) is good at 33% with 5 year coverage at 27%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 35.47% | 30.53% |
| AEPS | 33.30% | 30.80% |
| CFPS | 9.92% | 9.69% |
| FCF | 33.21% | 27.05% |
Some Debt Ratios are awful as debt is too high, but at least the Liquidity Ratio is fine. The Long Term Debt/Market Cap Ratio for 2023 is far too high at 1.89 and currently at 1.72. I like to see this at 1.00 or less. Some analysts think it should be 0.50 or less. The Intangible Good Will/Market Cap Ratio is far too high for 2023 at 2.19 and currently at 2.13. This should also be 1.00 or lower. The Liquidity Ratio for 2023 is a low at 1.09 and 0.59 currently. If you added in Cash Flow after dividends, the ratios are fine at 2.74 and 2.44. The Debt Ratio for 2023 is fine at 1.54 and 1.58 currently. The Leverage and Debt/Equity Ratios for 2023 are too high at 3.30 and 2.14 and currently at 3.16 and 2.00. I prefer to see these ratios below 3.00 and below 2.00.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 1.89 | 1.72 |
| Intang/GW | 2.19 | 2.13 |
| Liquidity | 1.09 | 0.59 |
| Liq. + CF | 2.71 | 2.44 |
| Debt Ratio | 1.54 | 1.58 |
| Leverage | 3.30 | 3.16 |
| D/E Ratio | 2.14 | 2.00 |
The Total Return per year is shown below for years of 5 to 30 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 | 10.31% | 2.03% | -2.04% | 4.07% |
| 2013 | 10 | 11.55% | 5.91% | 2.15% | 3.77% |
| 2008 | 15 | 36.24% | 6.92% | 3.68% | 3.24% |
| 2003 | 20 | 0.00% | 9.44% | 6.53% | 2.91% |
| 1998 | 25 | 10.78% | 5.88% | 3.86% | 2.01% |
| 1993 | 30 | 10.35% | 7.70% | 5.70% | 2.00% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 9.04, 11.02 and 12.99. The corresponding 10 year ratios are 9.67, 12.00 and 14.01. The corresponding Historical ratios are 9.62, 11.66 and 13.71. The current P/E Ratio is 7.40 based on a stock price of $61.24 and EPS estimate for 2024 of $8.28 The current ratio is below the low ratio for the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Earnings per Share Ratios are 9.11, 12.30 and 14.34. The corresponding 10 year ratios are 9.92, 12.39 and 14.00. The current P/AEPS Ratio is 7.53 based on a stock price of $61.24 and AEPS estimate for 2024 of $8.13.
I get a Graham Price of $111.13. The 10-year low, median, and high median Price/Graham Price Ratios are 0.94, 1.08 and 1.24. The current P/GP Ratio is 0.55 based on a stock price of $61.24. 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 10-year median Price/Book Value per Share Ratio of 2.03. The current P/B Ratio is 0.91 based on a stock price of $61.24, Book Value of $3,004M, and Book Value per Share of $67.52. The current ratio is 55% 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 for 2024 of $84.20. This implies a ratio of 0.73 based on a stock price of $61.24 and Book Value of $3,746M. This ratio is 64% 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 4.52. The current ratio is 2.58 based on Cash Flow per Share estimate for 2024 of $23.70, Cash Flow of $1,054M and a stock price of $61.24. The current ratio is 43% 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 1.69%. The current dividend yield is 5.58% based on dividends of $3.416 and a stock price of $61.24. The current dividend yield is 230% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 2.40%. The current dividend yield is 5.58% based on dividends of $3.416 and a stock price of $61.24. The current dividend yield is 133% 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 1.62. The current ratio is 0.92 based on a stock price of $61.24, Revenue estimate for 2024 of $2,973M and Revenue per Share of $66.83. The current ratio is 43% 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. I wonder about the dividend yield tests because this company has really rammed up their dividends in the last 10 years or so. However, the P/S Ratio test says that the stock price is relatively cheap. All the tests are saying the same thing.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (1), Hold (7) and Underperform (1). The consensus would be a Hold. The 12 months stock price consensus is $71.40 with a high of $93.00 and low of $63.00. The consensus price of $71.40 implies a total return of 22.17%, with 16.59% from capital gains and 5.58% from dividends.
The latest recommendation is a wait on Stock Chase. In other years there were mixed views about this stock. Stock Chase gives this stock 3 stars out of 5. It is on the dividend lists that I follow. Brian Paradza on Motley Fool likes the growing dividend on this stock. Christopher Liew on Motley Fool this the stock is oversold and will rebound. The company put out a Press Release on their fourth quarter of 2023. The company put out a Press Release about their results for the first quarter of 2024.
Simply Wall Street via Yahoo Finance looks at who owns the shares of this company. Simply Wall Street gives this stock 3 and one half stars out of 5. Simply Wall Street has two warnings of earnings are forecast to decline by an average of 4.3% per year for the next 3 years; and has a high level of debt.
Cogeco Communications Inc is a communication corporation. The company is a cable operator in North America operating in Canada. The company earns majority of its revenue from American telecommunications. The company operates in Canada and United States. Its web site is here Cogeco Communications Inc.
The last stock I wrote about was about was Canadian Pacific Kansas City Ltd (TSX-CP, NYSE-CP) ... learn more. The next stock I will write about will be Allied Properties Real Estate Investment Trust (TSX-AP.UN, OTC-APYRF) ... learn more on Monday, February 12, 2024 around 5 pm.
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