Is it a good company at a reasonable price? This company has grown it dividends with moderate yield and moderate growth. They have done well for their shareholders over the longer term. This is a General Insurance company and as such will be more volatile that say a Life Insurance company. If you plan to buy, be cautious as the stock price is relatively high. It is testing still as reasonable but above the median.
I do not own this stock of Intact Financial Corp (TSX-IFC, OTC-IFCZF). I am following this stock because in November 2011, the TD Bank put out a special report on the merits of dividend investing. At the end of the report, they listed a number of Canadian stocks as Equity Yield ideas. This was one stock listed that I did not follow. This and Wajax are from TD Report on dividend investing.
When I was updating my spreadsheet, I noticed that they totally revamped their income statement and it was hard to find in continuity with all the Revenue data that I had for past years. I did the best I could. I looked at sites that usually update financial statements online and found only one who had updated their sites for 2023 income financials. I cannot figure out where they get their revenue data from for 2023.
The company has put out all sorts of data for 2023, but sometimes more data is just that, more data. It does not always been better data. I did find a reasonable Revenue figure. This will probably become clearer with the annual report next year.
Revenue was not the only part of the annual statements with no continuity. It was quite frustrating to update the spreadsheet. I notice that a number of sites updated their financials for other statements, but not for Income.
If you had invested in this company in December 2013, for $1,040.55 you would have bought 15 shares at $69.37 per share. In December 2023, after 10 years you would have received $448.20 in dividends. The stock would be worth $3,057.90. Your total return would have been $3,506.10. This would be a total return of 13.96% per year with 11.38% from capital gain and 2.58% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $69.37 | $1,040.55 | 15 | 10 | $448.20 | $3,057.90 | $3,506.10 |
The current dividend yield is moderate with dividend growth moderate. The current dividend yield is moderate (2% to 4% ranges) at 2.12%. The 5, 10 and historical dividend yields are moderate at 2.21%, 2.53% and 2.56%. The dividend growth is moderate (8% to 14%) at 9.5% per year over the past 5 years. The last dividend increase was for 10% and it occurred in 2024.
The Dividend Payout Ratios (DPR) are fine. The DPR for 2023 for Earnings per Share (EPS) is fine at 63% with 5 year coverage good at 40%. The DPR for 2023 for Adjusted Earnings per Share (AEPS) is good at 47% with 5 year coverage at 37%. The DPR for 2023 for Cash Flow per Share (CFPS) is high at 54% with 5 year coverage good at 29%. The DPR for 2023 for Free Cash Flow (FCF) is fine at 62% with 5 year coverage good at 30%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 62.95% | 40.24% |
| AEPS | 47.36% | 37.35% |
| CFPS | 53.85% | 29.17% |
| FCF | 62.10% | 29.68% |
Some Debt Ratios are good like the important Liquidity Ratio, but the Debt Ratio is too low and Leverage and Debt/Equity Ratios are too high. The Long Term Debt/Market Cap Ratio for 2023 is good at 0.14 and currently at 0.13. The Liquidity Ratio for 2023 is a bit good at 2.82 and 2.82 currently. The Debt Ratio for 2023 is low at 1.42. I prefer this to be at 1.50 or higher. The Leverage and Debt/Equity Ratios for 2023 are too high at 3.40 and 2.40. I prefer these ratios to be below 3.00 and below 2.00.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.14 | 0.13 |
| Intang/GW | 0.25 | 0.22 |
| Liquidity | 2.82 | 2.82 |
| Liq. + CF | 4.38 | 4.27 |
| Debt Ratio | 1.42 | 1.42 |
| Leverage | 3.40 | 3.40 |
| D/E Ratio | 2.40 | 2.40 |
The Total Return per year is shown below for years of 5 to 19 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 | 9.46% | 18.23% | 15.50% | 2.74% |
| 2013 | 10 | 9.60% | 13.96% | 11.38% | 2.58% |
| 2008 | 15 | 8.81% | 13.23% | 13.23% | 3.17% |
| 2004 | 19 | 11.21% | 10.75% | 10.75% | 2.66% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 15.06, 18.45 and 21.84. The corresponding 10 year ratios are 15.96, 17.94 and 20.35. The corresponding historical ratios are 13.98, 15.57 and 16.95. The current P/E Ratio is 18.64 based on a stock price of $227.80 and EPS estimate for 2024 of $12.22. The current ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Earnings per Share Ratios are 12.78, 15.66 and 18.54. The corresponding 10 year ratios are 15.38, 16.68 and 18.59. The current ratio is 15.89 based on a AEPS estimate for 2024 of $14.34 and a stock price of $227.80. The current ratio is between the median and high ratios 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 $171.15. The 10-year low, median, and high median Price/Graham Price Ratios are 1.16, 1.27 and 1.37. The current ratio is 1.33 based on a stock price of $227.80. The current ratio is between the median and high ratios 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 2.09. The current ratio is 2.51 based on a Book Value of $16,190M, Book Value per Share of $90.79 and stock price of $227.80. The current ratio is 19.9% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I also have a Book Value per Share (BVPS) estimate of $89.00 for 2024. This implies a ratio of 2.56 with a stock price of $227.80 and Book Value of $15,871M. This ratio is 22% 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 12.87. The current ratio is 22.01 based on Stock Price of $227.80, Cash Flow for the last 12 months of $1,846, and Cash Flow per Share of $10.35. The current ratio is 71% 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 2.56%. The current dividend yield is 2.12% based on dividends of $4.84 and a stock price of $227.88. The current yield is 17% 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 2.53%. The current dividend yield is 2.12% based on dividends of $4.84 and a stock price of $227.88. The current yield is 16% below the historical median dividend 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 1.65. The current ratio is 1.89 based on Revenue estimate for 2024 of $21,497M, Revenue per Share of $120.55 and a stock price of $227.80. The current dividend is 14% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. Although, with the trouble I had reconciling the new accounting with the old accounting for revenue, I have to wonder about this test. The place where I got the estimate from did not include revenue values for 2023 (but did for prior years). They do give an estimate close to what I get as the Revenue figure.
Results of stock price testing is that the stock price is probably still reasonable, but at the high end of the reasonable range. The dividend yield tests say that the stock price is reasonable but above the median. the P/S Ratio test says this as do most of the rest of my testing.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (8), Hold (3) and Underperform (1). The consensus would be a Buy. The 12 month stock price is $237.50 with a high of $256.00 and low of $221.00. The consensus price of $237.50 implies a total return 6.38% with 4.26% from capital gains and 2.12% from dividends.
Analyst on Stock Chase like this stock. The only recommendation in 2024 is to buy on weakness Stock Chase gives this stock 5 stars out of 5. It is on my dividend lists. Amy Legate-Wolfe on Motley Fool says this stock has climbed to an all-time high on buybacks. Adam Othman on Motley Fool thinks this is a stock to buy and hold forever. The company put out a press release via Newswire about their year-end results for 2023.
Simply Wall Street via Yahoo Finance talk about dividend payments under this stock. Simply Wall Street list 3 warnings for this stock of large one-off items impacting financial results; profit margins (5.2%) are lower than last year (11.5%), and significant insider selling over the past 3 months.
Intact Financial Corp is a property and casualty insurance company that provides written premiums in Canada. Most of the company's direct premiums are written in the personal automotive space. Its web site is here Intact Financial Corp.
The last stock I wrote about was about was First National Financial Corporation (TSX-FN, OTC-FNLIF) ... learn more. The next stock I will write about will be Manulife Financial Corp (TSX-MFC, NYSE-MFC) ... learn more on Friday, February 17, 2024 around 5 pm. Tomorrow on my other blog I will write about Brian Feroldi.... learn more on Thursday, February 22, 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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