Is it a good company at a reasonable price? It is a good sign that the company has been increasing the dividends lately after the 2020 dividend cut. I have this stock and I have no intentions of selling it, but neither am I buying more. I have this stock in my TFSA account which is my fooling around money. The price is probably cheap.
I own this stock of Alaris Equity Partners Income Trust (TSX-AD.UN, OTC-ALARF). This is a stock that Dividends in Hand Blogger had bought in July 2016. It was also recommended by Acumen Capital report in a report by Brian Pow and Oliver Shao via Investor’s Digest. The Blogger Dividends in Hand sold his position in this company in April 29, 2020.
When I was updating my spreadsheet, I noticed the price of this stock is below what I paid for it, although the distributions are good. I have had this stock for almost 7 years and have made 6.43% with a capital loss of 0.91% and dividends of 7.34%. Unfortunately, I bought this stock first in 2017 and 2017 when it was at a high. Note that this company is now paying a distribution (rather than a dividend). So, the distribution can be tax as capital gains, return of company, dividend, or a combination. I have it in Tax Free Account, so this does not affect me. Note that I bought this stock with my fooling around money.
If you had invested in this company in December 2013, for $1,015.58 you would have bought 34 shares at $29.87 per share. In December 2023, after 10 years you would have received $497.34 in dividends. The stock would be worth $553.86. Your total return would have been $1,051.20. This would be a total return of 0.45% per year with 5.88% from capital loss and 6.33% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $29.87 | $1,015.58 | 34 | 10 | $497.34 | $553.86 | $1,051.20 |
The current dividend yield is high with dividend growth restarting after a dividend cut. The current dividend yield is high (7% and higher) at 8.14%. The 5, 10 and historical dividend yields are also high at 7.77%, 7.57% and 7.47%. The last dividend increase was in 2023 and it was for 3.03%
The Dividend Payout Ratios (DPR) are fine. The DPR for 2023 for Earnings per Share (EPS) is good at 46% with 5 year coverage fine at 65%. The DPR for 2023 for Cash Flow per Share (CFPS) is a little high at 52% with 5 year coverage at 46%. The DPR for 2023 for Free Cash Flow (FCF) is fine at 72% with 5 year coverage at 57%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 46.42% | 64.87% |
| CFPS | 52.31% | 45.84% |
| FCF | 71.99% | 56.80% |
Debt Ratios are fine, but I would like to see a higher Liquidity Ratio. The Long Term Debt/Market Cap Ratio for 2023 is good at 0.41 and currently at 0.40. The Liquidity Ratio for 2023 is too low at 0.39. If you added in Cash Flow after dividends, the ratios are still far too low at 0.56 and currently at 0.63. If you add back in the current portion of the long term debt, the ratio become fine at 2.60 and currently at 2.93. If you do that, be sure to check that the current debt is being rolled over. The Debt Ratio for 2023 is good at 2.87. The Leverage and Debt/Equity Ratios for 2023 are good at 1.54 and 0.54.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.41 | 0.40 |
| Intang/GW | 0.00 | 0.00 |
| Liquidity | 0.39 | 0.39 |
| Liq. + CF | 0.56 | 0.63 |
| Liq. + CF+D | 2.60 | 2.93 |
| Debt Ratio | 2.87 | 2.87 |
| Leverage | 1.54 | 1.54 |
| D/E Ratio | 0.54 | 0.54 |
The Total Return per year is shown below for years of 5 to 16 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 | -3.47% | 7.26% | -0.84% | 8.10% |
| 2013 | 10 | 0.11% | 0.45% | -5.88% | 6.33% |
| 2008 | 15 | 2.29% | 15.52% | 4.03% | 11.48% |
| 2006 | 16 | 12.44% | 3.10% | 9.35% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 5.28, 6.34 and 7.39. The corresponding 10 year ratios are 10.55, 15.51 and 19.54. The corresponding historical ratios are 10.55, 13.69 and 16.57. The current P/E Ratio is 8.92 based on a stock price of $16.71 and EPS estimate for 2024 of $1.87. 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 Graham Price of $29.84. The 10-year low, median, and high median Price/Graham Price Ratios are 0.65, 0.96 and 1.16. The current P/GP Ratio is 0.56 based on a stock price of $16.71. 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 1.12. The current ratio is 0.79 based on a stock price of $16.71, Book Value of $961M and Book Value per Share of $21.12. The current ratio is 30% below the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I also have a Book Value per Share (BVPS) estimate for 2024 of $22.00. This BVPS estimate implies a ratio of 0.76 and a Book Value of $1,001M with a stock price of $16.71. This ratio is 32% 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 9.06. The current ratio is 8.27 based on Cash Flow per Share estimate for 2024 of $2.02, Cash Flow of $91.9M and a stock price of $16.71. This ratio is 8.7% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 7.47%. The current dividend yield is $8.14% based on a stock price of $16.71 and dividend of $1.36. The current ratio is 9% above the historical year median yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a year median dividend yield of 7.47%. The current dividend yield is $8.14% based on a stock price of $16.71 and dividend of $1.36. The current ratio is 7.6% above the 10 year median 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 6.48. The current P/S Ratio is 4.41 based on a stock price of $16.71, Revenue estimate for 2024 of $172M and Revenue per Share of $3.79. The current ratio is 32% 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 reasonable, and maybe cheap. Both the dividend yield tests are showing the stock price as reasonable and below the median. However, the dividends were cut in 2020 and are still 16% below the 2019 dividends. On the other hand, dividend cuts are a problem in themselves. The P/S Ratio test says that the stock price is relatively cheap. All the other tests, except the P/CF ratio test is showing the stock price as cheap.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (3) and Hold (1). The consensus would be a Buy. The 12 month stock price consensus is $21.00 with a high of $24.50 and a low of $18.00. The consensus price of $21.00 implies a total return of 33.81% with 25.67% from capital gains and 8.14% from dividends.
There are no entries on Stock Chase for 2024, but all the entries for 2023 were buys. Stock chase gives this stock 4 stars out of 5. Karen Thomas on Motley Fool thinks this company will continue to do well for shareholders. She seems to have missed that dividends were cut in 2020. Aditya Raghunath on Motley Fool says buy this for a passive income stream. The company put out a press release on the Financial Post about their 2023 results.
Simply Wall Street via Yahoo Finance review this stock. Simply Wall Street has 3 warnings out on this stock of earnings are forecast to decline by an average of 21.5% per year for the next 3 years; unstable dividend track record; and has a high level of debt. Simply Wall Street gives this stock 3 and one half stars out of 5.
Alaris Equity Partners Income Trust is an open-ended trust. The Trust, through its subsidiaries, indirectly provides alternative financing to private companies (Partners) in exchange for distributions with the principal objective of generating stable and predictable cash flows for payment of distributions to unitholders of the Trust. Its web site is here Alaris Equity Partners Income Trust.
The last stock I wrote about was about was Sun Life Financial Inc (TSX-SLF, NYSE-SLF) ... learn more. The next stock I will write about will be Toromont Industries Ltd (TSX-TIH, OTC-TMTNF) ... learn more on Friday, April 12, 2024 around 5 pm. Tomorrow on my other blog I will write about How to Save $100,000.... learn more on Thursday, April 11, 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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