Is it a good company at a reasonable price? When dividends are at 0.15%, the company can hardly be called a dividend company. Dividends were cut over 90% going into 2020 and they have been flat since. Even though analysts are calling this stock a strong buy, my analysis suggests that the price is on the expensive side. It is never good when companies cut dividends. It is also not a good sign when a company changes its name. I
do not own this stock of AtkinsRealis (TSX-ATRL, OTC-SNCAF). This stock was one from Mike Higgs' list of dividend growth stocks as SNC-Lavalin Group Inc. By 2008 this stock had grown so much it was too high a percentage of my portfolio so I sold 1/3 of my stock. I sold all my stock in SNC-Lavalin (TSX-SNC, OTC-SNCAF) in 2019. I had given up hope that there will be any sort of resolution for this company anytime soon. I live off my dividends and they have cut the dividends twice that year.
When I was updating my spreadsheet, I noticed that this company used to be SNC-Lavalin Group Inc (TSX-SNC, OTC-SNCAF). See news Release.
If you had invested in this company in December 2013, for $1,003.59 you would have bought 21 shares at $47.79 per share. In December 2023, after 10 years you would have received $121.80 in dividends. The stock would be worth $985.86. Your total return would have been $1,017.66. This would be a total return of 0.13% per year with 1.13% from capital loss and 1.26% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $47.79 | $1,003.59 | 21 | 10 | $121.80 | $895.86 | $1,017.66 |
The current dividend yield is extremely low with dividends flat after a dividend cut. The current dividends are low (below 2%) at just 0.15%. Hardly a dividend at all. The 5, 10 and historical dividend yields are also low at 0.59%, 1.35% and 1.43%. The dividends are currently flat after dividends were cut by 93% in 2019. Analysts do think that dividends will grow again and probably within 2 years, maybe.
The Dividend Payout Ratios (DPR) are good. The DPR for 2023 for Earnings per Share (EPS) is good at 5% with 5 year coverage at 26%. The DPR for 2023 for Adjusted Earnings per Share (AEPS) is good at 5% with 5 year coverage at 21%. The DPR for 2023 for Cash Flow per Share (CFPS) is good at 4% with 5 year coverage at 16%. The DPR for 2023 for Free Cash Flow (FCF) can not be calculated because FCF is negative.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 4.88% | 26.17% |
| AEPS | 5.13% | 20.97% |
| CFPS | 3.99% | 15.89% |
| FCF | -54.02% | -12.52% |
Debt Ratios need improving. The Long Term Debt/Market Cap Ratio for 2023 is good at 0.16 and currently at 0.13. The Liquidity Ratio for 2023 far too low at 0.85. If you added in Cash Flow after dividends, the ratios are still too low at 0.86 and currently at 0.94. If you add back in current debt, they are still too low for 2023 at 1.11 and currently at 1.21. I prefer this ratio to be 1.50 or higher. The Debt Ratio for 2023 is low at 1.45. I prefer this ratio to be 1.50 or higher. The Leverage and Debt/Equity Ratios for 2023 are too high at 3.20 and 2.20. I prefer these ratios to be less than 3.00 and 2.00.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.16 | 0.13 |
| Intang/GW | 0.48 | 0.38 |
| Liquidity | 0.85 | 0.85 |
| Liq. + CF | 0.86 | 0.94 |
| Liq. +CF +D | 1.11 | 1.21 |
| Debt Ratio | 1.45 | 1.45 |
| Leverage | 3.20 | 3.20 |
| D/E Ratio | 2.20 | 2.20 |
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 | -41.30% | -1.25% | -1.46% | 0.21% |
| 2013 | 10 | -21.67% | 0.13% | -1.13% | 1.26% |
| 2008 | 15 | -11.26% | 1.90% | 0.30% | 1.60% |
| 2003 | 20 | -2.87% | 6.95% | 4.71% | 2.25% |
| 1998 | 25 | 0.54% | 14.64% | 10.67% | 3.97% |
| 1993 | 30 | 4.19% | 14.04% | 10.56% | 3.48% |
| 1988 | 35 | 4.79% | 19.48% | 13.96% | 5.51% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 15.11, 21.67 and 28.23. The corresponding 10 year ratios are 14.40, 19.39 and 25.55. The corresponding historical ratios are 14.34, 20.77 and 25.05. The current P/E Ratio is 25.07 based on a stock price of $54.27 and EPS estimate for 2024 of $2.17. 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. Note that the more stable these ratios are over time, the better this test is.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 23.13, 34.06 and 43.79. The corresponding 10 year ratios are 15.89, 21.35 and 26.81. The current P/AEPS Ratio is 22.71 based on AEPS estimate for 2024 of 2.39 and a stock price of $54.07. 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 $31.13. The 10-year low, median, and high median Price/Graham Price Ratios are 1.11, 1.52 and 1.97. The current P/GP Ratio is 1.74 based on a stock price $54.07. 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 1.82. The current P/B Ratio is 3.01 based on a Book Value of $3,164M, Book Value per Share of $18.02 and a stock price of $54.07. The current ratio is 65% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I also have a Book Value per Share estimate for 2024 of $20.20. This value implies a ratio of 2.69 based on a stock price of $54.07 and Book Value of $3,164M. This ratio is 47% 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 33.14. The current P/CF Ratio is 21.54 based on a stock price of $54.07, Cash Flow per Share estimate for 2024 of $2.52 and Cash Flow of $442M. This ratio is 35% below the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I get a historical median dividend yield of 1.43%. The current dividend yield is 0.15% based on dividends of $0.08. The current dividend yield is 90% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median dividend yield of 1.35%. The current dividend yield is 0.15% based on dividends of $0.08. The current dividend yield is 89% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10-year median Price/Sales (Revenue) Ratio is 0.71. The current P/S Ratio is 1.04 based on Revenue estimate for 2024 of $9,122M, Revenue per Share of $51.96 and a stock price of $54.07. The current ratio is 46% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
Results of stock price testing is that the stock price is probably on the expensive side. The dividend yield testing says the stock price is expensive. These are not good tests when dividends are cut, but it is also not a good sign when dividends are cut. However, the P/S Ratio testing is saying that the stock price is expensive also. Most of the rest of the testing is saying the stock price is reasonable, but above the median or it is expensive.
When I look at analysts’ recommendations, I find Strong Buy (5), Buy (6), and Hold (2). The consensus would be a Strong Buy. The 12 month stock price consensus is $60.21 with a high of $66.00 and low of $46.50. The consensus stock price of $60.21 implies a total return of 11.09% with 10.95% from capital gains and 0.15% from dividends.
There are two recommendations on Stock Chase for 2024 and they are both buys. Stock Chase gives this stock 4 stars out of 5. Andrew Button on Motley Fool says stock is growing fast but there are risks. Aditya Raghunath on Motley Fool thinks this is a growth stock to buy. The company put out a press release via Newswire about their fourth quarter 2023 results.
Simply Wall Street via Yahoo Finance reviews this stock. They give two warnings of debt is not well covered by operating cash flow; and significant insider selling over the past 3 months. Simply Wall Street gives this stock 2 and one half stars out of 5.
Based in Montreal, AtkinsRealis is a fully integrated professional services and project management firm that offers a wide range of services, including financing, consulting, engineering and construction, procurement, and operations and maintenance. The firm serves clients in the infrastructure, nuclear, and engineering design and project management industries. Its web site is here AtkinsRealis.
The last stock I wrote about was about was Barclays PLC ADR (LSE-BARC, NYSE-BCS) ... learn more. The next stock I will write about will be Fortis Inc (TSX-FTS, OTC-FRTSF) ... learn more on Wednesday, May 1, 2024 around 5 pm. Tomorrow on my other blog I will write about Dividend Stocks May 2024.... learn more on April 30, 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.
See my site for an index to these blog entries and for stocks followed. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
No comments:
Post a Comment