Is it a good company at a reasonable price? I still like this company. Some of the insiders are buying. The time to buy, of course, is when the stock is cheap. However, since I live off my dividends, I generally do not have any money for new investments. Currently, the stock is relatively cheap.
I own this stock of Melcor Developments Inc (TSX-MRD, OTC-MODVF). This was one of the stocks on Mike Higgs' list of good dividend growth stocks. So, I looked into it and bought it. I bought this stock first in 2008 and then some more in 2009. It is a little followed real estate company from Western Canada.
When I was updating my spreadsheet, I noticed that I have not done very well, especially lately, with this stock. My total return to date is 4.86% with 0.39% from capital gains and 4.47% from dividends. I have had this stock for 16 years. However, let’s face it, this company is from Alberta and Alberta has always had a boom/bust economy. I also paid far too much for my initial purchase of this stock. I did not count for the volatility of this stock.
I noticed that a number of officers have increased their shares in this company over the past year. Shareholders have not done well over the past 5 and 10 years. Share price blunged in 2020 and has been recovering since then.
If you had invested in this company in December 2013, for $1,002.50 you would have bought 50 shares at $20.05 per share. In December 2023, after 10 years you would have received $260.00 in dividends. The stock would be worth $563.00. Your total return would have been $823.00. This would be a total return of 2.26% loss per year with 5.61% from capital loss and 3.35% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $20.05 | $1,002.50 | 50 | 10 | $260.00 | $563.00 | $823.00 |
The current dividend yield is moderate with dividend growth low, but with a recent decrease. The current dividend yield is moderate (2% to 4% ranges) at 3.83%. The 5, 10 and historical dividend yields are also moderate at 3.75%, 3.69% and 2.94%. If I look the running 5 year average change in dividends over the past 10 years, the result is a median increase of 4.2%. To the end of 2023, the dividend increase was 4.24% per year. However, the dividends are decreased by 31% in 2024. The dividends, into 2024, are down by 2.5% per year over the past 5 years. As noted above, the last dividend change was in 2024 and dividends were decreased by 31%.
The Dividend Payout Ratios (DPR) are good. The DPR for 2023 for Earnings per Share (EPS) is good at 40% with 5 year coverage at 31%. The DPR for 2023 for Funds from Operations (FFO) is good at 23% with 5 year coverage at 25%. The DPR for 2023 for Cash Flow per Share (CFPS) is good at 23% with 5 year coverage at 18%. The DPR for 2023 for Free Cash Flow (FCF) is good at 41% with 5 year coverage at 37%.
The EPS is expected to drop in 2024 from $2.03 to $1.79. Therefore, the DPR for Earnings per Share (EPS) for 2024 is expected to be 24% with 5 year coverage at 28%. The DPR for 2024 for Cash Flow per Share (CFPS) is expected to be at 16% with 5 year coverage at 18%
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 40.21% | 31.41% |
| FFO | 23.44% | 25.59% |
| CFPS | 23.28% | 18.19% |
| FCF | 41.41% | 36.88% |
Debt Ratios are good. The Long Term Debt/Coverage Assets Ratio for 2023 is good at 0.40. The Long Term Debt/Market Cap Ratio for 2023 is high at 1.94 and currently at 1.90. The Liquidity Ratio for 2023 is a good at 3.56. The Debt Ratio for 2023 is good at 2.19 and.2.36 currently. The Leverage and Debt/Equity Ratios for 2023 are good at 1.73 and 0.73.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R+A | 0.40 | 0.40 |
| Lg Term R | 1.94 | 1.90 |
| Intang/GW | 0.00 | 0.00 |
| Liquidity | 3.56 | 3.56 |
| Liq. + CF | 4.15 | 4.27 |
| Debt Ratio | 2.19 | 2.36 |
| Leverage | 1.73 | 1.73 |
| D/E Ratio | 0.73 | 0.73 |
The Total Return per year is shown below for years of 5 to 33 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 | 4.24% | 2.45% | -1.74% | 4.19% |
| 2013 | 10 | 2.50% | -2.26% | -5.61% | 3.35% |
| 2008 | 15 | 2.85% | 13.91% | 6.18% | 7.73% |
| 2003 | 20 | 9.20% | 10.86% | 4.58% | 6.29% |
| 1998 | 25 | 10.74% | 15.98% | 7.61% | 8.38% |
| 1993 | 30 | 12.25% | 17.35% | 7.90% | 9.45% |
| 1990 | 33 | 13.43% | 16.53% | 7.96% | 8.58% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 5.44, 7.03 and 8.91. The corresponding 10 year ratios are 6.40. 7.51 and 8.93. The corresponding historical ratios are 5.86, 7.21 and 8.42. The current ratio is 6.42 based on a stock price of $11.49 and EPS estimate for 2024 of 1.79. 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 also have Funds from Operations (FFO) data. The 5-year low, median, and high median Price/ Funds from Operations Ratios are 4.04, 6.05 and 8.48. The corresponding 10 year ratios are 7.28, 9.54 and 9.50. The current P/FFO Ratio is 4.21 based on a stock price of $11.49 and FFO for the last 12 months of $2.73. The current ratio is below the low ratio of 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $39.86. The 10-year low, median, and high median Price/Graham Price Ratios are 0.35, 0.43 and 0.49. The current P/GP Ratio is 0.29 based on a stock price of $11.49. 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 0.42. The current P/B Ratio 0.29 based on a
stock price of $11.49, Book Value per Share of $1,210M and Book Value per Share of $39.45. The current ratio is 30% below the ratio of 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 12.42. The current P/CF Ratio is 7.22 based on Cash Flow for the last 12 months of $48.8M, Cash Flow per Share of $1.59 and a stock price of $11.49. The current ratio is 42% 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 2.94%. The current dividend yield is 3.83% based on dividends of $0.44 and a stock price of $11.94. The current dividend yield is 30% higher than 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 3.69%. The current dividend yield is 3.83% based on dividends of $0.44 and a stock price of $11.94. The current dividend yield is 4% higher than the historical median dividend 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 1.89. The current P/S Ratio is 1.21 based on Revenue estimate for 2024 of $292M, Revenue per Share of $9.52 and a stock price of $11.49. The current ratio is 36% 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 historical dividend yield test says this. The 10 year median dividend yield test says the stock price reasonable, but the dividends have just been cut 33%. The P/S Ratio test says that the stock price is relatively cheap. Most of the other tests says the same thing.
When I look at analysts’ recommendations, I find only a Hold (1). The consensus would be a Hold. The 12 months stock price consensus is $14.00 with high and low also $14.00 as there is only one analyst following this stock.
The last entry is in 2016 on Stock Chase. The last Buy recommendation was in 2007. Stock Chase gives this stock 1 star out of 5. It is not on any of the dividend lists I currently follow. Iain Butler on Motley Fool recommends this stock as a buy in June 2023. Nikhil Kumar on Motley Fool recommends this stock in May 2021. This is a small cap from Alberta and it is not well followed. The company put out a press release via Globe and Mail about their 2023 year end results.
Simply Wall Street on Yahoo Finance reviews this stock in March 2024. Simply Wall Street has 4 warnings on this stock of debt is not well covered by operating cash flow; unstable dividend track record; large one-off items impacting financial results; and profit margins (20%) are lower than last year (37%). Simply Wall Street gives this stock 2 and one half stars out of 5.
Melcor Developments Ltd is a real estate development company. It develops and manages mixed-use residential communities, business and industrial parks, office buildings, retail commercial centers, and golf courses. Its web site is here Melcor Developments Inc .
The last stock I wrote about was about was BCE Inc (TSX-BCE, NYSE-BCE) ... learn more. The next stock I will write about will be Goodfellow Inc (TSX-GDL, OTC-GFELF) ... learn more on Friday, April 5, 2024 around 5 pm. Tomorrow on my other blog I will write about Something to Buy April 2024 .... learn more on Thursday, April 4, 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. April 4, 2024.
Also, on my book blog I have put a review of the book Toronto Mayors by Mark Maloney learn more...
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