Is it a good company at a reasonable price? I bought this stock for diversification and that has not changed. They offer a wide range of agricultural solutions to farmers around the globe. I still think that this was a good investment, but there will be volatility. Analyst certainly think that it is going to do very well in the future. I intent to keep my investment in this stock but I will not be buying more as I think I have enough. The stock price is currently reasonable with the P/S Ratio testing showing the stock as cheap.
I own this stock of Ag Growth International (TSX-AFN, OTC-AGGZF). I wanted to review all the income trust stocks touted in the Money Show of 2009. There was a lot of talk at this show about some of the Unit Trust being currently good buys with very good yields. Its median yield in 2009 was 7.9%. It was on the Canadian Dividend Aristocrats and this is why I first investigated this company. By 2011 when I bought this stock, I have been interested in AFN for some time. This stock is a play on the agricultural sector.
When I was updating my spreadsheet, I noticed I have made a total return of 8.38% per year with 3.37% from capital gains and 5.01% from dividends. I have had this stock for 12.5 years. This company used to be an income trust. All the old income trust company are having a hard time getting the dividends right. There was decrease in dividend in 2020 and the dividends have been flat ever since. Before that dividend had been flat since 2011.
If you had invested in this company in December 2013, for $1,026.95 you would have bought 23 shares at $44.65 per share. In December 2023, after 10 years you would have received $396.75 in dividends. The stock would be worth $1,161.96. Your total return would have been $1,558.71. This would be a total return of 5.13% per year with 1.24% from capital gain and 3.89% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $44.65 | $1,026.95 | 23 | 10 | $396.75 | $1,161.96 | $1,558.71 |
The current dividend yield is low with dividend growth non-existent. The dividend yield is currently low (below 2%) at 1.24%. The 5 year median dividend yield is also low at 1.66%. The 10 year median dividend yield is moderate (2% to 4%) at 4.40%. The historical median dividend yield is good (5% to 6%) ranges at 5.69%. When changing from an income trust, the dividends were flat until 2020, when they were decreased by 75%. They have been flat since then.
The Dividend Payout Ratios (DPR) are good. The DPR for 2023 for Earnings per Share (EPS) is good at 17% with 5 year coverage not calculable due to earning losses. The DPR for 2023 for Funds from Operations (FFO) is good at 6% with 5 year coverage at 15%. The DPR for 2023 for Adjusted Earnings per Share (AEPS) is good at 10% with 5 year coverage at 17%. The DPR for 2023 for Cash Flow per Share (CFPS) is good at 7% with 5 year coverage at 20%. The DPR for 2023 for Free Cash Flow (FCF) is good at 23% with 5 year coverage too high at 94%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 17.44% | -413.39% |
| FFO | 5.58% | 15.02% |
| AEPS | 10.15% | 16.74% |
| CFPS | 7.37% | 20.47% |
| FCF | 23.28% | 93.65% |
Debt Ratios show that the company has too much debt. The Long Term Debt/Market Cap Ratio for 2023 is fine at 0.64 and currently at 0.71. The Liquidity Ratio for 2023 is too low at 1.21 and 1.26 currently. If you added in Cash Flow after dividends, the ratio is still too low at 1.38 and currently fine at 1.51. I like to see this ratio at 1.50 or higher. The Debt Ratio for 2023 is low at 1.24 and 1.24 currently. I like to see this ratio at 1.50 or higher. The Leverage and Debt/Equity Ratios for 2023 are far too high at 5.20 and 4.20 and currently at 5.14 and 4.14. It is not only any dividend list I currently follow.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term | 0.64 | 0.71 |
| Intang/GW | 0.59 | 0.61 |
| Liquidity | 1.21 | 1.26 |
| Liq. + CF | 1.38 | 1.51 |
| Debt Ratio | 1.24 | 1.24 |
| Leverage | 5.20 | 5.14 |
| D/E Ratio | 4.20 | 4.14 |
The Total Return per year is shown below for years of 5 to 20 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 | -24.21% | 3.78% | 1.54% | 2.24% |
| 2013 | 10 | -12.94% | 5.13% | 1.24% | 3.89% |
| 2008 | 15 | -7.16% | 15.69% | 7.22% | 8.47% |
| 2003 | 20 | -1.38% | 19.60% | 8.33% | 11.27% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 12.55, 15.37 and 18.19. The corresponding 10 year ratios are 21.00, 28.45 and 34.25. The corresponding historical ratios are 13.44, 18.86 and 24.27. The current P/E Ratio is 8.00 based on a stock price of $48.46 and EPS estimate for 2024 of $6.06. 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 know that the 10 year ratios are rather high. However, when a good company has low earnings, the stock price will only go so low, so you tend to have rather high ratios. Also, the current ratio of 8.00 is a low P/E Ratio.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 7.80, 10.04 and 15.05. The corresponding 10 year ratios are 11.07, 16.43 and 20.30. The current P/AEPS Ratio is 8.26 based on a stock price of $48.46 and AEPS estimate for 2024 of $5.87. 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 also have Funds from Operations (FFO) data. The 5-year low, median, and high median Price/ Funds from Operations Ratios are 4.02, 5.70 and 7.22. The corresponding 10 year ratios are 7.11, 9.58 and 11.59. The current P/FFO Ratio is 8.26 based on a stock price of $48.46 and FFO for the last 12 months of 4.31. This ratio is below the low ratio of the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $45.96. The 10-year low, median, and high median Price/Graham Price Ratios are 0.96, 1.34 and 1.70. The current P/GP Ratio is 1.05 based on a stock price of $48.46. 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 get a 10-year median Price/Book Value per Share Ratio of 2.68. The current P/B Ratio is 3.03 based on a stock price of $48.46, Book Value of $304.9M, and Book Value per Share of $16.00. The current ratio is 13% 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 Book Value per Share estimate for 2024 of $13.80. This analyst calculates the P/B Ratio differently that I do and, in this case, the 10 year median P/B Ratio would be 2.58. The Book Value per Share value of $13.80 implies a Book Value of $263M and P/B Ratio of 3.51 based on a stock price of $48.46. This ratio is 36% 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 15.41. The current P/CF Ratio is 6.50 based on Cash Flow per Share estimate for 2024 of $7.45, Cash Flow of $142M and a stock price of $48.46. The current ratio is 58% below the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 5.69%. The current dividend yield is 1.24% based on dividends of $0.60 and a stock price of $48.46. The current ratio is 78% 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 4.40%. The current dividend yield is 1.24% based on dividends of $0.60 and a stock price of $48.46. The current ratio is 72% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10-year median Price/Sales (Revenue) Ratio is 1.01. The current P/S Ratio is 0.57 based on Revenue estimate for 2024 of $1,615M, Revenue per Share of $84.72 and a stock price of $48.46. The current P/S Ratio is 43% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
Results of stock price testing is that the stock price is probably reasonable and maybe cheap. The P/S Ratio test is showing that the stock price is relatively cheap. The Price/Graham Price is a good test and it is showing the stock price as reasonable and below the median. The P/E Ratio, P/AEPS Ratio and P/FFO tests are all showing the stock price as cheap.
The dividend yield tests are showing the stock price as relatively expensive, but this test is not good for companies that used to be income trusts. That is because the income trust companies can have very high dividend yields that corporations cannot even come near to. It seems all the old income trust companies are having a hard time getting their dividends right.
When I look at analysts’ recommendations, I find Strong Buy (3) and Buy (6). The consensus would be a Strong Buy. The 12 months stock price consensus is $79.11 with a high of $85.00 and a low of $72.00. The consensus stock price of $79.11 implies a total return of 64.49% with 63.25% from capital gains and 1.24% from dividends based on a stock price of $48.46.
When I looked at analysts’ recommendations last year, I found Strong Buy (2) and Buy (8). The consensus would be a Strong Buy. The 12 month stock price consensus is $72.40. This implies a total return of 38.84% with 37.69% from capital gains and 1.14% from dividends based on a current stock price of $52.58. What happened was a decline in the stock price to $48.46, a decline of 7.84%. The shareholders had a total loss of 6.70% with a capital loss of 7.84% and dividends of 1.14%. It looks like analysts still expect the share price to do very well in the future. It just has not happened yet.
There is only one entry on Stock Chase for 2024 and it is a buy. There were a number of entries for 2023 with most being a buy, but there was one sell and one hold. Stock Chase gives this stock 3 stars out of 5. Adam Othman on Motley Fool thinks it is a good time to buy this industrial stock. He thinks it is attractively valued. Christopher Liew on Motley Fool thinks this stock is a potential multi-bagger for 2024. The company put out a press release via Businesswire for their 2023 annual result. The company put out a press release via Businesswire about their first quarter of 2024.
Simply Wall Street via Yahoo Finance reviews this company. Simply Wall Street gives this stock 3 and one half stars out of 5. Simply Wall Street has two warnings on this company of interest payments are not well covered by earnings; and large one-off items impacting financial results.
Ag Growth International Inc manufactures portable and stationary grain handling, storage, and conditioning equipment, including augers, belt conveyors, grain storage bins, grain handling accessories, grain aeration equipment, and grain drying systems. It has manufacturing facilities in Canada, the United States, Italy, Brazil, France, the United Kingdom, and India. Its web site is here Ag Growth International.
The last stock I wrote about was about was Power Corp of Canada (TSX-POW, OTC-PWCDF) ... learn more. The next stock I will write about will be Hammond Power Solutions Inc (TSX-HPS.A, OTC-HMDPF) ... learn more on Friday, May 17, 2024 around 5 pm. Tomorrow on my other blog I will write about The Dividend Guy Blogger learn more on Thursday, May 16, 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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