Is it a good company at a reasonable price? This stock seems like a good solid dividend stock. The company has raised the dividends 18 times over the past 23 years. All insurance companies had tough times with very low interest rates. Dividend have been raised every year over the past 10 years. My testing is showing the stock price relatively cheap. The analyst recommendations give it a Buy (but most all analysts recommendations seem to be a buy.)
I do not own this stock of IA Financial Corp (TSX-IAG, OTC-IDLLF). This was a stock shown as a dividend growth stock on the Canadian All Star List. See the site here.
When I was updating my spreadsheet, I noticed that this is another Life Insurance company and because of changes in IFRS rules they tried to have no continuity with Revenue from prior years. I did the best I could to find continuity to Revenues that I was tracking.
The current dividend yield is moderate with dividend growth moderate. The current dividend yield is moderate (2% to 4% ranges) at 3.51%. The 5, 10 and historical median dividend yield are also moderate at 3.47%, 3.08 and 2.70%. The dividend growth is moderate (8% to 14% ranges) at 13.3% per year over the past 5 years. The last dividend increase was for 21% and it was in 2024. (The dividend rise prior was 8%.)
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 33%. The DPR for 2023 for Adjusted Earnings per Share (AEPS) is good at 32% with 5 year coverage at 28%. The DPR for 2023 for Cash Flow per Share (CFPS) is good at 22% with 5 year coverage at 2714%. The DPR for 2023 for Free Cash Flow (FCF) is good at 21% with 5 year coverage at 33%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 39.71% | 32.51% |
| AEPS | 31.90% | 28.10% |
| CFPS | 22.05% | 26.83% |
| FCF | 21.07% | 32.59% |
Debt Ratios are fine. The Long Term Debt/Covering assets for 2023 is fine at 0.93 with current ratio at 0.75. The Long Term Debt/Market Cap Ratio is not the one for Insurance companies. The Liquidity Ratio for 2023 is good at 1.51 and 1.66 currently. The Debt Ratio for 2023 is fine for a financial at 1.08 and 1.08 currently.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term A | 0.93 | 0.75 |
| Lg Term | 4.41 | 3.34 |
| Intang/GW | 0.35 | 0.34 |
| Liquidity | 1.51 | 1.66 |
| Liq. + CF | 1.30 | 1.52 |
| Debt Ratio | 1.08 | 1.08 |
The Total Return per year is shown below for years of 5 to 22 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 | 13.31% | 19.53% | 15.70% | 3.83% |
| 2013 | 10 | 11.73% | 9.45% | 6.76% | 2.69% |
| 2008 | 15 | 7.97% | 12.71% | 9.45% | 3.26% |
| 2003 | 20 | 11.28% | 10.01% | 7.34% | 2.67% |
| 2000 | 23 | 10.48% | 9.04% | 6.70% | 2.34% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 7.03, 9.36 and 11.18. The corresponding 10 year ratios are 7.61, 9.38 and 11.76. The corresponding historical ratios are 10.16, 11.44 and 12.86. The current P/E Ratio is 9.09 based on a stock price of $88.49 and EPS estimate for 2024 of $9.73. The current ratio is below the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 6.67, 8.12 and 10.00. The corresponding 10 year ratios are 7.26, 9.11 and 10.96. The current P/AEPS Ratio is 8.62 based on a stock price of $88.49 and AEPS estimate for 2024 of $10.26. 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 Graham Price of $128.78. The 10-year low, median, and high median Price/Graham Price Ratios are 0.54, 0.66 and 0.80. The current P/GP Ratio is 0.69 based on a stock price of $88.49. 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 1.10. The current P/B Ratio is 1.23 based on a stock price of $88.49, Book Value of $7,158M and Book Value per Share of $71.84. The current ratio is 12% 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 value for 2024 of $72.80. The analyst calculates the Book Value differently than I do and, in this case, the 10-year median Price/Book Value per Share Ratio of 1.09. The BVPS of $72.80 implies a P/B Ratio of 1.22 based on a stock price of $88.49 and Book Value of $7,254M. This ratio is 12% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10-year median Price/Cash Flow per Share Ratio of 10.70. The current P/CF Ratio is 12.82 based on a stock price of $88.49, Cash Flow per Share estimate for 2024 of $6.90 and Cash Flow of $688M. 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 get an historical median dividend yield of 2.70%. The current dividend yield is 3.71% based on dividends of $3.28 and a stock price of $88.49. The current yield is 37% above 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 3.08%. The current dividend yield is 3.71% based on dividends of $3.28 and a stock price of $88.49. The current yield is 20.3% above 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 0.53. The current P/S Ratio is 0.89 based on Net Revenue for the past 12 months. The current ratio is 69% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. IFRS has changed how Revenue is calculated for insurance companies and it was difficult to similar values. This test is suspect.
Results of stock price testing is that the stock price is testing as relatively cheap. The tests I like the best is the dividend tests and, in this case, the stock is testing as relatively cheap. There is a range of test results, and only the dividend tests are saying the stock is expensive, but a number of tests says the stock price is reasonable, but above the median.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (5) and Hold (1). The consensus would be a Buy. The 12 month stock price consensus is $101.20 with a high of $108.00 and low of $93.00. The consensus stock price of $101.20 implies a total return of $18.07% with 14.36% from capital gains and 3.71% from dividends based on a current stock price of $88.49
There are four entries for 2023 on Stock Chase with two Buys and Two Holds. Analysts warn this is a small company. Stock Chase gives this stock 3 stars out of 5. Amy Legate-Wolfe on Motley Fool says to buy this growth stock. Joey Frenette on Motley Fool says to buy this insurance stock with solid value for long term investors. The company put out a press release via newswire about their results for 2023. The company put out a press release via newswire about their first quarter of 2024.
Simply Wall Street via Yahoo Finance put out a report on this company. Simply Wall Street gives this stock 4 stars out of 5. They have no warnings out on this company.
iA Financial Corp Inc is a life and health insurance company. It offers life and health insurance products, savings and retirement plans, mutual funds, securities, auto and home insurance, mortgages, and others. The company operates and manages its activities according to five main reportable operating segments Insurance Canada, Individual Wealth Management, Investment, Corporate, and U.S Operations. The majority of its revenue comes from Insurance Canada. Its web site is here IA Financial Corp.
The last stock I wrote about was about was RB Global Inc (TSX-RBA, NYSE-RBA) ... learn more. The next stock I will write about will be Adentra Inc (TSX-ADEN, OTC- HDIUF) ... learn more on Wednesday, June 5, 2024 around 5 pm. Tomorrow on my other blog I will write about Dividend Stocks June 2024 learn more on Tuesday, June 4, 2024 around 5 pm.
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If the historical median dividend yield is 2.70% and the current dividend yield is 3.71%, shouldn't the evaluation be inexpensive?
ReplyDeleteYes, you are correct. I have changed the testing conclusion to relatively cheap.
ReplyDelete