Is it a good company at a reasonable price? For my tastes, I find the debt too high and I do not like the Liquidity Ratios. Also, I did not like the Dividend Payout Ratio for the Adjusted Earnings per Share (AEPS). This ratio is not expected to decline anytime soon. These are the negatives. I like a total return of at least 8% and this stock does not always meet that level. It is a positive that some officers are buying shares. It is interesting that analysts’ recommendations are covering almost all categories, but buys do outnumber the holds. The stock price is testing as reasonable, but the dividend yield tests do point to a cheap price.
I do not own this stock of Telus Corp (TSX-T, NYSE-TU). I started to follow this stock because of a list of stock John Sartz talked about in 2008. At the Toronto Money Shows in 2009 and 2010 Aaron Dunn from KeyStone Financial Publishing Corp talked about having recommended this stock. Aaron Dunn says he likes companies with resilient business models, which are profitable and are growing their earnings. He also like companies with strong management teams, health balance sheets and compelling valuations. They look at the P/E and the Price/Cash Flow ratios. Telus Corp (TSX-T) was one of three stocks he recommended in 2009.
When I was updating my spreadsheet, I noticed that the officers I follow are buying but none of the board members I follow have bought shares in the past year. I noticed that people who investing in this stock 25 and 30 years ago only have a total return of 6%. See section on total returns below.
If you had invested in this company in December 2013, for $1,005.40 you would have bought 55 shares at $18.28 per share. In December 2023, after 10 years you would have received $591.22 in dividends. The stock would be worth $1,296.90. Your total return would have been $1,888.22. This would be a total return of 7.67% per year with 2.58% from capital gain and 5.09% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $18.28 | $1,005.40 | 55 | 10 | $591.32 | $1,296.90 | $1,888.22 |
The current dividend yield is good with dividend growth low. The current dividend yield is good (5% to 6% ranges) at 6.93%. The 5, 10 and historical dividend yields are moderate (2% to 4% ranges) at 4.57%, 4.45% and 4.22%. The dividend growth is low (below 8%) at 6.8% per year over the past 5 years. The last dividend increase was in 2024 and it was for 3.46%. However, this company tends to do 2 dividend increases each year.
The Dividend Payout Ratios (DPR) for AEPS needs to improve with DPR for Cash Flow the only one reasonable. The DPR for 2023 for Earnings per Share (EPS) are too high at 246% with 5 year coverage at 118%. The DPR for 2023 for Adjusted Earnings per Share (AEPS) are too high at 150.46% with 5 year coverage at 118%. The DPR for 2023 for Cash Flow per Share (CFPS) is fine at 42% with 5 year coverage is good at 27%. The DPR for 2023 for Free Cash Flow (FCF) is too high at 102% with 5 year coverage at 190%. However, all the sites I look at for FCF, disagree on what it is.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 246.45% | 117.77% |
| AEPS | 150.46% | 117.77% |
| CFPS | 42.31% | 37.01% |
| FCF | 102.10% | 190.42% |
Debt Ratios all could improve and they have a lot of debt. The Long Term Debt/Market Cap Ratio for 2023 is fine at 0.67 and currently at 0.75. The Liquidity Ratio for 2023 is good at 1.55 and 1.50 currently. If you added in Cash Flow after dividends, the ratios are far too low at 0.67 and currently at 1.03. You need to add back the current portion of the long term debt to get to something in the reasonable range with a ratio at 1.26 and currently at 1.57. Problems can occur if a company cannot roll over its long term debt. The Debt Ratio for 2023 is fine at 1.45 and 1.42 currently. The Leverage and Debt/Equity Ratios for 2023 are too high at 3.24 and 2.24 and currently at 3.36 and 2.36.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.67 | 0.75 |
| Intang/GW | 0.86 | 0.93 |
| Liquidity | 0.67 | 0.66 |
| Liq. + CF | 0.92 | 1.03 |
| Liq, CF DB | 1.26 | 1.57 |
| Debt Ratio | 1.45 | 1.42 |
| Leverage | 3.24 | 3.36 |
| D/E Ratio | 2.24 | 2.36 |
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 | 6.77% | 6.26% | 0.83% | 5.43% |
| 2013 | 10 | 8.03% | 7.67% | 2.58% | 5.09% |
| 2008 | 15 | 8.01% | 12.21% | 6.40% | 5.81% |
| 2003 | 20 | 11.93% | 11.85% | 6.67% | 5.18% |
| 1998 | 25 | 6.14% | 6.77% | 3.31% | 3.46% |
| 1993 | 30 | 5.98% | 8.56% | 4.48% | 4.08% |
| 1990 | 33 | 10.38% | 9.37% | 4.94% | 4.44% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 21.20, 25.32 and 29.45. The corresponding 10 year ratios are 17.72, 19.11 and 20.60. The corresponding historical ratios are 15.27, 17.33 and 19.29. The current ratio is 32.00 based on a stock price of $22.46 and EPS estimate for 2024 of $0.70. The current ratio is above the high ratio of the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 22.33, 25.69 and 27.98. The corresponding 10 year ratios are 16.05, 17.15 and 18.36. The current P/AEPS Ratio is 22.69 based on a stock price of $22.46 and AEPS estimate for 2024 of $0.99. The current ratio is above the high ratio for the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $15.41. The 10-year low, median, and high median Price/Graham Price Ratios are 1.40, 1.58 and 1.70. The current ratio is 1.46 based on a stock price of $22.46. 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 2.76. The current P/B Ratio is 2.11 based on a Book Value of $15,809M, Book Value per Share of $10.67 and a stock price of $22.46. The current ratio is 24% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I also have a Book Value per Share estimate for 2024 of $10.57. This implies a ratio of 2.12 based on a stock price of $22.46 and with a Book Value of $15,665M. This ratio is 23% 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 7.28. The current ratio is 5.73 based on Cash Flow per Share estimate for 2024 of $3.92, Cash Flow of $5,809M and a stock price of $22.46. The current ratio is 21% 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 4.22%. The current dividend yield is 6.93% based on a stock price of $22.46 and dividends of $1.5304. The current dividend yield is 64% above 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 4.45%. The current dividend yield is 6.93% based on a stock price of $22.46 and dividends of $1.5304. The current dividend yield is 56% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10-year median Price/Sales (Revenue) Ratio is 2.02. The current P/S Ratio is 1.64 based on Revenue estimate for 2024 of $20,240M, Revenue per Share of $13.66 and a stock price of $22.46. The current ratio is 18.5% 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, but could be cheap. The dividend yield tests are showing the stock price as relatively cheap. However, the P/S Ratio test is showing the stock price as reasonable, but it is relatively close to cheap. The rest of the testing varies from expensive (P/E, P/AEPS) to cheap (P/B, P/CF) with the P/GP showing the stock price as reasonable.
When I look at analysts’ recommendations, I find Strong Buy (5), Buy (5), Hold (7), and Underperform (1). The consensus would be a Buy. The 12 month stock price consensus is $24.79 with a high of $33.00 and low of $21.50. The consensus stock price of $24.79 implies a total return of 17.30% with 10.37% from capital gains and 6.93% from dividends based on a current stock price of $22.46.
There are lots of entries on Stock Chase for 2024 with combination of Buy, Do Not Buy and Hold recommendations. Stock Chase gives this stock 5 stars out of 5. Sneha Nahata on Motley Fool thinks this stock is remarkably cheap and a current Buy. Andrew Walker on Motley Fool also thinks this stock is at a bargain price. The company put out a Press Release about their fourth quarter of 2023. The company put out a press release on Newswire about their second quarter of 2024.
Simply Wall Street via Yahoo Finance put out a review of this stock. Simply Wall Street gives this stock 2 and one half stars out of 5. They have 4 warnings of interest payments are not well covered by earnings; dividend of 6.74% is not well covered by earnings or free cash flows; shareholders have been diluted in the past year; and large one-off items impacting financial results.
Telus is one of the Big Three wireless service providers in Canada. It is the incumbent local exchange carrier in the western Canadian provinces of British Columbia and Alberta, where it provides internet, television, and landline phone services. It also has a small wireline presence in eastern Quebec. Mostly because of recent acquisitions, more than 20% of Telus' sales now come from non-telecom businesses, most notably in the international business services, health, security, and agriculture industries. The firm has a 55% economic stake in Telus International. Its web site is here Telus Corp.
The last stock I wrote about was about was Accord Financial Corp (TSX-ACD, OTC-ACCFF) ... learn more. The next stock I will write about will be There will be no blog on Friday, September 13 as I will be at the Money Show. The next stock I will write about will be Trican Well Service Ltd (TSX-TCW, OTC-TOLWF) ... learn more on Monday, September 16, 2024 around 5 pm. Tomorrow on my other blog I will write about TD Bank .... learn more on Thursday, September 12, 2024 around 5 pm.
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