Is it a good company at a reasonable price? This company’s financials are in US$ and the dividends are paid in US$. As a Canadian I prefer not to have many stocks paying in US$ because it is harder to keep tabs on future income. This stock has not done very well over the past 5 and 10 years, but analysts do expect it will pick up in the future. Personally, I would not be interested in holding this stock. It is a cyclical stock and therefore not the sort I want. At the present time, the stock price is probably reasonable, but it could be cheap.
I do not own this stock of Methanex Corp (TSX-MX, NASDAQ-MEOH). I started a spreadsheet in November 2010 as I had read some good reports on the stock at that time. It is also got a solid “C” grade in a 2009 Money Sense review of stocks. Money Sense rated the top 100 Canadian Dividend Paying stocks. Money Sense was looking for stocks that provided generous income at reasonable prices. However, this stock has not been on the Money Sense list for the past few years.
When I was updating my spreadsheet, I noticed that this stock has not been doing well over the past few years. Dividends were cut in 2020 and the company started to rise this again in 2021. The stock price rose in 2023, the first time in a couple of years. Officers of this company have been buying stock. Over the past year both the CEO and CFO have bought stock.
If you had invested in this company in December 2013, for $1,005.12 you would have bought 16 shares at $62.82 per share. In December 2023, after 10 years you would have received $191.88 in dividends. The stock would be worth $1,002.88. Your total return would have been $1,194.76. This would be a total return of 1.91% per year with 0.02% from capital loss and 1.93% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $62.82 | $1,005.12 | 16 | 10 | $191.88 | $1,002.88 | $1,194.76 |
In the chart below, I am showing 5 and 10 year total growth and per year growth in columns 3 and 4. Column 5 shows growth expected over 12 months to the first quarter in 2024 and expected growth over this year. This company has not been doing well over the past 5 and 10 years as far as growth goes. I know that analysts are expect good growth in Earnings, Net Income, and dividends this year, but this is from a relatively low level. The main problem seems to be that Revenue, Earnings, Cash Flow etc. can vary a lot year to year.
| Yr | Item | Tot. Gwth | Per Year | Gwth | Coverage |
|---|---|---|---|---|---|
| 5 | Revenue Growth | -5.30% | -1.08% | -0.81% | <-12 mths |
| 5 | AEPS Growth | -67.49% | -20.12% | -5.78% | <-12 mths |
| 5 | Net Income Growth | -56.82% | -15.46% | -46.36% | <-12 mths |
| 5 | Cash Flow Growth | -32.64% | -7.60% | -1.33% | <-12 mths |
| 5 | Dividend Growth | -44.70% | -11.17% | 1.37% | <-12 mths |
| 5 | Stock Price Growth | -1.68% | -0.34% | 0.23% | <-12 mths |
| 10 | Revenue Growth | 23.13% | 2.10% | 1.71% | <-this year |
| 10 | AEPS Growth | -53.89% | -7.45% | 48.89% | <-this year |
| 10 | Net Income Growth | -53.81% | -7.43% | 47.47% | <-this year |
| 10 | Cash Flow Growth | 12.71% | 1.20% | -89.79% | <-this year |
| 10 | Dividend Growth | -7.01% | -0.72% | 41.98% | <-this year |
| 10 | Stock Price Growth | -20.05% | -2.21% | 10.85% | <-this year |
The current dividend yield is low with dividend growth has restarted. The current dividend yield is low (below 2%) at 1.55%. The 5 and 10 year median dividend yields are also low at 1.59% and 1.86%. The historical median dividend yield is moderate (2% to 4% ranges) at 2.31%. Dividends have been growing lately, but the dividend is still down some 49% from where it was in 2019. The last dividend increase was in 2023 and it was for 5.7%.
The Dividend Payout Ratios (DPR) are good. The DPR for 2023 for Earnings per Share (EPS) is good at 21% with 5 year coverage at 29%. The DPR for 2023 for Adjusted Earnings per Share (AEPS) is good at 32% with 5 year coverage at 32%. The DPR for 2023 for Cash Flow per Share (CFPS) is good at 7% with 5 year coverage at 7%. The DPR for 2023 for Free Cash Flow (FCF) is fine at 49% with 5 year coverage is high at 134%. However, no site agrees on what the FCF is.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 21.48% | 28.51% |
| AEPS | 32.44% | 32.24% |
| CFPS | 6.98% | 6.94% |
| FCF | 49.38% | 133.66% |
Debt Ratios show that this company has a high debt level, but Liquidity Ratio is fine. The Long Term Debt/Market Cap Ratio for 2023 is good at 0.57 and currently at 0.57. The Liquidity Ratio for 2023 is low at 1.14 and 1.34 currently. If you added in Cash Flow after dividends, the ratios are fine at 1.61 and currently at 1.90. The Debt Ratio for 2023 is good at 1.51 and 1.55 currently. The Leverage and Debt/Equity Ratios for 2023 are too high at 3.33 and 2.20 and currently at 3.24 and 2.09. I prefer these ratios to be below 3.00 and 2.00.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.57 | 0.59 |
| Intang/GW | 0.00 | 0.00 |
| Liquidity | 1.14 | 1.34 |
| Liq. + CF | 1.61 | 1.90 |
| Debt Ratio | 1.51 | 1.55 |
| Leverage | 3.33 | 3.24 |
| D/E Ratio | 2.20 | 2.09 |
The Total Return per year is shown below for years of 5 to 28 to the end of 2023 in CDN$. 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 | -11.72% | 0.52% | -0.92% | 1.45% |
| 2013 | 10 | 1.46% | 1.91% | -0.02% | 1.93% |
| 2008 | 15 | 1.78% | 14.63% | 10.67% | 3.96% |
| 2003 | 20 | 6.30% | 10.63% | 7.58% | 3.05% |
| 1998 | 25 | 9.00% | 11.45% | 8.58% | 2.87% |
| 1995 | 28 | 8.81% | 6.77% | 2.03% |
The Total Return per year is shown below for years of 5 to 28 to the end of 2023 in US$. 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 | -11.17% | 1.15% | -0.34% | 1.49% |
| 2013 | 10 | -0.72% | -0.51% | -2.21% | 1.71% |
| 2008 | 15 | 1.26% | 14.32% | 10.06% | 4.26% |
| 2003 | 20 | 6.18% | 10.86% | 7.46% | 3.40% |
| 1998 | 25 | 9.93% | 12.85% | 9.36% | 3.50% |
| 1995 | 28 | 9.17% | 6.90% | 2.27% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 6.02, 8.41 and 10.80. The corresponding 10 year ratios are 8.13, 10.67 and 13.21. The corresponding historical ratios are 8.68, 10.01 and 14.94. The current P/E Ratio is 14.57 based on a stock price of $66.75 and EPS estimate for 2024 of $4.58 ($3.27 US$). The current ratio is above the 10 year median high ratios. This stock price testing suggests that the stock price is relatively expensive.
I also have Adjusted Earning per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 6.05, 8.92, 11.79. The corresponding 10 year ratios are 9.51, 12.40 and 15.29. The current P/AEPS ratio is 14.17 based on a stock price of $47.47 and AEPS estimate for 2024 of $3.35. The current ratio is between the median and high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$ and you will get similar results in CDN$.
I get a Graham Price of $66.75. The 10-year low, median, and high median Price/Graham Price Ratios are 0.89, 1.14 and 1.39. The current P/GP Ratio is 1.02 based on a stock price of $66.75. This ratio is between the low and median ratio 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 2.18. The current P/B Ratio is 1.60 based on a Book Value of $2,002M, Book Value per Share of $29.71 and a stock price of $47.47. The current ratio is 27% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$ and you will get similar results in CDN$.
I also have a Book Value per Share estimate for 2024 of $30.55. This implies a ratio of 1.55 based on a stock price of $47.47 and Book Value of $2,059M. This ratio is 29% below the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$.
I get a 10-year median Price/Cash Flow per Share Ratio of 5.22. The current P/CF Ratio is 4.19 based on Cash Flow per Share estimate for 2024 of $11.34, Cash Flow of $773M and a stock price of $47.47. The current ratio is 19.8% below the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$ and you will get similar results in CDN$.
I get an historical median dividend yield of 2.31%. The current dividend yield is 1.56% based on dividends of $0.74 and a stock price of $47.47. The current dividend yield is 32% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$ and you will get similar results in CDN$. The problem with this test is that it works best on dividend growth stocks. This company has cut their dividends in 2020 and then started to raise them in 2021. The dividends are still way below those of 2019.
I get an historical median dividend yield of 1.86%. The current dividend yield is 1.56% based on dividends of $0.74 and a stock price of $47.47. The current dividend yield is 16% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$ and you will get similar results in CDN$. The problem with this test is that it works best on dividend growth stocks. This company has cut their dividends in 2020 and then started to raise them in 2021. The dividends are still way below those of 2019.
The 10-year median Price/Sales (Revenue) Ratio is 1.09. The current P/S Ratio is 0.84 based on Revenue estimate for 2024 of $3,787M, Revenue per Share of $56.20 and a stock price of $47.47. The current ratio is 23% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$ and you will get similar results in CDN$.
Results of stock price testing is that the stock price is probably cheap based on P/S Ratio testing, but maybe just reasonable. The dividend yield tests are not good because dividend cuts. However, dividend cuts are never a good sign. A number of are showing the stock price as relatively reasonable.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (4), and Hold (3). The consensus would be a Buy. The 12 month stock price consensus is $67.75 ($48.36 US$) with a high of $75.65 ($54.00 US$) and low of $59.89 ($42.71 US$). The stock price consensus implies a total return of 3.06% with 1.50% from capital gains and 1.56% from dividends.
A couple of analysts on Stock Chase says it is a buy. However, there is a Do Not Buy because it is a Cyclical stock with risky dividends. Stock Chase gives this stock 3 stars out of 5. Amy Legate-Wolfe on Motley Fool thinks this is a good dividend stock to buy. Christopher Liew on Motley Fool thinks it is a buy as he believes it has a positive long-term outlook. The company put out a Press Release about their fourth quarter of 2023. The company put out a Press Release about their third quarter of 2024.
Simply Wall Street via Yahoo Finance reviews this stock. Simply Wall Street has 2 warnings of has a high level of debt; and large one-off items impacting financial results.
Methanex Corp manufactures and sells methanol. Methanex's customers use methanol as a feedstock to produce end-products including adhesives, foams, solvents, and windshield washer fluids. The firm also sells its products to the oil refining industry, where the methanol is blended with gasoline to produce a high-octane fuel or blended as a component of biodiesel. China generates the most revenue of any geographical segment. Its web site is here Methanex Corp.
The last stock I wrote about was about was Stantec Inc (TSX-STN, NYSE-STN) ... learn more. The next stock I will write about will be Magna International Inc (TSX-MG, NYSE-MGA) ... learn more on Wednesday, December 4, 2024 around 5 pm. Tomorrow on my other blog I will write about Dividend Stocks December 2024 learn more on Tuesday, December 3, 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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