Is it a good company at a reasonable price? This is one of the old income trust stocks I bought. It kept up its dividend for a while, but then had to decrease the dividends. A lot o the old income trust stocks have had a hard time getting their dividends right after they were forced to become corporations. I bought this stock also for diversification. I plan to hold on to this stock as I am in stock for the long term and my reasons for buying this stock has not changed. The P/S Ratio test is a good one and it is saying that the stock price is 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 this stock has really taken a hit this year. At the end of last year, it was in the $50.00 range, but fell to around $31.00 in April and has since recovered to $38.72. To date I have a total return of 6.03% with 0.73% from capital gains and 5.30% from dividends. This stock really has not done well in total return. See total return chart below.
They had a loss in 2024 was due to a loss on foreign exchange. This is what is different from last year. This is shown in the Finance Expense/Income line. Revenue and AEPS fell in 2024. Analysts think they will go lower in 2025 and then start to recover in 2026 and 2027.
If you had invested in this company in December 2014, for $1,017.18 you would have bought 18 shares at $56.51per share. In December 2024, after 10 years you would have received $278.10 in dividends. The stock would be worth $914.76. Your total return would have been $1,192.86. This would be a total return of 1.88% per year with 1.06% from capital loss and 2.94% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $56.51 | $1,017.18 | 18 | 10 | $278.10 | $914.76 | $1,192.86 |
The current dividend yield is low with dividend growth currently negative. The dividend yield is low (below 2%) at 1.53%. The 5 year median dividend yield is low at 1.61%. The 10 year median dividend yield is moderate (2% to 4%) at 33.84%. The historical median dividend yield is good (5% to 6% ranges) at 5.60%. The dividends have decreased by 24% per year over the past 5 years. The dividends were decreased 75% in 2020 and have been flat since.
This stock used to be an income trust. Income Trust companies tended to have high dividend yields as they paid high dividends. When they became corporations, they all have had trouble finding the right level of dividends.
The Dividend Payout Ratios (DPR) are good. The DPR for 2024 for Earnings per Share (EPS) is negative because of earning losses. The DPR for 2024 for Funds from Operations (FFO) is good at 3% with 5 year coverage at 7%. The DPR for 2024 for Adjusted Earnings per Share (AEPS) is good at 13% with 5 year coverage at 15%. The DPR for 2024 for Cash Flow per Share (CFPS) is good at 9% with 5 year coverage at 12%. The DPR for 2024 for Free Cash Flow (FCF) is good at 14% with 5 year coverage at 28%. There is no agreement on what the FCF is, but the values are not that far off.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | -57.14% | -111.65% |
| FFO | 3.12% | 7.04% |
| AEPS | 13.02% | 14.76% |
| CFPS | 9.32% | 12.22% |
| FCF | 14.90% | 27.86% |
Debt Ratios need improving and they have too much debt. The Long Term Debt/Market Cap Ratio for 2024 is fine but rather high at 0.88 and currently far too high at 1.27. The Liquidity Ratio for 2024 is good at 1.54 and 1.61 currently. The Debt Ratio for 2024 is low at 1.22 and 1.20 currently. I prefer these ratios to be at 1.50 or higher. The Leverage and Debt/Equity Ratios for 2024 are far too high at 5.58 and 4.58 and currently at 6.00 and 5.00. I prefer these ratios to be less than 3.00 and 2.00.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term | 0.88 | 1.27 |
| Intang/GW | 0.57 | 0.74 |
| Liquidity | 1.54 | 1.61 |
| Liq. + CF | 1.77 | 1.86 |
| Debt Ratio | 1.22 | 1.20 |
| Leverage | 5.58 | 6.00 |
| D/E Ratio | 4.58 | 5.00 |
The Total Return per year is shown below for years of 5 to 21 to the end of 2024. 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. |
|---|---|---|---|---|---|
| 2019 | 5 | -24.21% | 3.27% | 1.82% | 1.45% |
| 2014 | 10 | -12.94% | 1.88% | -1.06% | 2.94% |
| 2009 | 15 | -7.83% | 7.48% | 2.56% | 4.92% |
| 2004 | 20 | -1.31% | 17.90% | 7.31% | 10.59% |
| 2003 | 21 | -1.31% | 19.29% | 7.95% | 11.34% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are negative and unusable. The corresponding 10 year ratios are 15.88, 20.25 and 22.84. The corresponding historical ratios are 12.55, 16.43 and 22.90. The current P/E Ratio is 18.33 based on a stock price of $39.22 and EPS estimate for 2025 of $2.14. The current 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 also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Earnings per Share Ratios are 7.80, 10.04 and 13.88. The corresponding 10 year ratios are 10.07, 14.26 and 17.36. The corresponding historical ratios are 11.99, 16.79 and 21.66. The current P/AEPS Ratio is 11.92 based on a stock price of $39.22 and AEPS estimate for 2025 of $3.29. The current 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 Graham Price of $32.35. The 10-year low, median, and high median Price/Graham Price Ratios are 0.96, 1.34 and 1.59. The current P/GP Ratio is 1.21 based on a stock price of $39.22. The current 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 2.68. The current P/B Ratio is 2.77 based on a Book Value of $264.9M, Book Value per Share of $14.14 and a stock price of $39.22. The current ratio is 3.5% 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 estimate for 2025 of $19.00. The analyst calculated the Book Value differently than I do and, in this case, the 10 year median P/B Ratio is 2.58. The BVPS estimate of $19.00 implies a Book Value of $256M and a ratio of 2.06. This ratio is 19.9% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10-year median Price/Cash Flow per Share Ratio of 11.48. The current P/CF Ratio is 6.18 based on Cash Flow per Share estimate for 2025 of $6.35, Cash Flow of $119M and a stock price of $39.22. The current ratio is 46% 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 5.60%. The current dividend yield is 1.53 based on a dividend of $0.60 and a stock price of $39.22. The current dividend yield is 73% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. However, this test does not work well when dividends are decreasing or flat.
I get a 10 year median dividend yield of 3.84%. The current dividend yield is 1.53 based on a dividend of $0.60 and a stock price of $39.22. The current dividend yield is 60% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. However, this test does not work well when dividends are decreasing or flat.
The 10-year median Price/Sales (Revenue) Ratio is 0.84. The current P/S Ratio is 0.54 based on Revenue estimate for 2025 of $1.351M, Revenue per Share of $71.99 and a stock price of $39.22. The current P/S Ratio is 35% 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 could be reasonable, but could also be cheap. The dividend yield tests are not good because of decreasing and flat dividends. However, the P/S Ratio test is good and says that the stock price is relatively cheap. Most of the rest of the testing is showing the stock price as reasonable and below 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 $48.75 with a high of $55.00 and low of $43.00. The consensus stock price of $48.75 implies a total return of 25.83% with 24.30% from capital gains and 1.53% from dividends based on a current stock price of $39.22.
Analysts in 2025 on Stock Chase say Do Not Buy. They say that the company continues to have problems in the farm business. Amy Legate-Wolfe on Motley Fool says buy for the long term and do not worry so much about the short term. She says that they have had a bumpy ride lately. Demetris Afxentiou on Motley Fool says to buy for the long term growth potential. The company put out a press release via Business Wire about their fourth quarter of 2025. The company put out a press release on Business Wire about their first quarter of 2025.
Simply Wall Street via Yahoo Finance reviews this stock mostly positively. Simply Wall Street has one warning of interest payments are not well covered by earnings.
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 geographical segments are Canada, the United States, and the International. Its web site is here Ag Growth International.
The last stock I wrote about was about was be 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 Monday, May 19, 2025 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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