I own this stock (TSX-BIN, NYSE-BIN). I first bought this company as BFI Canada Income Fund (TSX-BFC.UN) in 2007. I bought some more after the stock price went down in 2010. I have lost some 2.2% per year on this stock. Or, the stock price is down some 14%. It is because of dividends of approximately 3% per year that I have not lost more.
When I look at insider trading, I find $12.3M of insider selling and $2.2M of insider buying. About $11.1M of insider selling was by directors in August of 2011. This selling would seem to be by or mostly by Keith Carrigan, who is currently a director but was the CEO and founder of this company. The CEO, CFO and directors all have more options than shares. However, the reason that the directors have more options than shares is because of the number held by Carrigan who used to be the CEO.
Half the current insider buying is by directors and the rest by CEO, CFO and an officer of the company. The current buying is a good sign. Also, this company is buying back shares on the open market for cancellation. There were big increases in shares in 2009 and 2010. Money was used to pay down debt and to buy assets.
There are 162 institutions that hold 76% of the shares of this company. They have bought and sold shares over the past three months with 3 net buyers and an increase in their shares held. However, the increase in shares is less than 1% and so does not tell us much. But it does show that these institutions are not negative about this company.
I get 5 year median low and high Price/Earnings Ratios of 12.26 and 33.09. This is a broad range and the 5 year median high is rather high. The current 18.08 on a stock price of 20.31 is lower than the 5 year median of 21.35. It is on the high side, but not that high. By this measure the price is reasonable.
I get a Graham Price of $16.82. The low and high difference between the Graham price and the stock price is the stock price being 23.7% and 79% higher than the Graham Price. The current stock price of $20.31 is some 21% above the Graham Price. This shows a relatively good stock price.
I get a 10 year Price/Book Value Ratio 1.79 and a current one of 2.18, which is only some 1% higher. This is not much of a difference. Part of the reason for this is the earnings loss for 2011. This would point to a reasonable stock price.
The last test is the dividend yield, and this company has a 5 year median dividend yield of 6.33%. The current dividend yield is 2.76, which is some 57% lower. Normally, this would show a high relative stock price. However, when this company changed from an Income Trust to a Corporation, the management decided they wanted a growth company and therefore lowered the dividend by 72.5% to go for a dividend yield of around 2% to 3%.
This is a dividend paying company and the stock prices on dividend paying companies tend to increase about as much as the dividends are increased. Last year the dividends were increased by 12%.
When I look at analysts’ recommendations, I find Strong Buy, Buy and Hold. A number of analysts have downgraded this stock recently because of the missed 1st quarterly earnings estimates, with downgrades from Strong Buy to Buy and from Buy to Hold.
The 12 months stock price target is $24.30. This implies as 22.4% total return from current stock price of $20.31. A Buy analysts gave a 12 months stock price of $26 $US. Analysts think that the company is well-run, but also complain about the problems they seem to be having in the US Northeast division. (It is a company they purchased in the US Northeast for which they had to write down their good-will value and therefore got an earnings loss last year.)
Analyst had thought that this company would be fairly non-cyclical because it was into garbage, but it has not turned out that way. I had pointed out this problem with a link to an article by David Berman yesterday. (See David Berman points out in a G&M Article how recessions are bad for garbage companies.) There is also a fairly recent article on the site 24/7 Wall Street about Garbage and Waste Management companies having a current hard time. See article.
The blogger My Own Adviser talked about buying this stock in December 2011. The site Benzinga talks about BMO’s recent downgrade of this stock. See Benzinga.
I am going to hold on to my shares as I think the problems will clear up when the economy does. The problem is no one knows when this will occur. However, it is May and people are worried about Greece.
They are a full-service waste management company providing non-hazardous solid waste collection and landfill disposal services for municipal, commercial, industrial and residential customers in five provinces and ten US states. Two-thirds of their business is in US. The fund operates through its subsidiaries. Five companies control almost 53% of this company. There are also 11M special shares outstanding. Its web site is here Progressive Waste . See my spreadsheet at bin.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
Monday, May 14, 2012
Friday, May 11, 2012
Progressive Waste Solutions Ltd
I own this stock (TSX-BIN, NYSE-BIN). I first bought this company as BFI Canada Income Fund (TSX-BFC.UN) in 2007. I bought some more after the stock price went down in 2010. I have lost some 2.2% per year on this stock. Or, the stock price is down some 14%. It is because of dividends of approximately 3% per year that I have not lost more.
The company changed from BFI Canada Income Fund (TSX-BFC.UN) in October 2008 to BFI Canada (TSX-BFC). This was a change from an Income Trust to a corporation. In June 2009, the company changed to IESI-BFC Ltd (TSX-BIN). The company was known as IESI in US and BFC in Canada. In May 2011 the company changed to Progressive Waste Solutions Ltd (TSX-BIN). This is all very confusing if you are trying to track a company. The company also changed their reporting to US$ and their accounting rules to US GAAP (from CDN GAAP) in 2009.
When they changed from an Income Trust to a corporation they decreased their dividends by 72% between 2009 and 2010 and changed dividend payments from monthly to quarterly (cycle 1). The decrease in dividends improved their Dividend Payout Ratios. As an Income Trust they were paying over 260% of earnings in distributions. Last year the DPR for earnings was 66%, this year’s is 48% (using adjusted EPS) and next year’s is expected to be 49%.
The DPR for cash flow was never so high, coming in at around 50% when it was an income trust. Last year the DPR for cash flow was 21%, this year’s is 16% and next year’s is expected to be 35%. One of the things that the old Income Trust companies had to do was bring their DPRs in line with corporation.
If you look at dividend growth over the past 5 and 10 years, you will see that dividends are down 20% per year over the past 5 years and down 4.4% over the past 10 years. This may not look good, but the fact is that a lot of Income Trust companies had to reduce their dividends. They had a good record of dividend increases prior to their change to a corporation. Also, they raised their dividends 12% in 2011.
Another thing to mention about this company is that a number of analysts look at what they call “Adjusted” net income and EPS. For 2011 they had a net income loss. However, most of this loss was due to non-cash goodwill impairment charge related to their U.S. northeast operations. I do not usually use such things, but sometimes you must to make sense of what is really happening on a stock.
When I look at total return over the past 5 and 10 years on this company I find that total returns are down 1.7% per year over the past 5 years, but up 17% over the past 10 years. The dividend portion of total returns over the past 5 and 10 years is at 4.5% and 9.9% per year. Capital gain over the past 5 and 10 years is negative 6.2% and positive 7.1% per year respectively.
All gains over the past 5 years were in dividends. Over the past 10 years, some 54% of the total return was in dividends. However, the current dividend yield is just 2.6%. Going forward you should only expect the dividend portion of the total return to be in the 2 to 3% range. Corporations have lower dividend yields than the old Income Trust companies.
Generally speaking the company has had better growth over the past 10 years than the past 5 years. This is typical of a lot of companies at the present time. Revenue per share growth is just 2% per year over the past 5 years, but 12% per year over the past 10 years.
For EPS, if you use the adjusted EPS for 2011, earnings are up 13% and 15% per year over the past 5 and 10 years. Cash flow is up 0% over past 5 years, but up 13.5% over past 10 years. Book Value is a different story, as it is down 3% per year over past 5 years and only up 2.4% per year over the past 10 years. Income Trust companies had little if any growth in book value and generally it when down. This is because Income Trust companies paid out too much in distributions. This company used to be an Income Trust.
As far as debt ratios goes, the current Liquidity Ratio is rather low at 0.88. It means that current assets cannot cover current liabilities. However, the company has a good cash flow. The current Debt Ratio is quite good at 1.72. The current Leverage and Debt/Equity Ratios are fine at 2.38 and 1.38.
The Return on Equity, if you use the adjusted net income the ROE for 2011 is 10.2%. If you use the one from the statements it is a negative 14.9%. The ROE based on comprehensive income is a negative 16.5%, which is not far off the one based on net income. This company has had historically quite low ROEs running around 5 to 6%.
For the first quarter of 2012, the company’s EPS came in lower than analyst had expected and they have lowered their EPS estimates for 2012, but kept the same ones for 2013. The company said that they expected lower EPS for the first quarter. See G&M article. David Berman points out in a G&M Article how recessions are bad for garbage companies.
I will hold on to the shares of this company that I have as I expect that it will do better when the economy picks up.
They are a full-service waste management company providing non-hazardous solid waste collection and landfill disposal services for municipal, commercial, industrial and residential customers in five provinces and ten US states. Two-thirds of their business is in US. The fund operates through its subsidiaries. Five companies control almost 53% of this company. There are also 11M special shares outstanding. Its web site is here Progressive Waste. See my spreadsheet at bin.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
The company changed from BFI Canada Income Fund (TSX-BFC.UN) in October 2008 to BFI Canada (TSX-BFC). This was a change from an Income Trust to a corporation. In June 2009, the company changed to IESI-BFC Ltd (TSX-BIN). The company was known as IESI in US and BFC in Canada. In May 2011 the company changed to Progressive Waste Solutions Ltd (TSX-BIN). This is all very confusing if you are trying to track a company. The company also changed their reporting to US$ and their accounting rules to US GAAP (from CDN GAAP) in 2009.
When they changed from an Income Trust to a corporation they decreased their dividends by 72% between 2009 and 2010 and changed dividend payments from monthly to quarterly (cycle 1). The decrease in dividends improved their Dividend Payout Ratios. As an Income Trust they were paying over 260% of earnings in distributions. Last year the DPR for earnings was 66%, this year’s is 48% (using adjusted EPS) and next year’s is expected to be 49%.
The DPR for cash flow was never so high, coming in at around 50% when it was an income trust. Last year the DPR for cash flow was 21%, this year’s is 16% and next year’s is expected to be 35%. One of the things that the old Income Trust companies had to do was bring their DPRs in line with corporation.
If you look at dividend growth over the past 5 and 10 years, you will see that dividends are down 20% per year over the past 5 years and down 4.4% over the past 10 years. This may not look good, but the fact is that a lot of Income Trust companies had to reduce their dividends. They had a good record of dividend increases prior to their change to a corporation. Also, they raised their dividends 12% in 2011.
Another thing to mention about this company is that a number of analysts look at what they call “Adjusted” net income and EPS. For 2011 they had a net income loss. However, most of this loss was due to non-cash goodwill impairment charge related to their U.S. northeast operations. I do not usually use such things, but sometimes you must to make sense of what is really happening on a stock.
When I look at total return over the past 5 and 10 years on this company I find that total returns are down 1.7% per year over the past 5 years, but up 17% over the past 10 years. The dividend portion of total returns over the past 5 and 10 years is at 4.5% and 9.9% per year. Capital gain over the past 5 and 10 years is negative 6.2% and positive 7.1% per year respectively.
All gains over the past 5 years were in dividends. Over the past 10 years, some 54% of the total return was in dividends. However, the current dividend yield is just 2.6%. Going forward you should only expect the dividend portion of the total return to be in the 2 to 3% range. Corporations have lower dividend yields than the old Income Trust companies.
Generally speaking the company has had better growth over the past 10 years than the past 5 years. This is typical of a lot of companies at the present time. Revenue per share growth is just 2% per year over the past 5 years, but 12% per year over the past 10 years.
For EPS, if you use the adjusted EPS for 2011, earnings are up 13% and 15% per year over the past 5 and 10 years. Cash flow is up 0% over past 5 years, but up 13.5% over past 10 years. Book Value is a different story, as it is down 3% per year over past 5 years and only up 2.4% per year over the past 10 years. Income Trust companies had little if any growth in book value and generally it when down. This is because Income Trust companies paid out too much in distributions. This company used to be an Income Trust.
As far as debt ratios goes, the current Liquidity Ratio is rather low at 0.88. It means that current assets cannot cover current liabilities. However, the company has a good cash flow. The current Debt Ratio is quite good at 1.72. The current Leverage and Debt/Equity Ratios are fine at 2.38 and 1.38.
The Return on Equity, if you use the adjusted net income the ROE for 2011 is 10.2%. If you use the one from the statements it is a negative 14.9%. The ROE based on comprehensive income is a negative 16.5%, which is not far off the one based on net income. This company has had historically quite low ROEs running around 5 to 6%.
For the first quarter of 2012, the company’s EPS came in lower than analyst had expected and they have lowered their EPS estimates for 2012, but kept the same ones for 2013. The company said that they expected lower EPS for the first quarter. See G&M article. David Berman points out in a G&M Article how recessions are bad for garbage companies.
I will hold on to the shares of this company that I have as I expect that it will do better when the economy picks up.
They are a full-service waste management company providing non-hazardous solid waste collection and landfill disposal services for municipal, commercial, industrial and residential customers in five provinces and ten US states. Two-thirds of their business is in US. The fund operates through its subsidiaries. Five companies control almost 53% of this company. There are also 11M special shares outstanding. Its web site is here Progressive Waste. See my spreadsheet at bin.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
Thursday, May 10, 2012
Power Financial Corp 2
I own this stock (TSX-PWF). I first bought this stock in 2001. I then bought some more in 2004 and 2011. I have made a total return on this stock of 7.65% per year. Dividend return is 4.19% and capital gain is 3.46%. Dividends make up some 54.8% of my returns.
Over the past year there has been no insider trading, no insider selling and no insider buying. The CEO has a lot of options. With his options at 4.2M shares they are currently worth $114M. Paul G. Desmarais has just over 487M shares and owns approximately 66% of this company. He is also a director.
Not surprisingly, because so many shares are held by insiders, institutions hold only 10% of the shares of this company. There are 115 institutions with shares and over the past 3 months they have sold more than they have bought, but their share ownership is down less than 1%.
I get 5 year median low and high Price/Earnings Ratios of 11.90 and 16.04. The current P/E Ratio of 10.51 would suggest a low current stock price. (The 10 year median low P/E Ratio is 11.78, so the stock has not been relatively high over the past 5 years.)
I get a Graham price of $30.61 and the current stock price is 12% lower. The 10 year median difference between the Graham Price and low stock price is the stock price being 1% lower. The 10 year median difference between the Graham price and median and high stock price is the stock price being 15% and 29% higher than the Graham Price. This test shows the current stock price of $26.90 as being relatively low.
The 10 year median Price/Book Value Ratio is 2.36. The current P/B Ratio is 1.65 and is about 30% lower. This shows the current stock price to be relatively low.
The current dividend yield of 5.2% and it is 13% higher than the 5 year median of 4.6%. The 10 year median high dividend yield is just 3.3%. The yields on this stock have been quite high since the latest bear market. Also this company has not increased their dividends since 2008. By this measure the current stock price is relatively low.
When I look at analysts’ recommendations, all I find are Hold recommendations. The 12 month target price is $30.20. This would imply a 17.5% total return over the next 12 months. This company holds a lot of Life Insurance companies. Market downturns affect these sorts of companies and the worry is there will be a meaningful stock market downturn in our near future. See comments in blog3.
A number of analyst mention the current good dividend yield and a number mention good management. One analyst mentioned lack of earnings growth. It is true that earnings are down over the past 5 years, but they have been growing nicely since 2008, they just have not made it back what they were making in 2006 and 2007. 2008 saw a drop in earnings of 36%.
One analyst said that this company was a great way to get exposure to Great-West Life and IGM Financial. One analyst just changed their recommendation from Buy to Hold because Great-West’s first quarterly results for 2012 missed consensus estimate. He thought that both Great West and IGM have a weaker earnings outlook now.
Some people like Power Corp to Power Financial, however, some people always say this. Power Corp is more than just financials and therefore is considered to be less volatile. I also track Power Corp.
I am holding on to the shares I own in this company. It is not that analysts do not like this stock; they just seem unenthused about it currently. My long term expectations for this stock are earning around 4% dividends and 4% capital gains. However, in the past this stock has tended towards 3% dividends and 5% capital gains. These sorts of dividend payers tend to go up with dividend increases and there has not been any lately.
This company is a holding and management company. Its operations provide a range of individual and corporate financial and fiduciary services in North America and Europe. It holds interest in the following companies: Great-West Lifeco, Great-West Life, London Life, Canada Life, Great-West Life & Annuity, Putnam Investments, IGM Financial, Investors Group Mackenzie Financial, and Pargesa Group. Controlling shareholder of Power Corp of Canada is Paul Desmarais. They have 30.1%, but have 64.6% voting control. Its web site is here Power Financial. See my spreadsheet at pwf.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
Over the past year there has been no insider trading, no insider selling and no insider buying. The CEO has a lot of options. With his options at 4.2M shares they are currently worth $114M. Paul G. Desmarais has just over 487M shares and owns approximately 66% of this company. He is also a director.
Not surprisingly, because so many shares are held by insiders, institutions hold only 10% of the shares of this company. There are 115 institutions with shares and over the past 3 months they have sold more than they have bought, but their share ownership is down less than 1%.
I get 5 year median low and high Price/Earnings Ratios of 11.90 and 16.04. The current P/E Ratio of 10.51 would suggest a low current stock price. (The 10 year median low P/E Ratio is 11.78, so the stock has not been relatively high over the past 5 years.)
I get a Graham price of $30.61 and the current stock price is 12% lower. The 10 year median difference between the Graham Price and low stock price is the stock price being 1% lower. The 10 year median difference between the Graham price and median and high stock price is the stock price being 15% and 29% higher than the Graham Price. This test shows the current stock price of $26.90 as being relatively low.
The 10 year median Price/Book Value Ratio is 2.36. The current P/B Ratio is 1.65 and is about 30% lower. This shows the current stock price to be relatively low.
The current dividend yield of 5.2% and it is 13% higher than the 5 year median of 4.6%. The 10 year median high dividend yield is just 3.3%. The yields on this stock have been quite high since the latest bear market. Also this company has not increased their dividends since 2008. By this measure the current stock price is relatively low.
When I look at analysts’ recommendations, all I find are Hold recommendations. The 12 month target price is $30.20. This would imply a 17.5% total return over the next 12 months. This company holds a lot of Life Insurance companies. Market downturns affect these sorts of companies and the worry is there will be a meaningful stock market downturn in our near future. See comments in blog3.
A number of analyst mention the current good dividend yield and a number mention good management. One analyst mentioned lack of earnings growth. It is true that earnings are down over the past 5 years, but they have been growing nicely since 2008, they just have not made it back what they were making in 2006 and 2007. 2008 saw a drop in earnings of 36%.
One analyst said that this company was a great way to get exposure to Great-West Life and IGM Financial. One analyst just changed their recommendation from Buy to Hold because Great-West’s first quarterly results for 2012 missed consensus estimate. He thought that both Great West and IGM have a weaker earnings outlook now.
Some people like Power Corp to Power Financial, however, some people always say this. Power Corp is more than just financials and therefore is considered to be less volatile. I also track Power Corp.
I am holding on to the shares I own in this company. It is not that analysts do not like this stock; they just seem unenthused about it currently. My long term expectations for this stock are earning around 4% dividends and 4% capital gains. However, in the past this stock has tended towards 3% dividends and 5% capital gains. These sorts of dividend payers tend to go up with dividend increases and there has not been any lately.
This company is a holding and management company. Its operations provide a range of individual and corporate financial and fiduciary services in North America and Europe. It holds interest in the following companies: Great-West Lifeco, Great-West Life, London Life, Canada Life, Great-West Life & Annuity, Putnam Investments, IGM Financial, Investors Group Mackenzie Financial, and Pargesa Group. Controlling shareholder of Power Corp of Canada is Paul Desmarais. They have 30.1%, but have 64.6% voting control. Its web site is here Power Financial. See my spreadsheet at pwf.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
Wednesday, May 9, 2012
Power Financial Corp
I have updated my investing comments blog today about the idea of selling in May. See blog 3.
I own this stock of Power Financial Corp (TSX-PWF). I first bought this stock in 2001. I then bought some more in 2004 and 2011. I have made a total return on this stock of 7.65% per year. Dividend return is 4.19% and capital gain is 3.46%. Dividends make up some 54.8% of my returns. My long term expectations for this stock are earning around 4% dividends and 4% capital gains.
Until recently, this company had a great record of increasing dividends. The growth in dividends over the past 5 and 10 years is 7% and 12.3% per year, respectively. The recent recession has been hard on insurance companies and this company owns lots of insurance companies. They have not increased their dividends since 2009.
The 5 year median Dividend Payout Ratios for this company is 67% and 18% for earnings and cash flow. The DPRs for 2011 were 58% and 18% for earnings and cash flows. However, if we based the DPR on cash flow excluding changes in working capital (or changes in current assets and current liabilities), the 5 year median DPRs become 16% and the 2011 become 25%.
The DPRs are good. Analysts talk about the dividend being safe. No one is currently talking about the company increasing dividends at this point in time. The company is proud of their history of dividend payments, but they also do not say when they may resume increasing them.
Total return has not been great over the past few years. The 5 year return is negative with a decline of 3% per year. The dividend return over the past 5 years has been at the rate of 4.2% per year. The 10 year total returns are better at 7.5% with dividends at 4.5% and capital gain being 3%. Over the last 10 years, dividends have made up some 60% of the total returns.
When you look at growth, the company has done better in the last 10 year period than in the last 5 year period. Revenue per share is up 1.6% and 6% per year. Cash flow is down almost 3.5% per year over the past 5 years, but it is up 10% per year over the past 10 years. Book Value is up 2.7% and 10% per year over the past 5 and 10 years respectively.
The debt ratios are fine for an insurance company. The current Liquidity Ratio 1.25. This is not great, but the Debt Ratio is more important. The Debt Ratio is 1.10, which is ok but not great. It is lower than the 5 year median ratio of 1.18. Both the current Leverage and Debt/Equity Ratio are a bit high at 21.94 and 19.96 and these are higher than the company’s 5 year median of 12.91 and 11.12.
The Return on Equity is quite good for 2011 at 15%. The 5 year median ROE is 14.2%. The ROE basic on comprehensive income attributable to common shares is 14.5%. This ROE has a 5 year ratio of 10.6%.
Currently this stock is 5% of my portfolio. My portfolio is heavily into financials. I will hold on to the shares I have. I expect that this stock will fully recover as other insurance companies will.
This company is a holding and management company. Its operations provide a range of individual and corporate financial and fiduciary services in North America and Europe. It holds interest in the following companies: Great-West Lifeco, Great-West Life, London Life, Canada Life, Great-West Life & Annuity, Putnam Investments, IGM Financial, Investors Group Mackenzie Financial, and Pargesa Group. Controlling shareholder of Power Corp of Canada is Paul Desmarais. They have 30.1%, but have 64.6% voting control. Its web site is here Power Financial. See my spreadsheet at pwf.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
I own this stock of Power Financial Corp (TSX-PWF). I first bought this stock in 2001. I then bought some more in 2004 and 2011. I have made a total return on this stock of 7.65% per year. Dividend return is 4.19% and capital gain is 3.46%. Dividends make up some 54.8% of my returns. My long term expectations for this stock are earning around 4% dividends and 4% capital gains.
Until recently, this company had a great record of increasing dividends. The growth in dividends over the past 5 and 10 years is 7% and 12.3% per year, respectively. The recent recession has been hard on insurance companies and this company owns lots of insurance companies. They have not increased their dividends since 2009.
The 5 year median Dividend Payout Ratios for this company is 67% and 18% for earnings and cash flow. The DPRs for 2011 were 58% and 18% for earnings and cash flows. However, if we based the DPR on cash flow excluding changes in working capital (or changes in current assets and current liabilities), the 5 year median DPRs become 16% and the 2011 become 25%.
The DPRs are good. Analysts talk about the dividend being safe. No one is currently talking about the company increasing dividends at this point in time. The company is proud of their history of dividend payments, but they also do not say when they may resume increasing them.
Total return has not been great over the past few years. The 5 year return is negative with a decline of 3% per year. The dividend return over the past 5 years has been at the rate of 4.2% per year. The 10 year total returns are better at 7.5% with dividends at 4.5% and capital gain being 3%. Over the last 10 years, dividends have made up some 60% of the total returns.
When you look at growth, the company has done better in the last 10 year period than in the last 5 year period. Revenue per share is up 1.6% and 6% per year. Cash flow is down almost 3.5% per year over the past 5 years, but it is up 10% per year over the past 10 years. Book Value is up 2.7% and 10% per year over the past 5 and 10 years respectively.
The debt ratios are fine for an insurance company. The current Liquidity Ratio 1.25. This is not great, but the Debt Ratio is more important. The Debt Ratio is 1.10, which is ok but not great. It is lower than the 5 year median ratio of 1.18. Both the current Leverage and Debt/Equity Ratio are a bit high at 21.94 and 19.96 and these are higher than the company’s 5 year median of 12.91 and 11.12.
The Return on Equity is quite good for 2011 at 15%. The 5 year median ROE is 14.2%. The ROE basic on comprehensive income attributable to common shares is 14.5%. This ROE has a 5 year ratio of 10.6%.
Currently this stock is 5% of my portfolio. My portfolio is heavily into financials. I will hold on to the shares I have. I expect that this stock will fully recover as other insurance companies will.
This company is a holding and management company. Its operations provide a range of individual and corporate financial and fiduciary services in North America and Europe. It holds interest in the following companies: Great-West Lifeco, Great-West Life, London Life, Canada Life, Great-West Life & Annuity, Putnam Investments, IGM Financial, Investors Group Mackenzie Financial, and Pargesa Group. Controlling shareholder of Power Corp of Canada is Paul Desmarais. They have 30.1%, but have 64.6% voting control. Its web site is here Power Financial. See my spreadsheet at pwf.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
Tuesday, May 8, 2012
Ag Growth International 2
I own this stock (TSX-AFN). I first bought this stock in October 2011 and then some more in December 2011. The stock has gone up 17% since I bought it. Some 8.8% of my total return is in dividends. This stock used to be an Income Trust company.
When I look at insider selling, I find some $5.9M of insider selling. There is a bit of insider buying, with a net selling of $5.4M. However, some $4.7M of the selling is from the estate of an officer. This leaves only some $0.7M selling from current insiders with some $0.5M of insider buying. This isn’t much action and so tells us little.
There are 36 institutions that own almost 40% of this company. Over the past 3 months they have increased their shares by 11.7%. This shows a vote of confidence in this stock. However, over the past 3 months sellers outnumbered buyers by 1, with 6 sellers and 5 buyers.
I get 5 year median low and high Price/Earnings Ratios of 11.69 and 22.90. The current P/E Ratio of 16.11 is almost to the median P/E Ratio. This shows a reasonable price.
I get a current Graham Price of $41.09. The 10 year low median difference between the Graham price and stock price is the stock price being some 25% lower than the Graham price. The median and high difference between the Graham price and stock price is the stock price being 10% and 48% higher, respectively. The current difference between the Graham price and stock price is the stock price being 36% higher than the Graham price. This shows a rather high stock price.
The stock price has been increasing faster than the Graham price. This is because the stock price has been increasing faster than both the earnings and book value.
The 10 year median Price/Book Value Ratio is 2.07. The current P/B Ratio is 2.95. So the current P/B Ratio is some 25% higher than the 10 year median and would suggest a rather high stock price.
The 5 year median dividend yield is 6.79% and the current dividend yield is 5.84%. The current dividend yield is some 14% above the 5 year median and would suggest a rather high stock price. The 10 year low dividend yield is 5.48%, which is 6% lower than the current dividend yield. So the stock price has been relatively higher before.
The testing results for the current stock price are mixed. The test results generally suggest a rather high stock price, but not as relatively high as it has been in the past.
When I look at analysts’ recommendations I find Strong Buy, Buy, Hold, Underperform and Sell. Most the recommendations are a Hold and the consensus recommendation would be a Hold. One analyst says that high yield stocks, such as Ag Growth tend to perform better in regards to capital gain than lower yield dividend stocks. They still rated this stock as a Hold as they do not expect the stock price to go up in the next 12 months.
A Buy recommendation came with the comment that the dividend yield is very good on this stock. Buy recommendations seem to suggest that stock price will be higher in 12 months times. BMO recently rated this stock a” market perform”, which is another term for Hold. See afn.htm. (See my site for information on analyst ratings.)
The median Price Target in 12 months is $40.60. Yesterday, when I started this review, the 12 month price and the current price were basically the same. However, this stock has being falling in the latest downturn of stock market today and now the stock price is below the 12 month stock price. Still, most Hold recommendations seem to be because no one expects the stock price to do much within the next 12 months.
Part of an interesting article from the G&M on AG Growth. There is also a Proactive Investors article about AG returning to profitability in the four quarter of 2011.
I am holding on to the shares I currently have. I have done well so far and expect to get a decent long term gain on this stock, both in terms of dividends and capital gain.
Ag Growth is a leading North American manufacturer of portable grain handling equipment, consisting of augers, belt conveyors, grain drying, fencing, post-hole augers, and other ancillary grain handling accessories. This company has 1,400 dealers and distributors in Canada and the United States. Its web site is here Ag Growth. See my spreadsheet at afn.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
When I look at insider selling, I find some $5.9M of insider selling. There is a bit of insider buying, with a net selling of $5.4M. However, some $4.7M of the selling is from the estate of an officer. This leaves only some $0.7M selling from current insiders with some $0.5M of insider buying. This isn’t much action and so tells us little.
There are 36 institutions that own almost 40% of this company. Over the past 3 months they have increased their shares by 11.7%. This shows a vote of confidence in this stock. However, over the past 3 months sellers outnumbered buyers by 1, with 6 sellers and 5 buyers.
I get 5 year median low and high Price/Earnings Ratios of 11.69 and 22.90. The current P/E Ratio of 16.11 is almost to the median P/E Ratio. This shows a reasonable price.
I get a current Graham Price of $41.09. The 10 year low median difference between the Graham price and stock price is the stock price being some 25% lower than the Graham price. The median and high difference between the Graham price and stock price is the stock price being 10% and 48% higher, respectively. The current difference between the Graham price and stock price is the stock price being 36% higher than the Graham price. This shows a rather high stock price.
The stock price has been increasing faster than the Graham price. This is because the stock price has been increasing faster than both the earnings and book value.
The 10 year median Price/Book Value Ratio is 2.07. The current P/B Ratio is 2.95. So the current P/B Ratio is some 25% higher than the 10 year median and would suggest a rather high stock price.
The 5 year median dividend yield is 6.79% and the current dividend yield is 5.84%. The current dividend yield is some 14% above the 5 year median and would suggest a rather high stock price. The 10 year low dividend yield is 5.48%, which is 6% lower than the current dividend yield. So the stock price has been relatively higher before.
The testing results for the current stock price are mixed. The test results generally suggest a rather high stock price, but not as relatively high as it has been in the past.
When I look at analysts’ recommendations I find Strong Buy, Buy, Hold, Underperform and Sell. Most the recommendations are a Hold and the consensus recommendation would be a Hold. One analyst says that high yield stocks, such as Ag Growth tend to perform better in regards to capital gain than lower yield dividend stocks. They still rated this stock as a Hold as they do not expect the stock price to go up in the next 12 months.
A Buy recommendation came with the comment that the dividend yield is very good on this stock. Buy recommendations seem to suggest that stock price will be higher in 12 months times. BMO recently rated this stock a” market perform”, which is another term for Hold. See afn.htm. (See my site for information on analyst ratings.)
The median Price Target in 12 months is $40.60. Yesterday, when I started this review, the 12 month price and the current price were basically the same. However, this stock has being falling in the latest downturn of stock market today and now the stock price is below the 12 month stock price. Still, most Hold recommendations seem to be because no one expects the stock price to do much within the next 12 months.
Part of an interesting article from the G&M on AG Growth. There is also a Proactive Investors article about AG returning to profitability in the four quarter of 2011.
I am holding on to the shares I currently have. I have done well so far and expect to get a decent long term gain on this stock, both in terms of dividends and capital gain.
Ag Growth is a leading North American manufacturer of portable grain handling equipment, consisting of augers, belt conveyors, grain drying, fencing, post-hole augers, and other ancillary grain handling accessories. This company has 1,400 dealers and distributors in Canada and the United States. Its web site is here Ag Growth. See my spreadsheet at afn.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
Monday, May 7, 2012
Ag Growth International
I own this stock (TSX-AFN). I first bought this stock in October 2011 and then some more in December 2011. The stock has gone up 17% since I bought it. Some 8.8% of my total return is in dividends. This stock used to be an Income Trust company.
This company is one of the few old Income Trusts not to reduce their dividends on conversion to a corporation. They also increased their dividends at the end of 2010 some 17.6%. There was no dividend increase for 2011. The Dividend Payout Ratios are a bit high with 5 year median ratios at 123% and 63% for earnings and cash flow. The DPR for earnings is expected to be lower in 2012 at 94%.
The company has done well in increasing dividends. The company only went public in 2004, but for the last 5 and 7 years the growth in dividends is 9.3% and 17.4% per year. As an Income Trust, the dividend yield was high and the company has a 5 year dividend yield of 6.8%. However, the current yield is lower at 5.8%. It has been expected that old Income Trust company’s dividend yields will decline to a 4 to 5% range.
The total return for this company is good, with the return at 30% and 27.8% per year over the past 5 and 7 years. Of this growth, dividends would account for 9.9% and 10% per year. Capital gain would be 20.1% and 17.8% per year. Dividend composed 33% and 36.6% of the total return over the past 5 and 7 years.
Going forward, the dividend yield will be lower and over the long term will probably be closer to 4 to 5% of the total return. How much this stock will grow in capital gains is anyone’s guess. Personally, I would expect it to be at least around 8% per year. However, most analysts currently do not see the stock going up much more within the next 12 months.
Growth is mainly quite good for this company. The 5 and 10 year growth in revenue per share is 27% and 15% per year. The increase in EPS is lower with 5 and 7 year growth at 2.8% and 7% per year, respectively. Growth in cash flow is good with 5 and 7 year growth at 10% and 17.5% per year, respectively.
And growth in book value is fine with 5 and 7 year growth at 9.7% and 7.9% per year, respectively. However, the new account rules seem to have a big effect on the book value and if the accounts were under the new rules for 2010, the book value would be slightly lower in 2011 rather than 22% higher.
Debt ratios are quite good with the current Liquidity Ratio at a very good 3.16 and the current Debt Ratio at a quite good 2.05. The Liquidity ratio is better than the 5 year median ratio of 2.57 and the Debt Ratio is equal to the 5 year median ratio of 2.05. The current Leverage and Debt/Equity Ratios are also good at 2.00 and 0.98. These last two are higher than, and therefore not as good as the 5 year median ratios of 1.68 and 0.68.
The last thing to talk about is the Return on Equity. The ratio is quite good with the ROE for 2011 being at 12.4% and the 5 year median ROE being at 17.3%. The ROE based on the comprehensive income is even higher at 15% for 2011 and 15% for the 5 year median value. The high ROE based on comprehensive income tends to say that the net income is of good quality.
I will hold on to the shares I have. Buying this stock was part of my plan to get into riskier dividend paying stocks because I wanted to diversity my portfolio. Unfortunately, moving away from financials and utilities stocks mean you will take on more risks. Also, these stocks tend to be more volatile and are hit harder in bear markets. However, over the long term I expect to do just fine with them.
Ag Growth is a leading North American manufacturer of portable grain handling equipment, consisting of augers, belt conveyors, grain drying, fencing, post-hole augers, and other ancillary grain handling accessories. This company has 1,400 dealers and distributors in Canada and the United States. Its web site is here Ag Growth. See my spreadsheet at afn.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
This company is one of the few old Income Trusts not to reduce their dividends on conversion to a corporation. They also increased their dividends at the end of 2010 some 17.6%. There was no dividend increase for 2011. The Dividend Payout Ratios are a bit high with 5 year median ratios at 123% and 63% for earnings and cash flow. The DPR for earnings is expected to be lower in 2012 at 94%.
The company has done well in increasing dividends. The company only went public in 2004, but for the last 5 and 7 years the growth in dividends is 9.3% and 17.4% per year. As an Income Trust, the dividend yield was high and the company has a 5 year dividend yield of 6.8%. However, the current yield is lower at 5.8%. It has been expected that old Income Trust company’s dividend yields will decline to a 4 to 5% range.
The total return for this company is good, with the return at 30% and 27.8% per year over the past 5 and 7 years. Of this growth, dividends would account for 9.9% and 10% per year. Capital gain would be 20.1% and 17.8% per year. Dividend composed 33% and 36.6% of the total return over the past 5 and 7 years.
Going forward, the dividend yield will be lower and over the long term will probably be closer to 4 to 5% of the total return. How much this stock will grow in capital gains is anyone’s guess. Personally, I would expect it to be at least around 8% per year. However, most analysts currently do not see the stock going up much more within the next 12 months.
Growth is mainly quite good for this company. The 5 and 10 year growth in revenue per share is 27% and 15% per year. The increase in EPS is lower with 5 and 7 year growth at 2.8% and 7% per year, respectively. Growth in cash flow is good with 5 and 7 year growth at 10% and 17.5% per year, respectively.
And growth in book value is fine with 5 and 7 year growth at 9.7% and 7.9% per year, respectively. However, the new account rules seem to have a big effect on the book value and if the accounts were under the new rules for 2010, the book value would be slightly lower in 2011 rather than 22% higher.
Debt ratios are quite good with the current Liquidity Ratio at a very good 3.16 and the current Debt Ratio at a quite good 2.05. The Liquidity ratio is better than the 5 year median ratio of 2.57 and the Debt Ratio is equal to the 5 year median ratio of 2.05. The current Leverage and Debt/Equity Ratios are also good at 2.00 and 0.98. These last two are higher than, and therefore not as good as the 5 year median ratios of 1.68 and 0.68.
The last thing to talk about is the Return on Equity. The ratio is quite good with the ROE for 2011 being at 12.4% and the 5 year median ROE being at 17.3%. The ROE based on the comprehensive income is even higher at 15% for 2011 and 15% for the 5 year median value. The high ROE based on comprehensive income tends to say that the net income is of good quality.
I will hold on to the shares I have. Buying this stock was part of my plan to get into riskier dividend paying stocks because I wanted to diversity my portfolio. Unfortunately, moving away from financials and utilities stocks mean you will take on more risks. Also, these stocks tend to be more volatile and are hit harder in bear markets. However, over the long term I expect to do just fine with them.
Ag Growth is a leading North American manufacturer of portable grain handling equipment, consisting of augers, belt conveyors, grain drying, fencing, post-hole augers, and other ancillary grain handling accessories. This company has 1,400 dealers and distributors in Canada and the United States. Its web site is here Ag Growth. See my spreadsheet at afn.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
Friday, May 4, 2012
Davis & Henderson Corp 2
I own this stock (TSX-DH). I first bought this stock in2009 and then bought more in 2010 and 2011. I have made a total return of 15.9%. Of this total return, 10.3% is attributable to dividends and 5.6% to Capital Gains. Dividends make up almost 75% of my return.
When I look at insider trading, I find a minor amount of insider buying of $1.1M. Buy was by CEO and directors. It looks like insider have recently been retaining their options, and this is a good sign. Everyone but directors have more options than shares.
There are some 36 institutions that own 27% of the shares of this company. Over the past 3 months, they have decreased their investments in this company by almost 25%. However, institutions seem to be buying shares over the last few days.
I have 5 year median Price/Earnings Ratios of 8.03 and 11.92. The current P/E Ratio of 10.7 is showing a relatively high stock price. These are rather low P/E ratios, but this stock used to be an income trust paying out most of its income.
I get a Graham price of $22.09. The 10 year low and median difference between the Graham Price and stock price is the stock price being 26% and 10% lower than the Graham Price. The 10 year high difference is the stock price being 6% higher than the Graham Price. The current stock price of $19.42 is 12% lower than the Graham Price and shows a reasonable stock price.
The 10 year median Price/Book Ratio is 1.75. The current P/B Ratio of 2.19 is some 25% higher and shows a relatively high stock price. The problem with Income Trust companies was that they did not grow their book value because they paid out too much in dividends.
The current dividend yield of 6.39% is some 36% higher than the 5 year median dividend yield of 9.93%. Of course, the dividend has been cut when this company was no longer an income trust. You would expect the dividend yield to be lower.
The thing with companies that change from Income Trusts to Corporation is that you expect the dividends yield to go lower and the P/E ratio to go higher. This does not help in trying to test whether or not a stock price is reasonable. Here we get mixed results. However, the price is not unreasonable. Also, the stock price is lower than the relatively median stock price in 2011 when the change from Income Trust to Corporation took place.
When I look at analysts’ recommendations, I get Strong Buy, Buy and Hold. The consensus recommendation would be a Buy. The consensus buy comes with a 12 months price target is $20.40. One analyst likes the good dividend yield and feels it is safe.
One analyst mentions that their main business is printing cheques, which is a slowly eroding business. The company is trying to replace this business. The company just bought Avista Solutions, a company that is a leading provider of mortgage loan origination software to community banks and credit unions in the United States.
This stock is mentioned in a number Cruncher article in February 2012. See G&M.
I will hold on to the shares I have now. These shares form only 1% of my portfolio. I believe that this company has a future. I would expect over the longer term the dividend yield will go lower to between 4 and 5% and that it will have modest capital gains of 3 to 4%. This suggests a 7% to 9% total return. The consensus price of $20.40 suggests a 12 month total return of 11%.
Davis & Henderson is a leading solutions provider to the financial services marketplace. Founded in 1875, the company today provides innovative programs, technology products and technology based business services to customers who offer chequing accounts, credit card accounts and personal, commercial, and other lending and leasing products. Its web site is here Davis & Henderson. See my spreadsheet at dh.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
When I look at insider trading, I find a minor amount of insider buying of $1.1M. Buy was by CEO and directors. It looks like insider have recently been retaining their options, and this is a good sign. Everyone but directors have more options than shares.
There are some 36 institutions that own 27% of the shares of this company. Over the past 3 months, they have decreased their investments in this company by almost 25%. However, institutions seem to be buying shares over the last few days.
I have 5 year median Price/Earnings Ratios of 8.03 and 11.92. The current P/E Ratio of 10.7 is showing a relatively high stock price. These are rather low P/E ratios, but this stock used to be an income trust paying out most of its income.
I get a Graham price of $22.09. The 10 year low and median difference between the Graham Price and stock price is the stock price being 26% and 10% lower than the Graham Price. The 10 year high difference is the stock price being 6% higher than the Graham Price. The current stock price of $19.42 is 12% lower than the Graham Price and shows a reasonable stock price.
The 10 year median Price/Book Ratio is 1.75. The current P/B Ratio of 2.19 is some 25% higher and shows a relatively high stock price. The problem with Income Trust companies was that they did not grow their book value because they paid out too much in dividends.
The current dividend yield of 6.39% is some 36% higher than the 5 year median dividend yield of 9.93%. Of course, the dividend has been cut when this company was no longer an income trust. You would expect the dividend yield to be lower.
The thing with companies that change from Income Trusts to Corporation is that you expect the dividends yield to go lower and the P/E ratio to go higher. This does not help in trying to test whether or not a stock price is reasonable. Here we get mixed results. However, the price is not unreasonable. Also, the stock price is lower than the relatively median stock price in 2011 when the change from Income Trust to Corporation took place.
When I look at analysts’ recommendations, I get Strong Buy, Buy and Hold. The consensus recommendation would be a Buy. The consensus buy comes with a 12 months price target is $20.40. One analyst likes the good dividend yield and feels it is safe.
One analyst mentions that their main business is printing cheques, which is a slowly eroding business. The company is trying to replace this business. The company just bought Avista Solutions, a company that is a leading provider of mortgage loan origination software to community banks and credit unions in the United States.
This stock is mentioned in a number Cruncher article in February 2012. See G&M.
I will hold on to the shares I have now. These shares form only 1% of my portfolio. I believe that this company has a future. I would expect over the longer term the dividend yield will go lower to between 4 and 5% and that it will have modest capital gains of 3 to 4%. This suggests a 7% to 9% total return. The consensus price of $20.40 suggests a 12 month total return of 11%.
Davis & Henderson is a leading solutions provider to the financial services marketplace. Founded in 1875, the company today provides innovative programs, technology products and technology based business services to customers who offer chequing accounts, credit card accounts and personal, commercial, and other lending and leasing products. Its web site is here Davis & Henderson. See my spreadsheet at dh.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
Thursday, May 3, 2012
Davis & Henderson Corp
I own this stock (TSX-DH). I first bought this stock in2009 and then bought more in 2010 and 2011. I have made a total return of 15.9%. Of this total return, 10.3% is attributable to dividends and 5.6% to Capital Gains. Dividends make up almost 75% of my return.
When I bought this stock it was an Income Trust company with a symbol of DHF.UN. They were making monthly distributions. When they changed to a corporation, they changed the dividend payments to quarterly and they decreased the amount of the dividends. The decrease was almost 35%. Midway through 2011 they increased the dividend by 3.3%.
It was expected that dividend yields on Income Trusts would come down to 4 to 5% by combinations of dividend decreases, or no increases and gains in the stock price. I may have made dividend returns of 10.3% in the past, but this is not going to reoccur. The current dividend yield is 6.55%.
While this was an Income Trust the Dividend Payout Ratios for earnings and cash flow were high as was typical of Income Trust companies. The 5 year median DPRs for earnings was 98% and for cash flow was 68%. These DPRs are better for 2011 at 78% and 52%. The DPRs for 2012 are expected to be lower at around 69% and 47%.
The company had the habit of raising dividends every year until it was forced to change the corporate structure from an Income Trust to a corporation. If you look at the growth of dividends to 2011 you have no growth over 10 years and a 4% per year decline over the past 5 years. However, I would suspect that the company will go back to annual dividend increases. They have stated that they understand the importance of increasing dividends to their shareholders.
The total returns over the past 5 and 10 years are 12.3% and 16.8% per year. The portion of these returns due to dividends is 10.6% and 12.1%. So dividends made up 86% and 72% of the return, respectively. The capital gain was just 1.7% and 4.75 per year, respectively. As I said above, the dividends portion of the total returns are going to be lower moving forward.
One of the problems with this stock is that the stock price has not really moved much since this company became public in 2001 It went up somewhat until 2004 and has since just been mucking about. Analysts have given it a 12 months stock price of $20.70 which would be a rise of just over 7% from current prices. However, this is where it was at in 2004. The stock price has hit peaks in 2005, 2007 and 2011, but it has never quite made it back to the first 2005 peak, which was $23.85.
Growth in revenues per share has not been good as it is running at 0% for last 5 years and 1.8% per year over the past 10 years. EPS is a bit better running at 0% for last 5 years and 4.4% per year over the past 10 years. Cash flow growth is better running at 6% and 5.5% per year over the past 5 and 10 years.
Debt ratios are rather mixed. The current Liquidity Ratio is low at 0.93, but they have a strong enough cash flow to pay current liabilities and dividends. The current Debt Ratio is very good at 2.24. The current Leverage and Debt/Equity Ratios are fine at 1.81 and 0.81. (See my site for further information on Debt Ratios.)
The last thing to talk about today is Return on Equity. The ROE is good at 12.7% with a 5 year median of 16.5%. The ROE based on comprehensive income is better at 14.4% with a 5 year median of 16.6%. (You only worry if the ROE based on comprehensive income is significantly lower than the ROE based on net income.)
At the moment I will hold on to my shares and see how this investment works out. On good dividend paying stocks, the stock price has a tendency, over the long term, to increase at the same rate as the increase for dividends. It will be interesting to see what sort of dividend increase I receive in 2012.
Davis & Henderson is a leading solutions provider to the financial services marketplace. Founded in 1875, the company today provides innovative programs, technology products and technology based business services to customers who offer chequing accounts, credit card accounts and personal, commercial, and other lending and leasing products. Its web site is here Davis & Henderson. See my spreadsheet at dh.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
When I bought this stock it was an Income Trust company with a symbol of DHF.UN. They were making monthly distributions. When they changed to a corporation, they changed the dividend payments to quarterly and they decreased the amount of the dividends. The decrease was almost 35%. Midway through 2011 they increased the dividend by 3.3%.
It was expected that dividend yields on Income Trusts would come down to 4 to 5% by combinations of dividend decreases, or no increases and gains in the stock price. I may have made dividend returns of 10.3% in the past, but this is not going to reoccur. The current dividend yield is 6.55%.
While this was an Income Trust the Dividend Payout Ratios for earnings and cash flow were high as was typical of Income Trust companies. The 5 year median DPRs for earnings was 98% and for cash flow was 68%. These DPRs are better for 2011 at 78% and 52%. The DPRs for 2012 are expected to be lower at around 69% and 47%.
The company had the habit of raising dividends every year until it was forced to change the corporate structure from an Income Trust to a corporation. If you look at the growth of dividends to 2011 you have no growth over 10 years and a 4% per year decline over the past 5 years. However, I would suspect that the company will go back to annual dividend increases. They have stated that they understand the importance of increasing dividends to their shareholders.
The total returns over the past 5 and 10 years are 12.3% and 16.8% per year. The portion of these returns due to dividends is 10.6% and 12.1%. So dividends made up 86% and 72% of the return, respectively. The capital gain was just 1.7% and 4.75 per year, respectively. As I said above, the dividends portion of the total returns are going to be lower moving forward.
One of the problems with this stock is that the stock price has not really moved much since this company became public in 2001 It went up somewhat until 2004 and has since just been mucking about. Analysts have given it a 12 months stock price of $20.70 which would be a rise of just over 7% from current prices. However, this is where it was at in 2004. The stock price has hit peaks in 2005, 2007 and 2011, but it has never quite made it back to the first 2005 peak, which was $23.85.
Growth in revenues per share has not been good as it is running at 0% for last 5 years and 1.8% per year over the past 10 years. EPS is a bit better running at 0% for last 5 years and 4.4% per year over the past 10 years. Cash flow growth is better running at 6% and 5.5% per year over the past 5 and 10 years.
Debt ratios are rather mixed. The current Liquidity Ratio is low at 0.93, but they have a strong enough cash flow to pay current liabilities and dividends. The current Debt Ratio is very good at 2.24. The current Leverage and Debt/Equity Ratios are fine at 1.81 and 0.81. (See my site for further information on Debt Ratios.)
The last thing to talk about today is Return on Equity. The ROE is good at 12.7% with a 5 year median of 16.5%. The ROE based on comprehensive income is better at 14.4% with a 5 year median of 16.6%. (You only worry if the ROE based on comprehensive income is significantly lower than the ROE based on net income.)
At the moment I will hold on to my shares and see how this investment works out. On good dividend paying stocks, the stock price has a tendency, over the long term, to increase at the same rate as the increase for dividends. It will be interesting to see what sort of dividend increase I receive in 2012.
Davis & Henderson is a leading solutions provider to the financial services marketplace. Founded in 1875, the company today provides innovative programs, technology products and technology based business services to customers who offer chequing accounts, credit card accounts and personal, commercial, and other lending and leasing products. Its web site is here Davis & Henderson. See my spreadsheet at dh.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
Wednesday, May 2, 2012
Melcor Developments Inc 2
Posted blog entry on investing and withdrawals and how things worked out at comments blog.
I own this stock of Melcor Developments Inc. (TSX-MRD). I first bought this stock in 2008 and then bought some more in 2009. I have made a return of 12.4% per year on this stock. Of this return, 9.7% per year comes from capital gain and 2.7% per year comes from dividends. So, 21.5% of my return comes from dividends.
Over the past year there was insider trading. Some $1.8M of shares was bought late last year, mainly by directors and at or below $11.50. There was minor insider selling, but net insider buying is at $1.8M. Lately some insiders have retained shares gotten under options and some have not. Almost everyone has more shares than options. The CEO has some $20M of shares in this firm.
There is only 15 institutions that own some 7% of this firm. Over the past 3 months they have increased their shares by 15%. This is positive. The stocks in this company are heavily owned by the Melton family. Insiders own over 50% of the shares.
I get 5 year median low and high Price/Earnings Ratios of 5.23 and 14.87. This is rather a wide range. The current P/E of 8.27 based on stock price of $15.05 shows a rather low stock price.
I get a Graham Price of $28.57. The low and high difference between the Graham Price and the stock price is the stock price being 57% and 22% lower than the Graham Price. The stock price of $15.05 is some 47% lower than the Graham Price. This shows a good stock price.
However, the Graham Price has popped up lately because of the increase in the book value mainly due to new account rules. In 2010, the Graham Price was $19.90. If the Graham Price was still there, the stock price would only be 24% lower than the Graham price. So, maybe this test is compromised a bit.
I get a 10 year average Price/Book Value Ratio of 1.04. The current P/B Ratio is 0.75. Not only is the current ratio showing that the stock price is below the book value, the current ratio is only 73% of the 10 year value and shows a good stock price.
However, if the book value had not increased dramatically in 2011, this test might show a different story with the current P/B Ratio at or higher than the 10 year median value. So this test might be compromised. (By the way, the only site I know that gives current (or most recent quarter) P/B Ratio is Reuters. For this stock see the financials tab at Reuters.
The last test and probably the most important one is the dividend yield test. The current yield is 2.66%. The 5 year median is 2.92% some 9% higher. This would imply that the current price, while not unreasonable, is not cheap. Of course, there is also a problem with this test because dividends were cut significantly in 2009. The 10 year median dividend yield, of 2.69, is close to the current dividend yield. So, basically, we are back to a reasonable stock price for this stock.
There seems to be only one analyst following this stock. He gives a 12 stock price of $22 and rates the company a Buy.
There was one Analysis that I found at the Trading Chief, which is as follows below. This is dated March 26, 2012.
“The majority of Melcor's assets are in Alberta, with a growing inventory of residential units in the US. Management believes that the economic indicators in these regions provide a strong outlook for our business over the next several years. Alberta fundamentals remain strong, with low unemployment rates, net in-migration, higher than the national average weekly earnings, strong capital investment, stabilizing inflation and relative stability in the price of oil.
These fundamentals create a favorable environment for both residential and commercial property development. The US continues its slow economic recovery with lingering uncertainty and volatility, limited access to capital and continued distress in the speculative and investment real estate markets. These fundamentals create an environment that favors rentals over home ownership.
With Melcor's inventory of raw and developed land, financial resources and strong management group, the company is well positioned to take advantage of market opportunities.”
There is a short article on this company in the Edmonton Journal. And, another article in the same journal for March 17.
I will be holding on to the shares I have. This company provides a decent dividend yield of 2 to 3% and you should earn capital gains over the long term. This stock is riskier than a lot of dividend paying stocks, but probably will provide long term capital gains and long term growing dividends. It will probably suffer in most downturns and the management will increase dividends as they can afford to. It will also decrease dividend as and when required.
This company is primarily engaged in the acquisition of land for development and sale of residential communities, multi-family sites and commercial sites. It operates mostly in B.C. and Alberta. The company also develops, owns and manages commercial income properties, as well as four golf courses. Its web site is here Melcor. See my spreadsheet at mrd.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
I own this stock of Melcor Developments Inc. (TSX-MRD). I first bought this stock in 2008 and then bought some more in 2009. I have made a return of 12.4% per year on this stock. Of this return, 9.7% per year comes from capital gain and 2.7% per year comes from dividends. So, 21.5% of my return comes from dividends.
Over the past year there was insider trading. Some $1.8M of shares was bought late last year, mainly by directors and at or below $11.50. There was minor insider selling, but net insider buying is at $1.8M. Lately some insiders have retained shares gotten under options and some have not. Almost everyone has more shares than options. The CEO has some $20M of shares in this firm.
There is only 15 institutions that own some 7% of this firm. Over the past 3 months they have increased their shares by 15%. This is positive. The stocks in this company are heavily owned by the Melton family. Insiders own over 50% of the shares.
I get 5 year median low and high Price/Earnings Ratios of 5.23 and 14.87. This is rather a wide range. The current P/E of 8.27 based on stock price of $15.05 shows a rather low stock price.
I get a Graham Price of $28.57. The low and high difference between the Graham Price and the stock price is the stock price being 57% and 22% lower than the Graham Price. The stock price of $15.05 is some 47% lower than the Graham Price. This shows a good stock price.
However, the Graham Price has popped up lately because of the increase in the book value mainly due to new account rules. In 2010, the Graham Price was $19.90. If the Graham Price was still there, the stock price would only be 24% lower than the Graham price. So, maybe this test is compromised a bit.
I get a 10 year average Price/Book Value Ratio of 1.04. The current P/B Ratio is 0.75. Not only is the current ratio showing that the stock price is below the book value, the current ratio is only 73% of the 10 year value and shows a good stock price.
However, if the book value had not increased dramatically in 2011, this test might show a different story with the current P/B Ratio at or higher than the 10 year median value. So this test might be compromised. (By the way, the only site I know that gives current (or most recent quarter) P/B Ratio is Reuters. For this stock see the financials tab at Reuters.
The last test and probably the most important one is the dividend yield test. The current yield is 2.66%. The 5 year median is 2.92% some 9% higher. This would imply that the current price, while not unreasonable, is not cheap. Of course, there is also a problem with this test because dividends were cut significantly in 2009. The 10 year median dividend yield, of 2.69, is close to the current dividend yield. So, basically, we are back to a reasonable stock price for this stock.
There seems to be only one analyst following this stock. He gives a 12 stock price of $22 and rates the company a Buy.
There was one Analysis that I found at the Trading Chief, which is as follows below. This is dated March 26, 2012.
“The majority of Melcor's assets are in Alberta, with a growing inventory of residential units in the US. Management believes that the economic indicators in these regions provide a strong outlook for our business over the next several years. Alberta fundamentals remain strong, with low unemployment rates, net in-migration, higher than the national average weekly earnings, strong capital investment, stabilizing inflation and relative stability in the price of oil.
These fundamentals create a favorable environment for both residential and commercial property development. The US continues its slow economic recovery with lingering uncertainty and volatility, limited access to capital and continued distress in the speculative and investment real estate markets. These fundamentals create an environment that favors rentals over home ownership.
With Melcor's inventory of raw and developed land, financial resources and strong management group, the company is well positioned to take advantage of market opportunities.”
There is a short article on this company in the Edmonton Journal. And, another article in the same journal for March 17.
I will be holding on to the shares I have. This company provides a decent dividend yield of 2 to 3% and you should earn capital gains over the long term. This stock is riskier than a lot of dividend paying stocks, but probably will provide long term capital gains and long term growing dividends. It will probably suffer in most downturns and the management will increase dividends as they can afford to. It will also decrease dividend as and when required.
This company is primarily engaged in the acquisition of land for development and sale of residential communities, multi-family sites and commercial sites. It operates mostly in B.C. and Alberta. The company also develops, owns and manages commercial income properties, as well as four golf courses. Its web site is here Melcor. See my spreadsheet at mrd.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
Tuesday, May 1, 2012
Melcor Developments Inc
I own this stock (TSX-MRD). I started following this stock because it was on Mike Higgs’ list of dividend growth stocks. Mike was the first financial blogger who I followed.
I first bought this stock in 2008 and then bought some more in 2009. I have made a return of 12.4% per year on this stock. Of this return, 9.7% per year comes from capital gain and 2.7% per year comes from dividends. So, 21.5% of my return comes from dividends.
I would not have made this much if I had not bought some stock in 2009 when it hit a bottom after the 2008 bear market. The stock price is still at half the value it reached in 2007. Dividends peaked in 2008 and although the company has been increasing them lately, they are still some 4.8% lower than the peak year of 2008. Dividends dropped some 40% between 2008 and 2009.
There was only one increase in dividends in 2010 and dividends did not increase in 2011. Dividend growth rate on this company is still not bad when you consider this. The dividend growth over the past 5 and 10 years is 5.9% and 18.5% per year.
The Dividend Payout Ratios are good with 5 year median DPR of 24% for earnings and 18% for cash flow. (See my site for information on Dividend Payout Ratios). This is one of the few companies that pay dividends twice a year (rather than quarterly).
The financial year of 2011 was generally good for this company. However, the change to the accounting rules of IFRS also helped. There was growth in revenues, earnings and book value. However, cash flow fell a bit. Generally, the 10 year growth rates are better than the 5 year ones. The 5 and 10 year growth in cash flow is 0% and 13.3% per year.
The best growth is in earnings and that is 7% and 17% per year over the past 5 and 10 years. Revenue growth is at 2.3% and 10.5% per year over the past 5 and 10 years. Book Value grew the most with a 92% rise in 2011, but all but 13% of that rise seems to be attributable to the new accounting rules.
As far as debt ratios go, they all are good. The current Liquidity Ratio is 3.98. The current Debt Ratio is 1.98. Both these are very good. The current Leverage and Debt/Equity Ratios are also fine at 2.04 and 1.03.
The next thing to look at is Return on Equity. For 2011, this was 13.6%, which is a good rate. The 5 year median ROE is also good at 13.2%. The ROE based on comprehensive income is also similar at 13.7%.
The problem with investing in this company is that very few analysts or anyone else that is following the company. It is a small real estate company out of the west. I am going to retain the stock I have. I have only 1% of my portfolio in this stock.
And, I noted on my Investing blog the link to the Money Sense interview.
This company is primarily engaged in the acquisition of land for development and sale of residential communities, multi-family sites and commercial sites. It operates mostly in B.C. and Alberta. The company also develops, owns and manages commercial income properties, as well as four golf courses. Its web site is here Melcor. See my spreadsheet at mrd.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
I first bought this stock in 2008 and then bought some more in 2009. I have made a return of 12.4% per year on this stock. Of this return, 9.7% per year comes from capital gain and 2.7% per year comes from dividends. So, 21.5% of my return comes from dividends.
I would not have made this much if I had not bought some stock in 2009 when it hit a bottom after the 2008 bear market. The stock price is still at half the value it reached in 2007. Dividends peaked in 2008 and although the company has been increasing them lately, they are still some 4.8% lower than the peak year of 2008. Dividends dropped some 40% between 2008 and 2009.
There was only one increase in dividends in 2010 and dividends did not increase in 2011. Dividend growth rate on this company is still not bad when you consider this. The dividend growth over the past 5 and 10 years is 5.9% and 18.5% per year.
The Dividend Payout Ratios are good with 5 year median DPR of 24% for earnings and 18% for cash flow. (See my site for information on Dividend Payout Ratios). This is one of the few companies that pay dividends twice a year (rather than quarterly).
The financial year of 2011 was generally good for this company. However, the change to the accounting rules of IFRS also helped. There was growth in revenues, earnings and book value. However, cash flow fell a bit. Generally, the 10 year growth rates are better than the 5 year ones. The 5 and 10 year growth in cash flow is 0% and 13.3% per year.
The best growth is in earnings and that is 7% and 17% per year over the past 5 and 10 years. Revenue growth is at 2.3% and 10.5% per year over the past 5 and 10 years. Book Value grew the most with a 92% rise in 2011, but all but 13% of that rise seems to be attributable to the new accounting rules.
As far as debt ratios go, they all are good. The current Liquidity Ratio is 3.98. The current Debt Ratio is 1.98. Both these are very good. The current Leverage and Debt/Equity Ratios are also fine at 2.04 and 1.03.
The next thing to look at is Return on Equity. For 2011, this was 13.6%, which is a good rate. The 5 year median ROE is also good at 13.2%. The ROE based on comprehensive income is also similar at 13.7%.
The problem with investing in this company is that very few analysts or anyone else that is following the company. It is a small real estate company out of the west. I am going to retain the stock I have. I have only 1% of my portfolio in this stock.
And, I noted on my Investing blog the link to the Money Sense interview.
This company is primarily engaged in the acquisition of land for development and sale of residential communities, multi-family sites and commercial sites. It operates mostly in B.C. and Alberta. The company also develops, owns and manages commercial income properties, as well as four golf courses. Its web site is here Melcor. See my spreadsheet at mrd.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
Subscribe to:
Posts (Atom)