Cenovus Energy Inc

Sound bite for Twitter and StockTwits is: Dividend Paying Energy Stock. It would seem that the stock price is relatively cheap. This stock is in a volatile and syclical sector so this is a risk. The low current liquidity ratio is also a risk. But stock is cheap. You can make money in cyclical stock buying low and selling high. See my spreadsheet on Cenovus Energy Inc.

I do not own this stock of Cenovus Energy Inc. (TSX-CVE, NYSE-CVE). I do not own this stock but I used to. I had held this stock previously as Alberta Energy Company from April 2000 until August 2002 and made some 18% total returns per year.

When I was updating my spreadsheet, I noticed the Liquidity Ratio fell from 1.13 (a low value) to 0.67 (a much lower value) from the annual 2017 to the third quarterly statement. When this ratio is lower than 1.00 it means that current assets cannot cover current liabilities. Even adding in cash flow after dividends this ratio is just 0.89. This is a risk

Canadian oil and gas companies have been having problems lately. This stock is no different. As you can see from the chart below, dividend growth is negative. They have been reducing their dividends since hitting a recent high in 2014. Dividends have been decreased by some 81%.

Mostly dividends have had a low yield. The current dividend yield is 1.69%. The historical median is also low at 1.45%. The 5 and 10 year median dividend yields are moderate at 3.10% and 2.78% because yields were growing prior to the dividend cuts.

The current Dividend Payout Ratio for 2017 is 6.56% with 5 year coverage at 65.7%. They had good earnings in 2017 but they are expected to have an earnings loss in 2018. Net year the 5 year coverage of dividends is expected to be around 77% in 2018. Analysts are again expecting positive earnings in 2019 and 2020.

The only Debt Ratio problem involves the Liquidity Ratio. Their Long Term Debt/Market Cap Ratio for 2017 is 0.67 in 2018. I talked above about the problem with the Liquidity Ratio which is a negative for this stock. The Debt Ratio is good at 1.95 with 5 year median at 1.83. Leverage and Debt/Equity Ratios for 2017 are 2.05 and 1.05 which are fine.

The Total Return per year is shown below for years of 5 to 25 for Canadian shareholders. 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 charts below.

Years	Div. Gth	Tot Ret	Cap Gain	Div.
5	-25.65%	-16.47%	-19.18%	2.70%
10	-6.31%	-6.37%	-9.96%	3.58%
15	1.79%	4.46%	-0.19%	4.65%
20	5.70%	9.69%	4.71%	4.99%
25	5.10%	10.61%	5.99%	4.61%

The Total Return per year is show below for years of 5 to 12 for US shareholders. I do not have as much US$ data. This company changed report currency from US$ to CDN$ in 2009.

Years	Div. Gth	Tot Ret	Cap Gain	Div.
5	-28.99%	-20.55%	-22.91%	2.37%
10	-8.52%	-8.61%	-12.10%	3.50%
15-12	3.36%	-2.89%	-7.05%	4.16%
20	6.39%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 19.68, 27.54, and 34.12. the corresponding 10 year ratios are 19.19, 23.25 and 27.17. The historical median ratios are 13.91, 16.82 and 19.85. The current P/E Ratio is negative because the company is expected to have an earnings loss this year. This means that we can not do a proper test with P/E Ratios.

However, the company is expected to have a profit in 2019. The 2019 P/E Ratio is 11.94. We are getting close to 2019. This ratio is based on a current price of $11.82 and 2019 earnings estimate of $0.99. This stock price testing would suggest that the stock price is relatively cheap.

I get a Graham Price of $18.37. The 10 year low, median, and high median Price/Graham Price Ratios are 1.17, 1.47 and 1.70. The current P/GP Ratio is 0.64 based on a stock price of $11.82. This stock price testing would suggest that the stock price is relatively cheap.

I get a 10 year median Price/Book Value per Share Ratio of 2.05. The current P/B Ratio is 0.78 based on Book Value of $18,624M, BV per Share of $15.16 and a stock price of $11.82. The current ratio is some 62% below the 10 year ratio. This stock price testing would suggest that the stock price is relatively cheap.

I get an historical median dividend yield of 1.45%. The current dividend yield is $1.69% based on dividends of $0.20 and a stock price of $11.82. The current dividend yield is some 17% higher than the historical median. This stock price testing would suggest that the stock price is relatively reasonable and below the median.

The 10 year median Price/Sales (Revenue) Ratio is 1.37. The current P/S Ratio is 0.66 based on 2018 Revenue estimate of $22,124M, Revenue per Share of $18.00 and a stock price of $11.82. The current ratio is some 52% below the 10 year median ratio. This stock price testing would suggest that the stock price is relatively cheap.

All the stock testing shows the stock price as being cheap except for the dividend yield test. However, there is a problem with the dividend yield test as the dividends have been cut substantially over the last while. It would seem that the stock price is current cheap.

When I look at analysts’ recommendations, I find Strong Buy (1), Buy (17) and Hold (10). The consensus would be a Buy. The 12 month stock price would be $16.43. This implies a total return of 40.69% with 39% from capital gains and 1.69% from dividends based on a current stock price of $11.82.

David Rudolf on Bharatapress about several recent analysts changes to their target price. Brandon Baker on Bharatapress talks about stock purchases by Blume Capital Management. Mary Kom on Fairfield Current talks about Beutel Goodman selling some of their holdings in this stock.. Andrew Walker on Motley Fool thinks this stock might be an interesting contrarian pick. See what analysts are saying on Stock Chase. There are both positive and negative comments.

Cenovus Energy Inc is engaged in developing, producing, and marketing crude oil, natural gas liquids and natural gas in Canada with marketing activities and refining operations in the United States. Its web site is here Cenovus Energy Inc.

The last stock I wrote about was about Keyera Corp. (TSX-KEY, OTC-KEYUF) ... learn more. The next stock I will write about will be Johnson and Johnson (NYSE-JNJ) ... learn more on Wednesday, November 14, 2018 around 5 pm. Tomorrow on my other blog I will write about Money Show 2018 - Panel.... learn more on Tuesday, November 13, 2018 around 5 pm.

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. 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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Keyera Corp

Sound bite for Twitter and StockTwits is: Dividend Growth Utility. The revenue and earnings have started to move up again. It is expected that earnings will start to cover the dividends in 2018. This maybe a good time to buy then. See my spreadsheet on Keyera Corp.

I do not own this stock of Keyera Corp. (TSX-KEY, OTC-KEYUF). I started to review some of the stock recommended by Jennifer Dowty from a column she wrote and I reviewed in February 2010 on Dividends and Special Dividends. The title of the article in Investor’s Digest was Dividend Stocks: Buy, Hold and Collect. Jennifer is now a Portfolio Manager for Manulife Asset Management Limited.

When I was updating my spreadsheet, I noticed is that the Liquidity Ratio took a dive in the third quarter to 0.97. This means that current assets cannot cover current liabilities. This is mostly due to a Trade and Other Payables increase. It often has low Liquidity Ratios and needs cash flow to cover current liabilities. It is not the only utility to depend on cash flow this way.

This used to be an income trust company. The yields were higher before it switched to a corporation in 2010. The yields are still quite high with the current dividend yield at 5.92%, the 5 year median at 3.96%, the yield since 2010 at 4.11% and the historical median at 4.75%.

Dividend growth is in the moderate range (8% to 14% ranges). The dividend growth over the past 5, 10 and 14 years is at 13.69%, 8.37% and 8.89% per year. The last dividend increase was lower in 2018 at 5.7%. This is a low growth rate.

As an income trust company, they could afford to payout more then EPS. However, that changed when they became a corporation. It was expected that income trusts would decrease dividend yields and start to cover dividends with the earnings. The Dividend Payout Ratio for 2017 was 107% with 5 year coverage at 111%. Analysts expect that in 2018 the EPS will cover dividends. The DPR for CFPS for 2017 was at 59% with 5 year coverage at 59%. It is expected to be around 56% in 2018. They need to get this lower at 40% or below.

The Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2017 is good at 0.25. The Liquidity Ratio can be low. It was good at 1.56 for 2017 with a 5 year median at 1.15. The Liquidity Ratio for 2017, if you add in cash flow after dividend is 1.85. The company, as most utilities do, often depend on cash flow to cover current liabilities.

The Debt Ratio at 1.73 for 2017 is good. The 5 year median is also good at 1.52. The Leverage and Debt/Equity Ratios for 2017 are 2.37 and 1.37 respectively with 5 year median at 2.81 and 1.81 respectively. This are rather normal for utilities.

The Total Return per year is shown below for years of 5 to 15. 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 charts below.

Shareholders have been earning a good return.

Years	Div. Gth	Tot Ret	Cap Gain	Div.
5	9.89%	12.37%	7.55%	4.82%
10	8.37%	20.54%	13.65%	6.89%
15	13.69%	21.67%	13.94%	7.73%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 26.36, 30.28 and 35.35. The Corresponding 10 year ratios are 22.41, 25.70 and 28.77. The historical ratios are 19.55, 22.98 and 26.42. The current P/E Ratio is 16.81 based on a stock price of $30.42 and 2018 EPS estimate of $1.81. This stock price testing suggests that the current stock price is relatively cheap.

I get a Graham Price of $22.47. The 10 year low, median, and high median Price/Graham Price Ratios are 1.77, 2.11 and 2.47. The current P/GP Ratio is 1.35 based on a stock price of $30.42. This stock price testing suggests that the current stock price is relatively cheap.

I get a 10 year median Price/Book Value per Share Ratio of 3.86. The current P/B Ratio is 2.45 based on Book Value of $2,588M, Book Value per Share of $12.40 and a stock price of $30.42. The current ratio is some 36% below the 10 year ratio. This stock price testing suggests that the current stock price is relatively cheap.

I get an historical median dividend yield of 4.75%. The current dividend yield is 5.92% based on dividends of $1.80 and a stock price of $30.42. The current dividend yield is some 25% higher than the historical one. This stock price testing suggests that the current stock price is relatively cheap.

The 10 year median Price/Sales (Revenue) Ratio is 1.27. The current P/S Ratio is 1.44 based on 2018 Revenue estimate of $4,421M, Revenue per Share of $21.18 and a stock price of $30.42. The current ratio is some 13% above the 10 year ratio. This stock price testing suggests that the current stock price is relatively reasonable but above the median.

It is interesting that the only test to start with a reasonable base, which is the P/S Ratio test, shows the stock to be above the median in price. The 10 year median P/S Ratio of 1.27 is reasonable. Most of the P/E Ratios are really high and certainly high for a Utility. I find the 10 year median P/B Ratio at 3.86 a really high ratio.

However, the current ratios are not that high. A current P/E Ratio of 16.81 is a bit high that is all. The P/GP Ratio of 1.35 is not bad. Also, the yield is quite high and so is pointing to a good current stock price. The stock price of this stock has been moving down since hitting a high of 2014. In 2017 both the Revenue and the earnings have moved up. They also moved up with the third quarterly report in 2018.

When I look at analysts’ recommendations, I find Strong Buy (1), Buy (10), and Hold (3). The consensus would be a Buy. The 12 month stock price consensus is $39.91. This implies a total return of $37.11% with 31.205 from capital gains and 5.92% from dividends.

The company talks about third quarter results on Newswire. Peter Morris on Simply Wall Street talks about this company’s P/E Ratio. Cole Patterson on Simply Wall Street talks about this stock dividend and high relative EPS payment, but misses history of the company being a income trust prior. Lakeland Staff Writer on Lakeland Observer say the company has a Value Composite score of 42 meaning it might be slightly undervalued. Andrew Walker on Motley Fool thinks this is a good high yield stock for your TFSA. See what analysts are saying on Stock Chase. Mostly think it is a long term hold.

Keyera Corp is a midstream energy company. It is engaged in gathering, processing, and fractionation of natural gas in western Canada; storage and transportation of crude oil and natural gas byproducts; and marketing of natural gas liquids. Its web site is here Keyera Corp .

The last stock I wrote about was about was Dollarama Inc. (TSX-DOL, OTC-DLMAF) ... learn more. The next stock I will write about will be Cenovus Energy Inc. (TSX-CVE, NYSE-CVE) ... learn more on Monday, November 12, 2018 around 5 pm.

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. 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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Dollarama Inc

Sound bite for Twitter and StockTwits is: Dividend Growth Consumer. Not really a dividend paying stock as dividends are very low. The debt ratios are awful, the Book Value is negative and they are going into debt to buy back shares. No one else seems worried about this. I would not buy this stock under these conditions. The price seems on the high side. See my spreadsheet on Dollarama Inc.

I do not own this stock of Dollarama Inc. (TSX-DOL, OTC-DLMAF). I belong to an investment club and this was a stock I volunteered to look at. I had, of course, heard of this stock before and people have mentioned that it is doing very well for shareholders.

When I was updating my spreadsheet, I noticed that they are still going into debt to buy back shares. The Book Value is negative because the assets cannot cover the liabilities. This makes the stock vulnerable and a big risk in any economic turndown. There is also a lot of insider selling of some 0.12% where you would expect 0.01% to 0.02%. However, selling is not by CEO or CFO. The CEO has bought more shares and the CFO who previously did not have any shares have bought some.

The dividend yield is very low. I would not consider this a dividend paying stock as yield is below 1%. The current yield is 0.41%, the 5 year median is 0.46% and the 6 year median is 0.53%. They have been paying dividends since 2012. The dividend increases are moderate to good. The 5 and 6 year dividends growth is 10% and 16% per year.

They can afford their dividends. The Dividend Payout Ratio for 2017 is 9.45% with 5 year coverage at 11.48%. The DPR for CFPS is 7.69% with 5 year coverage at 9.15%. So, they have no trouble paying dividends.

Debt Ratios are not all bad. The Long Term Debt/Market Cap Ratio is low at 0.07. That is were the good news stops for debt ratios. The Liquidity Ratio for 2017 is 0.79. This means that current assets cannot cover current liabilities. If you add in cash flow after dividends the ratio is 1.61. This is not bad, but since it is a retail stock, cash flows can be volatile.

The Debt Ratio is 0.88. This mans that the assets cannot cover the liabilities and so we have a negative book value. The Leverage and Debt/Equity Ratios cannot be calculated because of the negative Book Value. Last year they were very high at 18.58 and 17.58.

The Total Return per year is shown below for years of 5 to 9. 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 charts below.

So far, shareholders have done very well on this stock.

Years	Div. Gth	Tot Ret	Cap Gain	Div.
5	10.18%	40.35%	39.72%	0.63%
6-9	15.63%	37.12%	36.62%	0.50%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 19.13, 23.63 and 28.13. The corresponding 8 year ratios are 16.79, 21.37 and 25.94. The current P/E Ratio is 21.63 based on a current stock price of $37.85 and 2018 EPS estimate of $1.75. This stock price testing suggests that the current stock price is reasonable.

I cannot calculate the Graham Price for this stock as the book value is negative. So basically, it has no Graham Price or it is zero for all practical purposes.

I get a 10 year median Price/Book Value per Share Ratio of 3.66. I cannot get a current one because the book value is negative.

I get an historical median dividend yield of 0.53% (6 year). The current yield is 0.41% a value some 22% lower. The current yield is based on Dividends of $0.16 and a stock price of $37.85. This stock price testing suggests that the stock price is relatively expensive.

The 8 year median Price/Sales (Revenue) Ratio is 2.49. The current P/S Ratio is 3.48 based on 2018 Revenue Estimate of $3,551M, Revenue per Share of $10.87 and a stock price of $37.85. The current ratio is some 40% above the 8 year ratio. This stock price testing suggests that the stock price is relatively expensive.

For P/GP and P/BV Ratios I can do no testing due to lack of a positive book value. The P/E and P/S Ratio tests are based on estimates and one shows a reasonable price and the other shows an expensive price. The Dividend Yield, which is not based on estimates, but currently available data, shows price as expensive.

When I look at analysts’ recommendations, I find Strong Buy (1), Buy (7) and Hold (7). The consensus would be a Buy. The 12 month stock price is $42.21. This implies a total return of $11.93% with 11.52% from capital gains and 0.41% from dividends and based on a stock price of $37.85.

Svea Herbst-Bayliss on Financial Post talks about a short seller who thinks stock will fall 40%. David Jagielski on Motley Fool thinks the company is a long term buy at a current bargain price. Gary James on Marea Informative about some insider buying. Mary Kom on Fairfield Current talks about an insider selling. See what analysts are saying about this stock on Stock Chase. They seem neutral to negative.

Dollarama Inc operates dollar stores in Canada that sell all items for $4 or less. The Company maintains retail operations in every Canadian province. Its web site is here Dollarama Inc.

The last stock I wrote about was about was Encana Corp. (TSX-ECA, NYSE-ECA) ... learn more. The next stock I will write about will be Keyera Corp. (TSX-KEY, OTC-KEYUF) ... learn more on Friday, November 9, 2018 around 5 pm. Tomorrow on my other blog I will write about Something to Buy November 2018.... learn more on Thursday, November 8, 2018 around 5 pm.

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. 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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Encana Corp

Sound bite for Twitter and StockTwits is: Dividend Paying Energy stock. My stock price testing suggests that the stock is cheap to reasonable. The worsening debt ratios for the second quarter suggests risk. I never buy Energy stocks for the long term, but only for a short term. See my spreadsheet on Encana Corp.

I do not own this stock of Encana Corp. (TSX-ECA, NYSE-ECA) but I used to. I had held this stock previously as Alberta Energy Company from April 2000 until August 2002 and made some 18% total returns per year. I had EnCana Corp from February 2006 to November 2009 and made a 9.54% per year total return. I sold this stock in 2009 because I only had 100 shares and the stock was going to split into two companies. I would have ended up with small investment in two companies.

When I was updating my spreadsheet, I noticed a lot of red ink. They have not been doing well lately. Also, I noticed that all debt ratios seemed to get worse in the second quarter compared to the year end. The Long Term Debt/Market Cap Ratio went higher from 0.32 to 0.45, the Liquidity Ratio down from 1.37 to 0.70, the Debt Ratio went down from 1.79 to 1.75 and the Leverage and Debt/Equity Ratios went up from 2.27 to 2.33 and 1.27 to 1.33, respectively.

Dividends are paid in US$. Over the years the dividends have gone up and down, but they have paid dividends. Since 2009 dividends have either been flat or decreased each year. Over the past 5 year dividends are down by 40% per year. So, I would not buy this for its dividends.

The current dividend yield is only 0.70%. I do not buy dividend paying companies when dividend yield is lower than 1%. The dividend yields in CDN$ terms have been as high as 4.52% and as low as 0.49%. The median historical dividend yield is 1.45%.

They have had problems covering the dividend with earnings since 2011. In 2017 because of good EPS, the dividend was finally covered and a DPR of 7.06%. However, the Dividend Payout Ratio for CFPS has been fine and low. The DPR for CFPS for 2017 is 4% with 5 year coverage at 12%. So, I am not worried about them covering their dividends.

Long Term Debt/Market Cap Ratio is fine with a current value of 0.45. You should worry when this gets close to or over 1.00. The current Liquidity Ratio is 0.70. This means that the current assets cannot cover the current liabilities. If you add in cash flow after dividends you get a ratio of 1.46. I would like to see this at 1.50 or better, but 1.46 is low but acceptable.

The current debt ratio at 1.75 is good as it is best at 1.50 or better and it is higher than 1.50. The current Leverage and Debt/Equity Ratios are 2.33 and 1.33. These are a little high but acceptable. However, you have to wonder when debt ratios, especially the Liquidity Ratios deteriorates so much from the annual statement. Last year between the annual statement and the second quarter, the debt ratios improved.

The Total Return per year is shown below for years of 5 to 25 for Canadian Shareholders. 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 charts below.

Below is Dividend Growth and Total Return for Canadian Shareholders. Long term shareholders have made some money. I have this stock coming from Alberta Energy Company which I had held.

Years	Div. Gth	Tot Ret	Cap Gain	Div.
5	-37.63%	-1.44%	-3.13%	1.69%
10	-15.54%	-4.86%	-7.04%	2.18%
15	-5.01%	5.15%	1.96%	3.19%
20	0.36%	10.05%	6.39%	3.66%
25	0.83%	10.85%	7.35%	3.50%

The Total Return per year is show below for years of 5 to 16 for US Shareholders. Below is Dividend Growth and Total Return for US Shareholders in EnCana. US shareholders have not done well over any period.

Years	Div. Gth	Tot Ret	Cap Gain	Div.
5	-40.43%	-6.07%	-7.57%	1.50%
10	-17.53%	-7.07%	-9.21%	2.14%
15	-3.54%	1.76%	-1.11%	2.88%
20-16	1.01%	2.40%	0.40%	2.00%
25	2.11%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 2.55, 3.78 and 5.02. The corresponding 10 year ratios are 6.68, 9.05 and 11.43. The historical median ratios are 10.11, 12.42 and 15.47. These are all in CDN$ terms. The current P/E Ratio is 21.41 based on a stock price of $11.21 CDN$ and EPS estimate for 2018 of $0.52 CDN$ ($0.40 US). The current P/E Ratio is quite high by any standard. This stock price testing suggests the stock price is relatively expensive.

The 5 and also probably the 10 year median P/E Ratios are low because of recent earning losses. The Trailing P/E Ratio is 10.51 (based on 2017 EPS of $1.07 CDN$) and with the one for 2019 at 7.93 (based on 2019 EPS of $1.41 CDN$). These are better P/E Ratios. The P/E Ratio is often not a good indicator of stock price.

I get a Graham Price of $10.23 CDN$. The 10 year low, median, and high median Price/Graham Price Ratios are 0.68, 0.99 and 1.34. The current P/GP Ratio is 1.10 based on the stock price of $11.21 CDN$. This stock price testing suggests that the stock price is reasonable but above the median.

I get a 10 year median Price/Book Value per Share Ratio of 1.35 CDN$. The current P/B Ratio is 1.26 based on a stock price of $11.21 CDN$, Book Value of $8,503M CDN$ and Book Value per Share of $8.89. The current P/B Ratio is 7% below the 10 year median ratio. This stock price testing suggests that the stock price is reasonable and below the median.

I get an historical median dividend yield of 1.45%. The current yield is 0.70% based on dividends of $0.08 CDN$ ($0.07 US$0) and a stock price of $11.21 CDN$ ($8.53 US$). The current dividend yield is 52% below the historical yield. This stock price testing suggests that the stock price is relatively expensive.

The 10 year median Price/Sales (Revenue) Ratio is 2.33 US$. The current P/S Ratio is 1.62 US$ based on 2018 Revenue estimate of $5039M US$, Revenue per Share of $5.27 US$ and a stock price of $8.53 US$. The current ratio is some 31% below the 10 year median. This stock price testing suggests that the stock price is relatively cheap.

The P/E Ratio test is not always a good one for various reasons. The Graham Price is a formula that takes into consideration both the EPS and Book Value. It is generally not a bad test. A Price/Graham Price Ratio of 1.10 is not a bad ratio in absolute terms. The problem with the dividend yield for this stock is that the company has been cutting dividends. So, it is not surprising to find a relatively low yield.

The P/B Ratio is often a very good test. There is nothing about this ratio for this stock to suggest any problems. The P/S Ratio is also often a very good test. Here again, I can find nothing negative to say about revenues (sales) for this stock. Both these tests suggest that the stock price is relatively good, one says below the median and the other says cheap. The P/B Ratio test might be the best as it does not use estimates.

When I look at analysts’ recommendations, I find Strong Buy (3), Buy (8), Hold (4) and Underperform (1). The consensus would be a Buy. The 12 month stock price consensus is $14.86. this implies a total return of $33.265 with 32.56% from capital gains and 0.70% from dividends.

The Canadian Press via CBC talks about this company acquiring Newfield Exploration Co. There are lots of articles on this. Javier Blas on Bloomberg says that investors are not pleased with the company acquiring Newfield Exploration Co . Matt Smith on Motley Fool thinks this stock is now attractively priced. Chris Varcoe on the Calgary Herald talks about how to solve the big discount for Canadian Oil. See what analysts are saying about this stock on Stock Chase.

Encana Corp is an independent oil and gas producer in North America. It is engaged in developing diverse resource plays producing natural gas, oil, and Natural Gas Liquids (NGL). The company is also engaged in marketing of natural gas, oil and NGLs. Its web site is here Encana Corp .

The last stock I wrote about was about was CCL Industries Inc. (TSX-CCL.B, OTC-CCDBF) ... learn more. The next stock I will write about will be Dollarama Inc. (TSX-DOL, OTC-DLMAF) ... learn more on Wednesday, November 7, 2018 around 5 pm. Tomorrow on my other blog I will write about Dividend Stocks November 2018.... learn more on Tuesday, November 6, 2018 around 5 pm.

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. 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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

CCL Industries Inc

Sound bite for Twitter and StockTwits is: Dividend Growth Material. On a number of different measures, this stock seems expensive. Our market is relatively high, so it is not surprising that I find a stock expensive. Also, I would not be buying a dividend stock with a yield less than 1%. See my spreadsheet on CCL Industries Inc.

I do not own this stock of CCL Industries Inc. (TSX-CCL.B, OTC-CCDBF). In 2009 I read a favorable report on this stock of which I had also heard before. This is also a dividend paying stock and in 2009 it was on Dividend Achievers list.

When I was updating my spreadsheet, I noticed there seems to be a lot of insider selling. However, insider selling is due to officers and directors selling their stock options. The CEO, CFO and Chairman are not selling the stock they already own. The spreadsheet is filled with green ink. They also seem to be raising money via debt. Cash is up 47% in the second quarter compared to the last annual statement.

However, the Debt and Intangible and Goodwill are still increasing at a high clip. Long term debt is up by 31.54% in 2017 after increasing by 90.49% last year. Intangibles and Goodwill are up by 58.40% in 2017 after increasing by 44.73% in 2016. They are making business acquisitions.

Dividends have been low (0% to1% range) recently but they were higher in the past. The current dividend is just 0.91%, with 5, 10 and historical yields at 0.89%, 1.60% and 2.10%. I prefer yields at are at least 1%. This is because, even with great growth, if yield is really low it takes a very long time to get to a decent yield.

Dividend growth has been increasing. See the chart below. The 10 year growth is 17% but the 5 year growth is 24%. However, the most recent increase was this year and it was for 13%. Last year was 15%. The last 5 years growth is high because of high increases for 2014 to 2016 inclusive.

They can afford their dividends. The 2017 Dividend Payout Ratio is 17.3% with 5 year coverage of 19.1%. The DPR for CFPS for 2017 is 8.5% with 5 year coverage at 8.8%.

Long Term Debt/Market Cap Ratio is low at 0.20. The Liquidity Ratio for 2017 is 1.42 with 5 year median at 1.41. If you add in cash flow after dividends, the ratios are 1.91 with 5 year median at 1.97. The Debt Ratio is 1.54 with 5 year median at 1.74. I like these last two ratios to be 1.50 or higher.

The Leverage and Debt/Equity Ratios for 2017 are 2.85 and 1.85 with 5 year median ratios at 2.20 and 1.20. I would prefer ratios that are lower, however, these ratios are not unusual.

The Total Return per year is shown below for years of 5 to 30. 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 charts below.

As you can see from the chart below, shareholders have done very well with this stock.

Years	Div. Gth	Tot Ret	Cap Gain	Div.
5	24.14%	48.14%	46.53%	1.61%
10	16.96%	23.88%	22.82%	1.06%
15	13.59%	20.86%	19.74%	1.12%
20	11.10%	16.30%	15.33%	0.97%
25	8.79%	15.73%	14.54%	1.19%
30	8.10%	14.34%	13.02%	1.32%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 14.59, 21.84 and 27.26. The corresponding 10 year ratios are 14.31, 19.44 and 23.05. The corresponding historical ratios are 11.65, 14.31 and 18.79. The current P/E Ratio is 19.90 based on a stock price of $27.12 and EPS estimate for 2018 of $2.87. This stock price testing suggests that the stock price is reasonable and around the median.

I get a Graham Price of $29.64. The 10 year low, median, and high median Price/Graham Price Ratios are 0.93, 1.27 and 1.54. The current P/GP Ratio is 1.93 based on a stock price of $57.12. This stock price testing suggests that the stock price is expensive.

I get a 10 year median Price/Book Value per Share Ratio of 1.81. The current P/B Ratio is 4.20 based on Book Value of $2,408M, Book Value per Share of $13.60 and a stock price of $57.12. The current ratio is some 131% higher than the 10 year ratio. This stock price testing suggests that the stock price is expensive.

I get an historical median dividend yield of 2.10%. The current yield is 0.91% based on a dividend of $0.52 and a stock price of $57.12. The current yield is some 57% below the historical ratio. This stock price testing suggests that the stock price is expensive.

The 10 year median dividend yield is 1.60%. The current yield is 43% higher. It is only looking at the 5 year median yield that the current yield looks fine. The 5 year median dividend yield is 0.89% and the current one is 2% higher.

The 10 year median Price/Sales (Revenue) Ratio is 1.08. The current P/S Ratio is 1.96 based on 2018 Revenue of $5,154M, Revenue per Share of $26.89 and a stock price of $57.12. The current ratio is some 82% above the 10 year ratio. This stock price testing suggests that the stock price is expensive.

The reason that this stock is expensive for the P/GP Ratio and P/B Ratio testing is that the stock price has been climbing much faster than the Book Value. The P/B Ratio is quite high at 4.20. Liabilities are increasing at a faster rate than assets.

On a number of different measures, this stock seems expensive. The market tends to over or underprice stocks. Stock can stay over or underpriced for a long time. Our market is relatively high, so it is not surprising that I find a stock expensive.

When I look at analysts’ recommendations I find Buy (8) and Hold (2). The consensus would be a Buy. The 12 month stock price consensus is $72.61. This implies a total return of 28.03% with 27.12% from capital gains and 0.91% from dividends based on a stock price of $57.12

James Harlett on Simply Wall Street says this stock is undervalued by 21%. Alexis Guardo on Simply Wall Street says that the CEO of CCL is paid $7M CDN$ compared to similar companies with average of $4M CDN$. However, he thinks that shareholders might think the CEO is worth his pay. Caroline Biscotti on Wheaton Business Journal says that the company has a Piotroski F-Score of 6, where 1 is a low valued company and 9 is a high valued company. Stephanie Bedard-Chateauneuf on Motley Fool thinks this is a great company to buy and hold. See what analysts are saying about this stock on Stock Chase. Analysts like it but some complain it has gone sideways for the last 2 years and that you should buy at $50 and sell at $70.

CCL Industries Inc manufactures and sells packaging and packaging-related products. It produces labels used for packaging of various consumer products, extruded aerosol containers as well as provides inventory management and labelling solutions. Its web site is here CCL Industries Inc.

The last stock I wrote about was about was Brookfield Asset Management Inc. (TSX-BAM.A, NYSE-BAM) ... learn more. The next stock I will write about will be Encana Corp. (TSX-ECA, NYSE-ECA) ... learn more on Monday, November 5, 2018 around 5 pm.

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. 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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Brookfield Asset Management Inc

Sound bite for Twitter and StockTwits is: Dividend Growth Financial. On a lot of tests this is showing as being expensive. Sales have been increasing faster than EPS, in fact EPS has been going down until this year. This is the problem with this stock at present and can be considered to be a negative. However, this might also suggest that the stock price is more reasonable than it first seems. See my spreadsheet on Brookfield Asset Management Inc.

I do not own this stock of Brookfield Asset Management Inc. (TSX-BAM.A, NYSE-BAM). I used to own an earlier version of this stock as Hees International, then Edper Group and then EdperBrascan back in 1987 to 1999.

When I was updating my spreadsheet, I noticed Revenues increased by some 67%. They seem to have bought a number of companies this past year. Revenue is going up with earnings going dowe over past 3 years. However, analysts do expect that earnings will start to increase in this year. The second quarterly report says the same thing.

As you can see from the charts below, mostly the dividends have grown better in CDN$ terms, but not always. For the last 15 years dividend growth has been moderate (8% to14% range) with the US$ growth lower than the CDN$ growth over the past 10 years.

Dividend yields range from low (0% to 1% range) to moderate (2% to 3% range). The current dividend yield CDN$ is $1.46% with 5, 10 and historical median yields at 1.49%, 1.67% and 2.43%. Yield were quite high (median around 8.63%) prior to 2000. They have been travelling south ever since.

They can afford their dividends. The Dividend Payout Ratio for EPS in US$ is 42% in 2017 with 5 year coverage at 37%. The DPR for CFPS for 2017 is 9% with 5 year coverage at 20%.

Because this is a Real Estate company, the Long Term Debt/Market Cap Ratio does not really apply. What you want to ensure is that their mortgage debt is covered by cash and investments. I get a Mortgage/Cash & Investment Ratio of 0.74 for 2017 and a current one of 0.79. So, this is fine as you need this to be below 1.00.

The Liquidity Ratio is not considered important, but I do calculate it to be 1.57, which is a good ratio. I get a Debt Ratio of 1.71 which is a good one. The Leverage and Debt/Equity Ratios are 2.41 and 1.41 for 2017. These are rather normal for this sort of company.

The Total Return per year is shown below for years of 5 to 30. 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 charts below.

This first chart is the return for the Canadian Shares in CDN$. Shareholders in Canada have done well.

Years	Div. Gth	Tot Ret	Cap Gain	Div.
5	14.36%	20.74%	17.63%	3.10%
10	8.73%	10.99%	8.84%	2.15%
15	8.76%	18.59%	15.54%	3.05%
20	4.61%	15.50%	12.56%	2.94%
25	3.67%	23.07%	15.23%	7.84%
30	4.21%	12.75%	9.30%	3.45%

This second chart is the US shares in US$ and as you can see, US shareholders have also done well.

Years	Div. Gth	Tot Ret	Cap Gain	Div.
5	8.84%	15.05%	12.25%	2.80%
10	5.98%	8.28%	6.24%	2.04%
15	10.32%	20.98%	17.16%	3.82%
20	5.19%	16.38%	13.26%	3.12%
25	3.65%	22.46%	15.29%	7.17%
30	4.27%	12.99%	9.42%	3.57%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 12.61, 14.02 and 15.44. The corresponding 10 year P/E Ratios are 12.69, 15.24 and 16.98. The corresponding historical P/E Ratios are 11.47, 13.67 and 15.44. These are for CDN$. The current P/E Ratio is 27.34 based on a stock price of $53.86 CDN$ and 2018 EPS estimates of $1.97 CDN$ ($1.50 US$). The stock price testing suggests that the stock price is relatively expensive.

I get a Graham Price of $38.50 CDN$. The 10 year low, median, and high median Price/Graham Price Ratios are 0.81, 0.92 and 1.02. The current P/GP Ratio is 1.40. The stock price testing suggests that the stock price is relatively expensive.

I get a 10 year median Price/Book Value per Share Ratio of 1.34 CND$. The current P/B Ratio is 1.61 CDN$ based on $32,020M, Book Value per Share of $33.44 and a stock price of $53.86 CDN$. The current P/B Ratio is some 21% above the 10 year median ratio. The stock price testing suggests that the stock price is relatively expensive.

I get an historical median dividend yield of 2.43%. The current yield is 1.46% CDN$ based on dividends of $0.79 CDN$ and a stock price of $53.86 CDN$. The current dividend is some 40% below the historical median dividend. The stock price testing suggests that the stock price is relatively expensive.

The 10 year median dividend yield and the current yield is some 12% below this. The 5 year median is 1.49% and this current one is some 2.05% below this level. No matter how you look at this, the current stock price is high.

The 10 year median Price/Sales (Revenue) Ratio is 1.13 US$. The current P/S Ratio is 1.15 US$ based on 2018 Revenue estimate of $34,197M, Revenue per share of $35.72 and a stock price of $40.90, all in US$. The current P/S Ratio is some 1.2% above the 10 year ratio. The stock price testing suggests that the stock price is relatively reasonable but above the median.

The stock price testing results, whether in US$ or CDN$ will have basically the same results. On all tests but the P/S Ratio test this stock is showing as expensive. Even on the P/S Ratio it is showing as higher than the median. All the other ratios but the P/S Ratio is driven by earnings. The dividend yield is also about earnings as you want the dividends to increase with earnings.

When I look at analysts’ recommendations I find Buy (3) recommendations and that is all for this stock. I would have expected it to be better followed. The stock price consensus in US$ is $45.82. This implies a total return of 13.50% with 15.03% from capital gains and 1.47% from dividends based on a current US$ price of $40.90.

Josh Rudnik on Seeking Alpha does an analysis of this company. Kay Ng on Motley Fool likes this stock because of the increasing management fees. Reuben Gregg Brewer on Motley Fool explains the company’s structure. See what analysts are saying about this stock on Stock Chase. Mostly they like this company.

Brookfield Asset Management Inc is an alternative asset management company focused on property, renewable energy, infrastructure, and private equity. Its web site is here Brookfield Asset Management Inc.

The last stock I wrote about was about was Molson Coors Canada (TSX-TPX.B, NYSE-TAP) ... learn more. The next stock I will write about will be CCL Industries Inc. (TSX-CCL.B, OTC-CCDBF) ... learn more on Friday, November 2, 2018 around 5 pm. Tomorrow on my other blog I will write about Money Show 2018 – Keith Richards.... learn more on Thursday, November 1, 2018 around 5 pm.

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. 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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Molson Coors Canada

Sound bite for Twitter and StockTwits is: Dividend Growth Consumer. It seems rather cheap, but brewing is a mature business. Liquidity Ratio is low and this will make the company vulnerable in hard times. See my spreadsheet on Molson Coors Canada.

I do not own this stock of Molson Coors Canada (TSX-TPX.B, NYSE-TAP). In 2008 I did a spreadsheet on this stock as it has recently been recommended and generally, beer companies make good money. Labatt’s was one of the original companies that I purchased and I did very well with it before it was bought out.

When I was updating my spreadsheet, I noticed I could not find out who is the current chairman. They say that Geoffrey E. Molson stopped being Chairman in May 2017 and that is all I can find. He is listed as Chairman still in 2017 annual report. This stock also reports in US$ and dividends are paid in US$.

For the Canadian Holders of Molson Coors Canada Inc (TSX-TPX.B), Dividend yields are moderate (2% and 3% ranges). The current yield is 2.74%, with 5, 10 and historical median yields are 2.09%, 2.20% and 2.11%.

For Canadians dividends growth is moderate (8% to 14% ranges) recently but this has to do with the exchange rates. In US$ the dividend growth has stalled and it is currently low. The company stopped raising dividends in 2015. However, analysts think that there might be some increase late this year or in 2019. See charts below for the dividend growth for TSX-TPX.B and NYSE-TAP

They can clearly afford their dividends as the Dividend Payout Ratio for 2017 is 25% with 5 year coverage at 31%. The DPR for Cash Flow for 2017 is 19% with 5 year coverage at 25%. The DPR for Cash Flow excluding WC for 2017 is 17% with 5 year coverage at 22%. This is in US$.

The Long Term Debt/Market Cap Ratio for 2017 is 0.57 and the currently one is 0.74. These are fine. The Liquidity Ratio is low at just 0.64. This means that the current assets cannot cover current liabilities. If we added in cash flow after dividends it is 1.08. If we also add in the current portion of long term debt it is only 1.37. This is still lower as I would prefer the Liquidity Ratio be 1.50 or higher. Low Liquidity Ratios makes a company vulnerable in bad times.

The Debt Ratio is good at 1.80. I prefer this ratio to be 1.50 or higher also. Leverage and Debt/Equity Ratios for 2017 are 2.29 and 1.27 respectively, with 5 year median ratios at 1.76 and 0.76. These ratios have been higher the last two years, but they are fairly typical for this sort of company.

The Total Return per year is shown below for years of 5 to 21 for CDN$ stock TSX-TPX.B. 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 charts below.

Shareholders have done well with this stock over the years.

Years	Div. Gth	Tot Ret	Cap Gain	Div.
5	9.99%	22.92%	19.77%	3.15%
10	12.52%	9.51%	7.47%	2.05%
15	9.49%	7.65%	5.26%	2.39%
20	7.33%	13.23%	9.88%	3.35%
21	6.97%	12.15%	9.09%	3.06%

This next chart is for US$ stock of NYSE-TAP for the years of 5 to 23. I have more data on the dividends than on the stock price. The US shareholders have also done well over the years.

Years	Div. Gth	Tot Ret	Cap Gain	Div.
5	5.08%	16.69%	13.91%	2.78%
10	9.87%	8.37%	6.23%	2.14%
15	9.68%	8.76%	6.79%	1.96%
20	9.34%	10.31%	8.24%	2.07%
25-23	7.81%	13.03%	10.43%	2.61%
27	7.22%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 12.49, 15.40 and 18.21 in CDN$. The corresponding 10 year median ratios are 12.30, 14.76 and 17.22. The corresponding historical median ratios 12.30, 15.25 and 18.21. The current P/E Ratio is 12.57 CND$ based on the stock price of $78.40 CDN$ and 2018 EPS of $6.24 CDN$. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a Graham Price of $103.30 CDN$. The 10 year low, median, and high median Price/Graham Price Ratios are 0.82, 0.92 and 1.04. The current P/GP Ratio is 0.74 CDN$ based on a stock price of $78.40 CDN$. This stock price testing suggests that the stock price is relatively cheap.

I get a 10 year median Price/Book Value per Share Ratio of 1.23 CDN$. The current P/B Ratio is 0.99 based on Book Value of $17,796M CDN$, Book Value per Share of $78.99 CDN$ and a stock price of $78.40 CDN$. The current P/B Ratio is 19% below the 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get an historical median dividend yield of 2.11% CDN$. The current dividend yield is 2.74% CDN$ based on a stock price of $78.40 CDN$, dividends of $2.15 CDN$. The current dividend yield is some 30% higher than the historical yield. This stock price testing suggests that the stock price is relatively cheap.

The 10 year median Price/Sales (Revenue) Ratio is 2.52 CDN$. The current P/S Ratio is 1.20 CDN$ based on a stock price of $78.40 CDN$, Revenue estimate for 2018 of $14,758M and Revenue per Share of $65.51. The current P/S Ratio is some 53% below 10 year ratio. This stock price testing suggests that the stock price is relatively cheap.

I did all my stock testing using CDN$. Using US$ you would get similar results. However, if you take the NYSE-TAP stock price using the exchange rate there is often a discrepancy between the NYSE-TAP stock price and the TSX-TPX.B stock price. For example, the current NYSE-TAP price is $56.68 US$ but the TSX=TPX-B stock price is $78.40 CDN$. The current exchange rate is 1.3108 and using this exchange rate times the $56.68 US$ is only $74.30 CDN$.

It would appear from my stock price testing that the stock price is cheap to reasonable and below the median.

When I look at analysts’ recommendations for NYSE-TAP I find Strong Buy (3), Buy (4), Hold (8) and Sell (1). The consensus is a buy. The 12 month US$ stock price is $73.36. This implies a total return of $32%, with 29.43% from capital gains and 2.89% from dividends.

Olly Wehring on Just Drinks talks about Molson Coors doing a cannabis joint venture. Beth Newhart on Beverage Daily talks about the company constructing a modern brewing site in Canada. Jason Phillips on Motley Fool thinks these shares are underpriced. See what analysts think about this stock on Stock Chase. there is only one entry for TPX.B and the analysts is wondering why the stock are 40% off since last year. There are more analysts entry for NYSE-TAP on Stock Chase. Analysts seem to feel that Brewing are struggling with declining consumption in a mature industry.

Molson Coors Canada Inc is a brewer that produces and sells beer and other malt beverages. The company offers its products across the world under various brands which include Coors Light, Staropramen, Carling, Miller Lite, Keystone, and Creemore Springs. Its web site is here Molson Coors Canada.

The last stock I wrote about was about was Pason Systems Inc. (TSX-PSI, OTC-PSYTF) ... learn more. The next stock I will write about will be Brookfield Asset Management Inc. (TSX-BAM.A, NYSE-BAM) ... learn more on Wednesday, October 31, 2018 around 5 pm. Tomorrow on my other blog I will write about Money Show 2018 – Paul Philip.... learn more on Tuesday, October 30, 2018 around 5 pm.

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. 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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

Pason Systems Inc

Sound bite for Twitter and StockTwits is: Dividend Growth Industrial. I think that the stock price is relatively cheap. It has good debt ratios. The CEO and CFO are not among those insiders selling. See my spreadsheet on Pason Systems Inc.

I do not own this stock of Pason Systems Inc. (TSX-PSI, OTC-PSYTF). I read a report on this stock in the Buy and Sell Advisor in September 2013. I had not heard of this dividend growth company before so I decided to investigate it.

When I was updating my spreadsheet, I noticed there is still a lot of red ink, but things are improving. This company has very good debt ratios. There is no long term debt and the Liquidity Ratio is 5.68 where a good ratio is 1.50 or above. On the other hand, there is a relatively large amount of insider selling, but the CEO and CFO are not selling and there only a small amount of insider selling by the Chairman.

The dividend yields are in the moderate range (2 and 3% ranges). The current dividend is 3.66%, with 5, 10 and historical median dividend yields at 3.42%, 2.63% and 2.29%. The dividend growth is moderate (8% to 14% range) to good (over 15%) over the past 13 years for which dividends have been paid. However, growth has been low recently. There were no increases in 2016 and 2017. The last increase was in 2018 and it was for 5.9%. Dividends have been paid over the past 13 years.

The short answer is currently they cannot afford their dividends. I understand why they continue as companies that cut dividends are treated harshly by dividend investors. The last time they could afford dividends was in 2014. They are not expected to be able to afford dividends again until 2019. The Dividend Payout Ratio for 2017 was 226% with 5 year coverage of 256%. The DPR for 2018 is expected to be 116% and for 2019, it is expected to be 94%.

The DPR for CFPS is higher than what I would like with 2017 payout ratio at 66% with 5 year coverage at 49%. This is also expected to get lower next year. I prefer the DPR for CFPS to be 40% or less but they are covering the dividends. It has been a long slow recovery from the 2008 recession and this recover has been hard on a lot of companies.

They have very good debt ratios. This is important for companies as it means that they can survive in hard times. They have no long term debt so the Long Term Debt/Market Cap Ratio is 0.00. The Liquidity Ratio 5.68. The Debt Ratio is 7.82. These are great ratios because good ratios start at 1.50 or above.

The Leverage and Debt/Equity Ratios are also very good at 1.15 and 0.15 respectively, with 5 year median ratios at 1.21 and 0.21.

The Total Return per year is shown below for years of 5 to 21. 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 charts below.

They have had problems lately and total return is low for the past 5 years.

Years	Div. Gth	Tot Ret	Cap Gain	Div.
5	10.12%	4.91%	1.18%	3.73%
10	15.57%	6.87%	3.83%	3.04%
13-15	20.53%	16.43%	12.79%	3.64%
20		15.59%	12.96%	2.63%
21		21.66%	18.28%	3.37%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 15.86, 21.00 and 26.15. The corresponding 10 year ratios are 14.60, 19.90 and 25.21. The historical ratios are 13.24, 19.22 and 23.95. The current P/E Ratio is 32.80 based on a stock price of $19.68 and 2018 EPS estimate of $0.60. This stock price testing suggests that the stock price is relatively expensive.

I get a Graham Price of $7.54. The 10 year low, median, and high median Price/Graham Price Ratios are 1.75, 2.15 and 2.61. The current P/GP Ratio is 2.61 based on a stock price of $19.68. This stock price testing suggests that the stock price is relatively reasonable but above the median and almost expensive.

I get a 10 year median Price/Book Value per Share Ratio of 3.40. The current P/B Ratio is 4.68 based on Book Value of $359M, Book Value per Share of $4.21 and a stock price of $19.68. The current P/B Ratio is some 38% above the 10 year median. This stock price testing suggests that the stock price is relatively expensive.

I get an historical median dividend yield of 2.29%. The current dividend yield is 3.66% based on a stock price of $19.68 and dividends of $0.70. The current yield is some 60% above the historical yield. This stock price testing suggests that the stock price is relatively cheap.

The 10 year median Price/Sales (Revenue) Ratio is 4.41. The current P/S Ratio is 5.66 based on Revenue, of $297M, Revenue per Share of $3.48 and a stock price of $19.68. The current ratio is some 28% above the 10 year ratio. This stock price testing suggests that the stock price is relatively expensive.

This is a hard stock to valuate the stock price. Ratios are high because this stock has experienced problems and it is associated with the oil and gas industry in Canada. For a company for which the earnings drop you are going to see high ratios. That is because the price does not drop as much as the earnings. Investor realize (or are not stupid enough) to go too low on the price because that would not reflect the real value of a company that has temporary problems.

Things are improving both Revenue wise and earnings wise for this company. The price of the shares is some 35% below the last high. The debt ratios are very good. The dividend yield test is showing this stock as relatively cheap. I think that this stock is at a very good current price. The recent dividend increase shows that management is expecting to earn more in the future.

When I look at analysts’ recommendations I find Buy (2) and Hold (4). The consensus would be a Hold. The 12 month stock price is $22.67. This implies a total return of $18.35 with 15.19% from capital gains and $3.66% from dividends.

Brandy Kinsey on Simply Wall Street says that the P/E Ratio on this stock is very high because investors are overvaluing the company’s earnings. However, what investors are doing are recognizing that earnings have been low and they are not stupid enough to lower the price too much for a temporary period of low earnings. Lisa Matthews on Fairfield Current talks about some recent analysts remarks. Simon Ball on Bay City Observer says that the company has a Book to Market of 0.2135 where a value less than 1 says a company is undervalued.. Brian Pacampara on Motley Fool likes this company because it has no long term debt. See what analysts are saying about this stock on Stock Chase. They like the company but some feel it is too expensive.

Pason Systems Inc provides data management systems for drilling rigs. Its products include electronic drilling recorder, pit volume totalizer, communications, data hub software, automatic driller,gas analyzer/total gas system & hazardous gas alarm system. Its web site is here Pason Systems Inc.

The last stock I wrote about was about was North West Company (TSX-NWC, OTC-NWTUF) ... learn more. The next stock I will write about will be Molson Coors Canada (TSX-TPX.B, NYSE-TAP) ... learn more on Monday, October 29, 2018 around 5 pm.

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. 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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

North West Company

Sound bite for Twitter and StockTwits is: Dividend Growth Consumer. Stock price testing seems to show that price is reasonable and around the median. Insiders are buying. See my spreadsheet on North West Company.

I do not own this stock of North West Company (TSX-NWC, OTC-NWTUF). 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 Income Trust being currently good buys with very good yields. This stock changed from an income trust to a corporation in 2011.

When I was updating my spreadsheet, I noticed the Selling and Admin expenses are growing faster than Revenue for the past year and this is also true for the past 5 years. Revenue grew last year at 5.95%, but Expenses grew by 11.51%. Over the past 5 years revenue has grown by 29.08%, but expenses by 35.61%. This has happened 4 out of the past 5 years.

I also noted that the financial year ends at the end of January each year. However, the annual statement dated January 31, 2018 is showing online as the annual statement for 2017.

Dividend yields are good (4% to5% range). The current dividend yield is 4.53% with 5, 10 and historical median dividend yields at 4.49%, 4.78% and 5.14%. The dividend yields were higher in the past because this company spent time as an income trust. It changed to a corporation in 2011 and decreased the dividends by almost 30%. It seems to have changed to an income trust in 1996 but there was no big increase in dividends until 1999.

The dividend growth has been low lately. The 5 to 15 year growth rates are affected by the drop in dividends in 2011 of 30%. However, the increases have also been low 2005 and in the 3% range. The last increase was in 2018 and was for 3.2%. The 20 to 26 durations dividend growth rates are affected by the 153% increase in 1999. The low recent growth might be due to high current Dividend Payout Ratio.

The Dividend Payout Ratio for this company seems to have been high since 2000. They have been able to cover their dividends but payout was in the 70 and 80% ranges. The DPR for EPS for 2018 is 94% with 5 year coverage at 86%. I would like to see this lower. The DPR for CFPS is better with the one for 2018 at 36% with 5 year coverage at 37%. I like to see this coverage at 40% or less.

The Long Term Debt/Market Cap Ratio is low at 0.22 (anything below 1.00 is fine). The Liquidity Ratio is good at 1.96 for the 2018 financial year. The 5 year median ratio is 2.10. The Debt Ratio for 2018 is 1.70 and its 5 year median is 1.83. For both these ratios you want them to be at 1.50 or higher. So, these ratios are good.

The Leverage and Debt/Equity Ratios are fine at 2.52 and 1.48 respectively for 2018 with 5 year medians of 2.20 and 1.20. These ratios are normal for this sort of company.

The Total Return per year is shown below for years of 5 to 26. 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 charts below.

The shareholders have done very well by this stock. Long term shareholders certainly have with 26 year total return of 11.38%.

Years	Div. Gth	Tot Ret	Cap Gain	Div.
5	4.24%	10.85%	6.08%	4.77%
10	2.20%	8.77%	3.69%	5.08%
15	6.47%	18.61%	10.28%	8.33%
20	12.04%	19.97%	10.72%	9.25%
25	9.93%	12.39%	7.40%	4.99%
29-26	9.19%	11.38%	6.85%	4.54%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 17.12, 18.89 and 20.67. The corresponding 10 year ratios are 15.45, 17.65 and 19.75. The corresponding historical ratios are 9.96, 12.67 and 15.03. The current P/E Ratio is 16.53 based on a stock price of $28.27 and 2019 EPS estimate of 1.71. This stock price testing suggests that the stock price is relatively reasonable and probably below the median.

I get a Graham Price of $17.36. The 10 year low, median, and high median Price/Graham Price Ratios are 1.47, 1.68 and 1.84. The current P/GP Ratio is 1.63 based on a stock price of $28.27. 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 3.56. The current B/P Ratio is 3.61 based on Book Value of $381M, Book Value per Share of $7.83 and a stock price of $28.27. The current ratio is 1.39% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and around the median.

I get an historical median dividend yield of 4.98%. The current dividend yield is 4.53% based on dividends of $1.28 and a stock price of $28.27. The current dividend yield is 9.08% below the historical one. This stock price testing suggests that the stock price is relatively reasonable but above the median.

Since this stock used to be an income trust and income trust tend to have higher dividend yields it would be better to do this test from the time the company became a corporation which is 2011. This dividend yield median is 4.53%. The current yield is the same at 4.53%. This stock price testing suggests that the stock price is relatively reasonable and around the median.

The 10 year median Price/Sales (Revenue) Ratio is 0.70. The current P/S Ratio is 0.69 based on 2019 Revenue estimate of $1992M, Revenue per Share of $40.91 and a stock price of $28.27. The current P/S Ratio is 1.74% below the 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.

When I look at analysts’ recommendations I find Buy (2) and Hold (4) recommendations. The consensus recommendation out be a Hold. The 12 month stock price is $32.17. this implies a total return of 18.32% based on capital gains of 13.80% and dividends at 4.53% based on a current stock price of $28.27.

The company on Market Wired talks about the change in shares to variable and common voting shares. Erna Eldridge on Simply Wall Street talks about dividends, but I have no idea where he gets his information from as he said they have paid a dividend for 1 years, but my records shows at least 29 years of dividends. Will Ashworth of Motley Fool likes this stock. See what analysts are saying about this stock on Stock Chase. They have various comments, but one says that they bought an Airline (June 2017). I missed that.

The North West Co Inc is a retailer of food and everyday products and services to rural communities and urban neighborhoods in Canada, Alaska, the South Pacific, and the Caribbean. Its web site is here North West Company.

The last stock I wrote about was about was Equitable Group Inc. (TSX-EQB, OTC-EQGPF) ... learn more. The next stock I will write about will be Pason Systems Inc. (TSX-PSI, OTC-PSYTF) ... learn more on Friday, October 26, 2018 around 5 pm. Tomorrow on my other blog I will write about Money Show 2018 – Susan Mallin.... learn more on Thursday, October 25, 2018 around 5 pm.

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. 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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.