Is it a good company at a reasonable price? When I look at this stock, I see little growth, undependable total return, and a Liquidity ratio lower than 1.00 which could cause problems in bad times. Shareholders would get a good dividend rate, if they do not mind lack of growth. It is not the sort of stock I personally like. The results of stock price testing says the stock price is relatively cheap.
I do not own this stock of First Capital REIT (TSX-FCR.UN, OTC-FCXXF). In 2011 a reader asked me to review this real estate stock. Also, the site Canadian Dividend Stock site mentions this company as a top Canadian REIT.
When I was updating my spreadsheet, I noticed this company has not been doing well. Even by what they want us to measure them by, which is Funds from Operations (FFO) and Adjusted Funds from Operations (AFFO), Growth is poor. When values decline too much, the per year change cannot be calculated (N/C).
| Year | Item | Growth | Per Year |
|---|---|---|---|
| 5 | Revenue Growth | -0.20% | -0.04% |
| 5 | EPS Growth | -128.76% | N/C |
| 5 | FFO Growth | 4.31% | 0.85% |
| 5 | AFFO Growth | 6.15% | 1.20% |
| 5 | Net Income Growth | -125.27% | N/C |
| 5 | Cash Flow Growth | -7.54% | -1.56% |
| 5 | Dividend Growth | -59.26% | -16.44% |
| 5 | Stock Price Growth | -23.26% | -5.16% |
| 10 | Revenue Growth | 18.86% | 1.74% |
| 10 | EPS Growth | -137.04% | N/C |
| 10 | FFO Growth | 21.00% | 1.92% |
| 10 | AFFO Growth | 12.71% | 1.20% |
| 10 | Net Income Growth | -140.72% | N/C |
| 10 | Cash Flow Growth | 37.35% | 3.22% |
| 10 | Dividend Growth | -51.85% | -7.05% |
| 10 | Stock Price Growth | -11.96% | -1.27% |
If you had invested in this company in December 2012, for $1,016.28 you would have bought 54 shares at $18.82 per share. In December 2022, after 10 years you would have received $424.04 in dividends. The stock would be worth $907.54. Your total return would have been $1,331.78. This is a total return would be a total return of 3.30% per year with 1.12% from capital loss and 4.42% from dividends. The best to be said is that shareholders did not lose money.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $18.82 | $1,016.28 | 54 | 10 | $424.04 | $907.74 | $1,331.78 |
The current dividend yield is good with dividend growth restarting. The current dividend yield is good (5% to 6% ranges) at 6.38%. The 5, 10 and historical dividend yields are moderate (2% to 4% ranges) at 4.14%, 4.36% and 4.84%. They were changed from quarter to monthly and were restored in 2020. The dividends were cut by 50% in 2021. They were restored to what was paid in 2020 in 2023.
Even with the return of the dividends to the 2020 rates, dividend growth has been very low. See chart below. In the past 29 years, dividends have gone up 18 times and down 2 times. Increases have been in the 1% to 2% ranges when done in the past. In this chart over the past 10 years, dividends have increased by 0.28% per year. So, 10 years ago in 2013 dividends were $0.84 and now they are $0.864. The problem is that historical background inflation runs at 3%. This stock’s increases did not keep up with this, although I do understand that until recently, inflation has been very low.
| Year | Growth |
|---|---|
| 5 | 0.09% |
| 10 | 0.28% |
| 15 | 0.51% |
| 20 | 0.92% |
| 25 | 1.97% |
| 28 | 3.36% |
The Dividend Payout Ratios (DPR) are fine. The DPR for 2022 for Earnings per Share (EPS) is negative with 5 year coverage at 80%. The DPR for AFFO and FFO are better gages than the EPS to see if dividends are affordable. The DPR for 2022 for Adjusted Funds from Operations (AFFO) is 52% with 5 year coverage at 70%. The DPR for 2022 for Funds from Operations (FFO) is 45% with 5 year coverage at 62%. The DPR for 2022 for Cash Flow per Share (CFPS) is 28% with 5 year coverage at 39%. The DPR for 2022 for Free Cash Flow (FCF) is 40% with 5 year coverage at 56%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | -73.63% | 80.32% |
| AFFO | 52.08% | 69.98% |
| FFO | 44.63% | 61.85% |
| CFPS | 28.08% | 38.87% |
| FCF | 40.10% | 56.48% |
Debt Ratios are fine, but always check that the current portion of the loans can be rolled over. The Long Term Debt/Market Cap Ratio for 2022 is too high at 1.13 current. However, this is a real estate stock and I have also looked at the Long Term Debt/Covering Assets ratios and ratio for 2022 is good at 0.43 and the current one is good at 0.39.
The Liquidity Ratio for 2022 is really low at 0.60 and 056. Adding in cash flow after dividends do not help as then the ratios are still very low at 0.78 and 0.56. However, if you take out the currently portion of the debt the current ratio is 2.68 and 3.17. In this case, insure the loan can be rolled over. The Debt Ratio for 2022 is good at 1.83 and currently at 1.73. The Leverage and Debt/Equity Ratios for 2022 are fine at 2.21 and 1.21 and are currently good at 2.36 and 1.36.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 1.07 | 1.13 |
| Lg Term A | 0.43 | 0.39 |
| Intang/GW | 0.00 | 0.00 |
| Liquidity | 0.60 | 0.56 |
| Liq. + CF | 0.78 | 0.59 |
| Liq. CF xDB | 2.68 | 3.17 |
| Debt Ratio | 1.83 | 1.73 |
| Leverage | 2.21 | 2.36 |
| D/E Ratio | 1.21 | 1.36 |
The Total Return per year is shown below for years of 5 to 28 to the end of 2022. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2017 | 5 | -8.89% | -0.34% | -4.10% | 3.76% |
| 2012 | 10 | -4.09% | 3.30% | -1.12% | 4.42% |
| 2007 | 15 | -2.43% | 6.02% | 0.76% | 5.27% |
| 2002 | 20 | -1.15% | 12.24% | 4.05% | 8.19% |
| 1997 | 25 | 0.15% | 6.75% | 1.37% | 5.38% |
| 1994 | 28 | 1.76% | 12.29% | 3.98% | 8.30% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 10.85, 11.94 and 13.02. The corresponding 10 year ratios are 11.73, 13.40 and 15.06. The corresponding historical ratios are 15.40, 17.11 and 18.81. The current P/E Ratio is negative and so untestable. The P/E Ratio for 2024 is 11.88 based on a stock price of $13.54 and EPS estimate for 2024 of $1.14. This ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I also have Funds from Operations (FFO) data. The 5-year low, median, and high median Price/ Funds from Operations per Share Ratios are 11.82, 15.74 and 17.58. The corresponding 10 year ratios are 15.67, 17.25 and 18.88. The current P/FFO Ratio is 11.57 based on FFO estimate for 2023 of $1.17 and a stock price of $13.54. The current ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I also have Adjusted Funds from Operations (AFFO) data. The 5-year low, median, and high median Price/ Adjusted Funds from Operations per Share Ratios are 13.65, 17.88 and 19.97. The corresponding 10 year ratios are 16.81, 18.12 and 2025. The current P/AFFO Ratio is 12.65 based on AFFO estimate for 2023 of $1.07 and a stock price of $13.54. The current ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $21.70. The 10-year low, median, and high median Price/Graham Price Ratios are 0.83, 0.90 and 1.00. The current P/GP Ratio is 0.62 based on a stock price of 13.54. This ratio is below the low ratio of the 10 year median ratios. 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 1.05. The current P/B Raio is 0.76 based on a Book Value of $3,821M, Book Value per Share of $17.89 and a stock price of $13.54. The current ratio is 28% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a 10-year median Price/Cash Flow per Share Ratio of 16.99. The current P/CF Ratio is 13.48 based on Cash Flow for the past 12 months of $214.5M, Cash Flow per Share of $1.00 and a stock price of $ 13.54. The current ratio is 21% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 4.84%. The current dividend yield is 6.38% based on dividends of $0.864 and a stock price of $13.54. The current yield is 32% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 4.36%. The current dividend yield is 6.38% based on dividends of $0.864 and a stock price of $13.54. The current yield is 46% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10-year median Price/Sales (Revenue) Ratio is 6.09. The current P/S Raito is 4.14 based on Revenue estimate for 2023 of $698M, Revenue per Share of $3.27 and a stock price of $13.54. The current ratio is 32% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
Results of stock price testing is that the stock price is probably cheap. The dividend yield tests say this and the P/S Ratio test confirms this. Most of the other testing is saying the same thing, that the stock price is relatively cheap.
When I look at analysts’ recommendations, I find Strong Buy (4), Buy (3) and Hold (1). The consensus would be a Strong Buy. The 12 month stock price consensus is $16.19, with a high of $17.00 and low of $15.00. The consensus of $16.19 implies
Analysts on Stock Chase like this stock. Stock Chase gives this stock 4 stars out of 5. It is not on any dividend list that I follow. Robin Brown on Motley Fool likes this REIT because he feels it is undervalued and essential real estate. Christopher Liew on Motley Fool says to buy this for passive income. The company put out a press release via Newswire on their results for 2022. The company put out a press release on Newswire about the results from their third quarter of 2023.
There is a report from March 2023 by Simply Wall Street. Simply Wall Street gives this stock 1 and one half stars out of 5. They list 2 warnings of earnings have declined by 37.5% per year over past 5 years; interest payments are not well covered by earnings; and unstable dividend track record.
First Capital REIT is a developer, owner, and operator of mixed-use urban real estate in Canada's populated centres. The company's focus is on creating thriving neighbourhoods that create value for businesses, residents, communities, and investors. Its web site is here First Capital REIT.
The last stock I wrote about was about was FirstService Corp (TSX-FSV, NASDAQ-FSV) ... learn more. The next stock I will write about will be Stella-Jones Inc (TSX-SJ, OTC-STLJF) ... learn more on Friday, November 24, 2023 around 5 pm. Tomorrow on my other blog I will write about Annual Reports .... learn more on Thursday, November 23, 2023 around 5 pm.
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