Price/Earnings Ratio is, basically, the stock price divided by the Earnings per Share (EPS). So, if you have $1.25 of EPS and a current price of $10.00, then you have a P/E of 8. (Price divided by P/E Ratio gives Earnings. For example $10.00 divided by 8 gives earnings of $1.25. EPS times P/E gives you the price.
For example, $1.25 EPS times 8 gives you $10.00.)
Usually when people talk about a Forward (or Leading) P/E Ratio, they are using the current stock price and EPS estimates for the current financial year. The Trailing P/E Ratio is using the current stock price and EPS for the last financial year. There are variations on this with Forward P/E Ratios using current stock price and next 12 months of EPS and Trailing P/E Ratios using current stock price and last 12 months of EPS.
On my spreadsheets, I calculate Price/Earnings Ratios for Closing, High, Low and Median stock price for each financial year. My median stock price is the median of the high and low stock prices for each financial year. When I give a current P/E Ratio, I am using current stock price and EPS estimates for the current financial year. When I give trailing P/E ratios, I am using the current stock price and EPS for the last financial year.
In order to see if the current P/E ratio is a reasonable one, I compare it to P/E ratios I calculated over the last 5 financial years. The stock price is probably reasonable if the current P/E ratio is around the median P/E ratio of the past 5 years. It is also valid to compare a company’s current P/E to current P/E ratios of similar companies.
I also like to compare the 5 year median Price/Earnings ratios for high and low stock prices to the current P/E ratio to get an idea if the current price is relatively high or relatively low. Realistically, while it is nice to pay a low price for a stock, getting one at a reasonable price is probably more attainable.
When comparing P/E ratios, you need to compare trailing P/E ratios to trailing P/E ratios, and current P/E ratios to current P/E ratios. Remember current is also called forward or leading P/E. In a rising (bull) market, the trailing P/E ratios tend to be higher than the current P/E ratios and the opposite in a falling (bear) market.
A financial year for a company is taken from the date of their annual financial statements. Most companies use the calendar year. That is a year beginning 1 January and ending 31 December. Some companies have non-calendar financial years. Our banks are examples of this. The TD Bank’s (TSX-TD) financial year begins 1 November and ends 31 October every year. Others, like Canadian Tire (TSX-CTC.A) have financial years ending on the closes Saturday to 31 December. For example, the financial year for 2010 started 3 January 2010 and ended 1 January 2011.
As I understand Price/Earnings Ratios, 10 and below is consider low, 15 – 20 is considered normal and 25 or 30 is considered high. This is just a rule of thumb. However, companies like utility companies tend to have low P/E Ratios and tech companies tend to have high ones. Also, mature companies tend to have lower P/E ratios than growth companies.
When companies change from a growth company to a mature company, their P/E ratios will tend to come down. Also, for some companies, investors are willing to pay a higher price (or a premium) for its stock. This will result in higher P/E Ratios that similar companies have. This can occur for various reasons.
There are, of course, problems with this ratio. The earnings part of the ratio is rather a fake number. This is because, for the P/E ratio to mean anything, all companies, across all industries have to calculate earnings in the same way. Earnings also seem to be a value that can be more easily manipulated that say cash flow. So, perhaps it is not a good idea to put too much weight on the earnings value.
I think that the Price/Earnings Ratio is one valuable tool for determining if a company’s stock price is reasonable or not. However, I do not think that it should be the only thing you should use.
Other possible ratios to use are Price/Sales Ratios and Price/Book Value. You can also use Graham Price, Dividend Yield and Return on Equity to determine if the stock price is reasonable or not. Under the new account rules for Canada (IFRS) it has been suggested we should also use Return on Comprehensive Income.
The site Investopedia has a tutorial on Price/Earning Ratio. The site Wikipedia has an informative article on the Price/Earnings Ratio.
Site such as Globe & Mail, in their stock summary used a P/E that is based on the last 12 months EPS. If you go to financials and add up EPS for last 4 financial periods, you will get the EPS used in their P/E Ratio. The Forward P/E ratio is supposed to be based on EPS estimates. However, I cannot match earnings used on this site (or others sites using same estimates) for the Forward P/E. Google Financial also gives P/E ratios for various stocks. See Google Finance.
Usually sites state what they are using as the EPS. Some use Diluted EPS and others Undiluted EPS. I use the Diluted EPS. Sites can also vary on the P/E Ratios depending on how up to date they are in what they use for EPS. You need to be aware of how a site gets their EPS. They usually always use the current stock price.
Also Yahoo gives current P/E ratios by industry. However, please be aware that this is geared towards the US market, not the Canadian market.
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, June 30, 2011
Wednesday, June 29, 2011
Rogers Sugar Inc 2
I do not own this stock (TSX-RSI). This stock was brought to my attention by Dividend Ninja. This company used to be a Unit Trust (TSX-RSI.UN) but it has recently converted to corporation. On change to a corporation, it lowered its dividend.
There is a minimal of insider selling and insider buying with net selling. This tells us nothing. There are 11 institutions that own almost 20% of this stock. There has been some buying and selling in the last 3 months, and these institutions have marginally increased their investment in this stock..
When I look at the 5 year median Price/Earnings Ratios, I get a low of 8.06 and a high of 10.40. The current one of 13.35 is higher than the median high. The 5 year median Trailing Price/Earnings Ratios are a low of 8.57 and a high of 11.09. The current trailing P/E at 11.13 is higher than the median high also, but just.
The 10 year median Price/Book Value Ratio is 1.35 and the current one at 1.64 is some 22% higher. However, a P/B Ratio of 1.64 is a pretty good one, on an absolute basis. I get a Graham Price of $5.41 and a current stock price of $5.34. The stock price is below the Graham Price. However, the median high difference between the Graham Price and the stock price is 15%. So, on a relatively basis, the stock price is high.
On a dividend yield basis, the stock price is high also. The current Dividend yield of 6.37% is lower than the 5 year average of 10.18%. However, do not forget that this company just lowered the dividends as it changed to a corporation.
When I look at analysts’ recommendations, I find only Hold and Underperform. The consensus would be a Hold as there are lots of Hold recommendations. For the second quarter of their 2011 reporting year, it seems that this company missed some earnings estimates. Hold recommendations come with a stock price at or just below the current stock price.
One good thing about this company is that the Payout Ratios are expected to be good by 2012 based on current estimates. This stock is probably suitable for investors who want income rather than growth. However, note that this is considered a medium risk, not a low risk. Also, do not forget that sugar is a commodity. So there will be volatility with this stock because of this.
I know that this company has a habit and adjusting the dividend as they see fit. This has meant that in the past they have lowered as well as raised their dividends. However, personally, I would rather a company lower a dividend because they cannot not keep up the current one without going into debt. I think it is a bad idea for a company to borrow money to pay dividends. On the other hand, you have to look at such situations on a case by case basis.
There is a Wikipedia entry for this company. Dividend Girl owns this stock and has recently commented on it at her blog. The Dividend Ninja wrote about this stock on his blog recently also.
Rogers Sugar Inc. was established to hold all of the common shares and notes of Lantic Inc. Lantic Inc. is a refiner, processor, distributor and marketer of sugar products in Canada. Its web site is here Rogers Sugar. See my spreadsheet at rsi.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.
There is a minimal of insider selling and insider buying with net selling. This tells us nothing. There are 11 institutions that own almost 20% of this stock. There has been some buying and selling in the last 3 months, and these institutions have marginally increased their investment in this stock..
When I look at the 5 year median Price/Earnings Ratios, I get a low of 8.06 and a high of 10.40. The current one of 13.35 is higher than the median high. The 5 year median Trailing Price/Earnings Ratios are a low of 8.57 and a high of 11.09. The current trailing P/E at 11.13 is higher than the median high also, but just.
The 10 year median Price/Book Value Ratio is 1.35 and the current one at 1.64 is some 22% higher. However, a P/B Ratio of 1.64 is a pretty good one, on an absolute basis. I get a Graham Price of $5.41 and a current stock price of $5.34. The stock price is below the Graham Price. However, the median high difference between the Graham Price and the stock price is 15%. So, on a relatively basis, the stock price is high.
On a dividend yield basis, the stock price is high also. The current Dividend yield of 6.37% is lower than the 5 year average of 10.18%. However, do not forget that this company just lowered the dividends as it changed to a corporation.
When I look at analysts’ recommendations, I find only Hold and Underperform. The consensus would be a Hold as there are lots of Hold recommendations. For the second quarter of their 2011 reporting year, it seems that this company missed some earnings estimates. Hold recommendations come with a stock price at or just below the current stock price.
One good thing about this company is that the Payout Ratios are expected to be good by 2012 based on current estimates. This stock is probably suitable for investors who want income rather than growth. However, note that this is considered a medium risk, not a low risk. Also, do not forget that sugar is a commodity. So there will be volatility with this stock because of this.
I know that this company has a habit and adjusting the dividend as they see fit. This has meant that in the past they have lowered as well as raised their dividends. However, personally, I would rather a company lower a dividend because they cannot not keep up the current one without going into debt. I think it is a bad idea for a company to borrow money to pay dividends. On the other hand, you have to look at such situations on a case by case basis.
There is a Wikipedia entry for this company. Dividend Girl owns this stock and has recently commented on it at her blog. The Dividend Ninja wrote about this stock on his blog recently also.
Rogers Sugar Inc. was established to hold all of the common shares and notes of Lantic Inc. Lantic Inc. is a refiner, processor, distributor and marketer of sugar products in Canada. Its web site is here Rogers Sugar. See my spreadsheet at rsi.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, June 28, 2011
Rogers Sugar Inc
I do not own this stock (TSX-RSI). This stock was brought to my attention by Dividend Ninja. This company used to be a Unit Trust (TSX-RSI.UN) but it has recently converted to corporation. On change to a corporation, it lowered its dividend.
Lowering the dividend was the right thing to do as corporation cannot pay the same dividend rates as Unit Trusts. The dividend yield is still good on this stock at 6.93%, but not as good the 5 year median dividend yield of 10.18%. And, please note that a lot of people feel that, in the end, old unit trust stock will have dividend yields in the 4 to 5% range. They will get to this level because of a combination of decreasing dividends and stock price increase.
This stock has a habit of not only raising dividends, but lowering them. The company says their dividends will be subject to periodic review by the company’s board. This would imply that their past dividend policy has not changed. The other thing to note is that the company said the new distribution amount, taxed as dividend, would leave their shareholders with the same after tax amount. The old distribution was tax as interest.
The 5 year median Payout Ratio on earnings is 96% and the 5 year median Payout Ratio on Cash Flow is 58%. The expected Payout Ratio on earnings by the financial year September 2012 is expected to be a more reasonable value of 76%. The Payout Ratio on Cash Flow hasn’t been as bad as that for earnings. However, by the financial year September 2012, it is expected to be 52%. Please note that both these ratios had been overt 100% in the past.
Another feature of old income trust stock is that Book Value growth was lousy. This is because when you buy out higher distributions than earnings, a book value deficit is created. This stock is no different and 5 and 10 year book value growth is 2% and negative 8% per year, respectively. However, the Book Value grew at 4% between September 2010 financial year end and the end of the second quarter at April 2011.
The best growth for this stock has been in total return. The 5 and 10 year total return has been at 14% and 9.2% respectively. The portion of this total return coming from dividends has been 10% and 9%, respectively. Going forward the portion of the total return from dividends would probably be lower.
Other growth figures are not as good. The main problem with Revenues, Earnings and Cash Flow is that they tend to go up and down a lot. The 5 and 10 year revenue per share growth is 6.9% and 5% per year, respectively. The 5 and 10 year earnings growth is 2.7% and 5.9% per year, respectively. The 5 and 10 year growth in Cash Flow per share is 3.9% and 0% per year, respectively.
In looking at debt ratios, these also tend to fluctuate. The current Liquidity Ratio is 1.29, but the 10 year median ratio is just 1.08. This is just ok. The Asset/Liability Ratio is much better at 1.87 and a 10 year median of 1.92. Both the Leverage Ratio and Debt/Equity Ratio are fine with current ratios at 2.15 and 1.15, respectively.
The Return on Equity has been good for the last 5 years. This was not true prior to 5 years ago. The ROE for September 30, 2010 was 16.6%, with a 5 year median of 16.6%. Both these are very good. The ROE for the 12 months ending in April 2011 is even better at 23.5%.
You would characterize this stock as one to buy for income and modest capital gains. However, income might fluctuate. It would be of median risk.
Rogers Sugar Inc. was established to hold all of the common shares and notes of Lantic Inc. Lantic Inc. is a refiner, processor, distributor and marketer of sugar products in Canada. Its web site is here Rogers Sugar. See my spreadsheet at rsi.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.
Lowering the dividend was the right thing to do as corporation cannot pay the same dividend rates as Unit Trusts. The dividend yield is still good on this stock at 6.93%, but not as good the 5 year median dividend yield of 10.18%. And, please note that a lot of people feel that, in the end, old unit trust stock will have dividend yields in the 4 to 5% range. They will get to this level because of a combination of decreasing dividends and stock price increase.
This stock has a habit of not only raising dividends, but lowering them. The company says their dividends will be subject to periodic review by the company’s board. This would imply that their past dividend policy has not changed. The other thing to note is that the company said the new distribution amount, taxed as dividend, would leave their shareholders with the same after tax amount. The old distribution was tax as interest.
The 5 year median Payout Ratio on earnings is 96% and the 5 year median Payout Ratio on Cash Flow is 58%. The expected Payout Ratio on earnings by the financial year September 2012 is expected to be a more reasonable value of 76%. The Payout Ratio on Cash Flow hasn’t been as bad as that for earnings. However, by the financial year September 2012, it is expected to be 52%. Please note that both these ratios had been overt 100% in the past.
Another feature of old income trust stock is that Book Value growth was lousy. This is because when you buy out higher distributions than earnings, a book value deficit is created. This stock is no different and 5 and 10 year book value growth is 2% and negative 8% per year, respectively. However, the Book Value grew at 4% between September 2010 financial year end and the end of the second quarter at April 2011.
The best growth for this stock has been in total return. The 5 and 10 year total return has been at 14% and 9.2% respectively. The portion of this total return coming from dividends has been 10% and 9%, respectively. Going forward the portion of the total return from dividends would probably be lower.
Other growth figures are not as good. The main problem with Revenues, Earnings and Cash Flow is that they tend to go up and down a lot. The 5 and 10 year revenue per share growth is 6.9% and 5% per year, respectively. The 5 and 10 year earnings growth is 2.7% and 5.9% per year, respectively. The 5 and 10 year growth in Cash Flow per share is 3.9% and 0% per year, respectively.
In looking at debt ratios, these also tend to fluctuate. The current Liquidity Ratio is 1.29, but the 10 year median ratio is just 1.08. This is just ok. The Asset/Liability Ratio is much better at 1.87 and a 10 year median of 1.92. Both the Leverage Ratio and Debt/Equity Ratio are fine with current ratios at 2.15 and 1.15, respectively.
The Return on Equity has been good for the last 5 years. This was not true prior to 5 years ago. The ROE for September 30, 2010 was 16.6%, with a 5 year median of 16.6%. Both these are very good. The ROE for the 12 months ending in April 2011 is even better at 23.5%.
You would characterize this stock as one to buy for income and modest capital gains. However, income might fluctuate. It would be of median risk.
Rogers Sugar Inc. was established to hold all of the common shares and notes of Lantic Inc. Lantic Inc. is a refiner, processor, distributor and marketer of sugar products in Canada. Its web site is here Rogers Sugar. See my spreadsheet at rsi.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, June 27, 2011
Computer Modelling Group Ltd 2
I own this stock (TSX-CMG, OTH-CMDXF-). I bought this stock in November 2008 and some more in June 2009. This is a small dividend paying technology company that does business internationally. I have made a total return of 48% per year on this stock. About 6% per year would be attributable to dividends. It was not a large investment.
When I look at insider trading I find some $11M of net insider selling. There is too small amount of insider buying to mention. Although insiders do own stock in this company in the millions of dollars, they do not own a substantial amount of outstanding shares. The CEO has sold off $2.3M in shares, but he still owns some $8M in shares. A number of officers have sold off shares to the tune of $7.3M, but it seems they are mostly selling off stock options. I consider all this action to be neutral.
It is a smart move for insiders of small fast growing companies to sell their shares in the company they work for and diversify their stock holdings. Also, except for the CFO, all other insiders generally have more shares than stock options. I glad to see a lot of insiders holding sizable amounts of this stock. This is positive. Also, the company has just raised the dividends by 5% and given a special dividend in June of this year. This is also positive. The recent stock split is also positive. You often get an uptick in the stock price with a split and this is what happened.
Just under 60% of the shares are held by 33 institutions. There has been some buying and selling over the past 3 months, but there is a net increase of 1.8M shares held by institutions over the past 3 months.
When I look at 5 year median Price/Earnings Ratios, I get a low of 11.56 and a high of 20.34. The current P/E of 24.63 is on the relatively high side. However, the P/E ratios have been increasing over the past 10 years and a P/E of 24.63 is not particularly high for a fast growing tech company.
I get a 10 year median Price/Book Value ratio of 4.85. The current one of 13.54 is a lot higher. This ratio has also been growing of late. However, on an absolute basis, a P/B Ratio of 13.54 is high. I get a Graham Price of $3.45 and a current stock price of $13.30. The current price is 285% higher than the Graham Price. However, the low and high difference between the Graham Price and Stock price last year ran from 156% to 305%. As you can see, the stock price has been moving up quite quickly on this stock.
I get a current dividend yield of 3.16% and a 5 year median dividend yield of 4.18%. By this this standard the current stock price is high also. There is not any good news on current stock price looking at the Price/Sales ratio also. The 5 year P/S Ratio is 4.58 and the current one is 8.79. On this ratio, lower is better.
There are few analysts following this stock, but the recommendations I see are Strong Buy, Buy, Hold and Underperform. The consensus would be a Buy. There is a big discrepancy in earnings estimates from $.54 to $.80 to $1.10. The P/E of each is 24.6, 16.6 to 12.09, respectively. The thing is that if you want to buy this stock, the price may never get any better as it seems to be a fast moving tech stock. But, it is a risky stock.
See a Can Tech Letter interview on this company. Also, there is another blog entry on this stock at All Time High Stocks.
I have done very well by this stock. But, as I said yesterday, I will hold on to what I have at the moment, but I will probably sell stock equal to my original purchase price at some point in the future.
Computer Modelling Group Ltd. is a computer software technology and consulting company serving the oil and gas industry. CMG is the leading supplier of advanced processes reservoir modelling software in the world with a blue chip client base of international oil companies and technology centers in approximately 50 countries. Its web site is here Computer Modelling. See my spreadsheet at cmg.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 some $11M of net insider selling. There is too small amount of insider buying to mention. Although insiders do own stock in this company in the millions of dollars, they do not own a substantial amount of outstanding shares. The CEO has sold off $2.3M in shares, but he still owns some $8M in shares. A number of officers have sold off shares to the tune of $7.3M, but it seems they are mostly selling off stock options. I consider all this action to be neutral.
It is a smart move for insiders of small fast growing companies to sell their shares in the company they work for and diversify their stock holdings. Also, except for the CFO, all other insiders generally have more shares than stock options. I glad to see a lot of insiders holding sizable amounts of this stock. This is positive. Also, the company has just raised the dividends by 5% and given a special dividend in June of this year. This is also positive. The recent stock split is also positive. You often get an uptick in the stock price with a split and this is what happened.
Just under 60% of the shares are held by 33 institutions. There has been some buying and selling over the past 3 months, but there is a net increase of 1.8M shares held by institutions over the past 3 months.
When I look at 5 year median Price/Earnings Ratios, I get a low of 11.56 and a high of 20.34. The current P/E of 24.63 is on the relatively high side. However, the P/E ratios have been increasing over the past 10 years and a P/E of 24.63 is not particularly high for a fast growing tech company.
I get a 10 year median Price/Book Value ratio of 4.85. The current one of 13.54 is a lot higher. This ratio has also been growing of late. However, on an absolute basis, a P/B Ratio of 13.54 is high. I get a Graham Price of $3.45 and a current stock price of $13.30. The current price is 285% higher than the Graham Price. However, the low and high difference between the Graham Price and Stock price last year ran from 156% to 305%. As you can see, the stock price has been moving up quite quickly on this stock.
I get a current dividend yield of 3.16% and a 5 year median dividend yield of 4.18%. By this this standard the current stock price is high also. There is not any good news on current stock price looking at the Price/Sales ratio also. The 5 year P/S Ratio is 4.58 and the current one is 8.79. On this ratio, lower is better.
There are few analysts following this stock, but the recommendations I see are Strong Buy, Buy, Hold and Underperform. The consensus would be a Buy. There is a big discrepancy in earnings estimates from $.54 to $.80 to $1.10. The P/E of each is 24.6, 16.6 to 12.09, respectively. The thing is that if you want to buy this stock, the price may never get any better as it seems to be a fast moving tech stock. But, it is a risky stock.
See a Can Tech Letter interview on this company. Also, there is another blog entry on this stock at All Time High Stocks.
I have done very well by this stock. But, as I said yesterday, I will hold on to what I have at the moment, but I will probably sell stock equal to my original purchase price at some point in the future.
Computer Modelling Group Ltd. is a computer software technology and consulting company serving the oil and gas industry. CMG is the leading supplier of advanced processes reservoir modelling software in the world with a blue chip client base of international oil companies and technology centers in approximately 50 countries. Its web site is here Computer Modelling. See my spreadsheet at cmg.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, June 24, 2011
Computer Modelling Group Ltd
I own this stock (TSX-CMG, OTH-CMDXF-). I bought this stock in November 2008 and some more in June 2009. This is a small dividend paying technology company. I have made a total return of 48% per year on this stock. About 6% per year would be attributable to dividends. It was not a large investment.
This is a high risk investment. They sell reservoir modelling software. Things can change rapidly in the software industry, so if you invest in this company, you need to keep an eye on it. I happen to like tech companies, but I also understand the risks. Also, just because past returns have been very high, does not mean that future ones will be also.
The growth rates for this company in Revenue, Earnings, Dividends, Total Return, Cash Flow and Book Value are very high. The lowest is in Book Value and the 5 and 10 year growth is 16% and 21% per year, respectively. Next in growth comes Revenue per share at 22% and 18% per year, respectively. Most of the rest is 30% or above growth per year.
This is a fast growing company. They are also paying out most of what they get in earnings and cash flow in dividends. The Payout Ratio re earnings has a 5 year median rate of 93% and the Payout re Cash Flow has a 5 year median of 79%. For the financial year ending in March 2011, the respectively Payout Ratios were 101% and 85.8%. The dividend growth rates over the past 5 and 6 years are 50% and 46% per year. They also often give out special dividends. The dividend yield is currently at 3.23%. The company has a 5 year median dividend yield of 4.18%.
The other thing of note is the Debt Ratios and they are very good. The Liquidity Ratio is 2.47 and the Asset/Liability Ratio is 2.56. The Leverage Ratio is 1.64 and the Debt/Equity Ratio is 0.64. They are debt free. The stock has recently split 2:1. This is the second stock split. The other stock split was in 2008.
I have done very well by this stock. I will hold on to what I have at the moment, but I will probably sell stock equal to my original purchase price at some point in the future.
Computer Modelling Group Ltd. is a computer software technology and consulting company serving the oil and gas industry. CMG is the leading supplier of advanced processes reservoir modelling software in the world with a blue chip client base of international oil companies and technology centers in approximately 50 countries. Its web site is here Computer Modelling. See my spreadsheet at cmg.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 is a high risk investment. They sell reservoir modelling software. Things can change rapidly in the software industry, so if you invest in this company, you need to keep an eye on it. I happen to like tech companies, but I also understand the risks. Also, just because past returns have been very high, does not mean that future ones will be also.
The growth rates for this company in Revenue, Earnings, Dividends, Total Return, Cash Flow and Book Value are very high. The lowest is in Book Value and the 5 and 10 year growth is 16% and 21% per year, respectively. Next in growth comes Revenue per share at 22% and 18% per year, respectively. Most of the rest is 30% or above growth per year.
This is a fast growing company. They are also paying out most of what they get in earnings and cash flow in dividends. The Payout Ratio re earnings has a 5 year median rate of 93% and the Payout re Cash Flow has a 5 year median of 79%. For the financial year ending in March 2011, the respectively Payout Ratios were 101% and 85.8%. The dividend growth rates over the past 5 and 6 years are 50% and 46% per year. They also often give out special dividends. The dividend yield is currently at 3.23%. The company has a 5 year median dividend yield of 4.18%.
The other thing of note is the Debt Ratios and they are very good. The Liquidity Ratio is 2.47 and the Asset/Liability Ratio is 2.56. The Leverage Ratio is 1.64 and the Debt/Equity Ratio is 0.64. They are debt free. The stock has recently split 2:1. This is the second stock split. The other stock split was in 2008.
I have done very well by this stock. I will hold on to what I have at the moment, but I will probably sell stock equal to my original purchase price at some point in the future.
Computer Modelling Group Ltd. is a computer software technology and consulting company serving the oil and gas industry. CMG is the leading supplier of advanced processes reservoir modelling software in the world with a blue chip client base of international oil companies and technology centers in approximately 50 countries. Its web site is here Computer Modelling. See my spreadsheet at cmg.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, June 23, 2011
Thomson Reuters Corp 2
I own this stock (TSX-TRI, NYSE-TRI). I held this stock in my RRSP account between 1998 and 2000. In this account, I made a total return of 14.3% per year on Thomson. For this period, my dividend portion of the total return was probably 2.2%. For my Trading account, I bought this stock in 1985 and I still have this stock in this account. To date, I have made total returns of 7.45% per year for this account on Thomson. For this stock, total return of both accounts is 8.3% per year.
When I look at insider trading, I find $4M net insider selling. There is $4.4M of insider selling and a minimal amount of insider buying. All the selling seems to be of options. None of this is significant. Of course one positive is that this company has raised their dividend by 6.9% in US$.
10 Institutions own about 35% of the shares of this company on the TSX. Over the past 3 months they have increased their investment in this company by 2.3%. No institution has sold any of their shares over the past 3 months. This is a positive. On the NYSE, 399 companies own 40% of the outstanding shares. They have increased their position only marginally over the past 3 months. There were no sales. So, this is also a positive.
When I look at the 5 year median Price/Earnings Ratio I get a low of 22.2 and a high of 30.7. The current P/E ratio based on earnings estimates is 17.8. This low P/E ratio points to a very good relative price. Also, on an absolute basis, a P/E of 17 is a reasonable one. (Note I am looking at CDN$ values, but they are not significantly different than US$ values, so switching currencies will not make any difference here.)
I get a 10 year Price/Book Value Ratio of 2.14 and a current one of 1.59. This current one is some 74% of the long term ratio. If the current ratio is 80% or lower compared to the 10 year ratio, it means that the current stock price is relatively good. The current dividend yield is 3.34% and the 5 year median is 3.18%. This also points to a good relative current stock price.
I get a Graham Price of $32.37. This is some 12% below the current stock price of $36.26. The median difference between the Graham Price and the low stock price over the past 10 years is the low stock price has been some 40.6% above the Graham Price. This difference points to a relatively good stock price. In fact, all my indicators point to a relatively good stock price. (See my site for information on calculating Graham Price.)
When I looked at analysts’ recommendations, I find lots of Strong Buy, lots of Hold, some Buy and at least one Sell. There are no others. The consensus would be a Buy. However, the consensus recommendation is quite close to a Hold. One Hold recommendation complained the long time it is taking for the integration of Thomson and Reuters. He feels that although cash flow should increase this year, there will still be a profit headwind. Hold recommendations come with a 12 month stock price of $40.
Some buy or strong buy recommendations come with a 12 month stock price of $45 to $50. A buy recommendation report says that Thomson Reuters have a well laid out plan to become more efficient. A Strong Buy recommendation said that it is a subscription based business with a high renewal rate of 86%.
Most negative comments talk about the stock moving sideways for some time now. Some do not see that this will change anytime soon. One feels that that it is not a good current buy as the stock price just moved below its 50 day and 200 day moving averages. Another thinks an investment in this company is dead money.
I hold this stock in my Trading Account. To sell a stock from my Trading Account, I look at the company’s long term viability. If it has long term viability, I will probably not sell. I also sell a stock if I like another stock better. However, to sell from my Trading account, I would have to believe that not only will I make a better return on the replacement stock, but also gain back the tax I have to pay to sell a stock.
For this stock, I certainly think it has long term viability. I think that on a long term basis still, it will produce a decent return for me. Therefore, I am not selling it. Although, I am not sure that I would buy this company today. It is not the same company that I bought in 1985. Although, I must admit that companies have to change over time to survive.
I have always been more careful in my investment in my Trading Account, generally looking for good long term stock. I do not sell from this account very easily either. The problem with a trading account is there are tax consequences. There is no such consequences for an RRSP account, so it is easier to make that sell transaction. It is also easier to make a buy transaction, because if you are wrong about a stock, you can sell with no tax consequences. It is easier to buy stocks for just capital gain for an RRSP account, because selling does not have tax consequences.
I have kept complete records in Quicken since 1 January 1994. According to Quicken, the total return on my trading account since then is 13.04% per year. The Total Return on my RRSP account since then is 9.87% per year. Another time period doesn’t help. If I do total return on my Trading Account to the end of 1999, my total return is 24.21% per year. For my RRSP account, it is 16.4% per year. So do I pick better stocks for my trading account? Or is it my reluctance to sell that makes a difference.
Thomson Reuters Corp is the leading source of intelligent information for businesses and professionals. They combine industry expertise with innovative technology to deliver critical information to leading decision-makers. Through more than 50,000 people in over 100 countries, they deliver this must-have insight to the financial, legal, tax and accounting, healthcare and science and media markets, powered by the world’s most trusted news organization. They derive the majority of our revenues from selling electronic content and services to professionals, primarily on a subscription basis. Its web site is here Thomson Reuters. See my spreadsheet at tri.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 $4M net insider selling. There is $4.4M of insider selling and a minimal amount of insider buying. All the selling seems to be of options. None of this is significant. Of course one positive is that this company has raised their dividend by 6.9% in US$.
10 Institutions own about 35% of the shares of this company on the TSX. Over the past 3 months they have increased their investment in this company by 2.3%. No institution has sold any of their shares over the past 3 months. This is a positive. On the NYSE, 399 companies own 40% of the outstanding shares. They have increased their position only marginally over the past 3 months. There were no sales. So, this is also a positive.
When I look at the 5 year median Price/Earnings Ratio I get a low of 22.2 and a high of 30.7. The current P/E ratio based on earnings estimates is 17.8. This low P/E ratio points to a very good relative price. Also, on an absolute basis, a P/E of 17 is a reasonable one. (Note I am looking at CDN$ values, but they are not significantly different than US$ values, so switching currencies will not make any difference here.)
I get a 10 year Price/Book Value Ratio of 2.14 and a current one of 1.59. This current one is some 74% of the long term ratio. If the current ratio is 80% or lower compared to the 10 year ratio, it means that the current stock price is relatively good. The current dividend yield is 3.34% and the 5 year median is 3.18%. This also points to a good relative current stock price.
I get a Graham Price of $32.37. This is some 12% below the current stock price of $36.26. The median difference between the Graham Price and the low stock price over the past 10 years is the low stock price has been some 40.6% above the Graham Price. This difference points to a relatively good stock price. In fact, all my indicators point to a relatively good stock price. (See my site for information on calculating Graham Price.)
When I looked at analysts’ recommendations, I find lots of Strong Buy, lots of Hold, some Buy and at least one Sell. There are no others. The consensus would be a Buy. However, the consensus recommendation is quite close to a Hold. One Hold recommendation complained the long time it is taking for the integration of Thomson and Reuters. He feels that although cash flow should increase this year, there will still be a profit headwind. Hold recommendations come with a 12 month stock price of $40.
Some buy or strong buy recommendations come with a 12 month stock price of $45 to $50. A buy recommendation report says that Thomson Reuters have a well laid out plan to become more efficient. A Strong Buy recommendation said that it is a subscription based business with a high renewal rate of 86%.
Most negative comments talk about the stock moving sideways for some time now. Some do not see that this will change anytime soon. One feels that that it is not a good current buy as the stock price just moved below its 50 day and 200 day moving averages. Another thinks an investment in this company is dead money.
I hold this stock in my Trading Account. To sell a stock from my Trading Account, I look at the company’s long term viability. If it has long term viability, I will probably not sell. I also sell a stock if I like another stock better. However, to sell from my Trading account, I would have to believe that not only will I make a better return on the replacement stock, but also gain back the tax I have to pay to sell a stock.
For this stock, I certainly think it has long term viability. I think that on a long term basis still, it will produce a decent return for me. Therefore, I am not selling it. Although, I am not sure that I would buy this company today. It is not the same company that I bought in 1985. Although, I must admit that companies have to change over time to survive.
I have always been more careful in my investment in my Trading Account, generally looking for good long term stock. I do not sell from this account very easily either. The problem with a trading account is there are tax consequences. There is no such consequences for an RRSP account, so it is easier to make that sell transaction. It is also easier to make a buy transaction, because if you are wrong about a stock, you can sell with no tax consequences. It is easier to buy stocks for just capital gain for an RRSP account, because selling does not have tax consequences.
I have kept complete records in Quicken since 1 January 1994. According to Quicken, the total return on my trading account since then is 13.04% per year. The Total Return on my RRSP account since then is 9.87% per year. Another time period doesn’t help. If I do total return on my Trading Account to the end of 1999, my total return is 24.21% per year. For my RRSP account, it is 16.4% per year. So do I pick better stocks for my trading account? Or is it my reluctance to sell that makes a difference.
Thomson Reuters Corp is the leading source of intelligent information for businesses and professionals. They combine industry expertise with innovative technology to deliver critical information to leading decision-makers. Through more than 50,000 people in over 100 countries, they deliver this must-have insight to the financial, legal, tax and accounting, healthcare and science and media markets, powered by the world’s most trusted news organization. They derive the majority of our revenues from selling electronic content and services to professionals, primarily on a subscription basis. Its web site is here Thomson Reuters. See my spreadsheet at tri.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, June 22, 2011
Thomson Reuters Corp
I own this stock (TSX-TRI, NYSE-TRI). I held this stock in my RRSP account between 1998 and 2000. In this account, I made a total return of 14.3% per year. For this period, my dividend portion of the total return was probably 2.2%. For my Trading account, I bought this stock in 1985 and I still have this stock in this account. To date, I have made total returns of 7.45% per year. Approximately 3.5% of this total return is in dividends.
I have often held the same stock in the trading account and RRSP accounts. When I go looking for something to buy, I look at what I already have to see if any would be a suitable buy. If I want to sell a stock or some of my shares in a company, I would first sell off stock in my RRSP account before my trading account.
This stock reports in US$. Needless to say, the stock has done better in US$ than in CDN$, especially of late. In respect to dividends, it is no exception. Dividends have only gone up in US$, which is the currency dividends are proclaimed in. In CDN$ terms, dividends have not always gone up. Also, the 5 and 10 year growth in dividends are a lot less in CDN$ then in US$.
For example, between 2009 and 2010, dividends increased in US$ by 3.6% and decreased in CDN$ by 6.2%. My spreadsheet shows that actual dividends I received per shares. (This is different from most CDN$ values on my spreadsheet, where I have used the year end currency exchange rate.)
The growth in Dividends in CND$ over the past 5 and 10 years is 4.3% and 1.4% per year. The growth in Dividends in US$ over the past 5 and 10 years is 8% and 5.4% per year. However, this is quite common for Canadian stocks that reports in US$ over the past while because our Canadian currency has basically been increasing against the US currency since 2003. This company reports in US$; as they do most of their business in US$ currency.
As with most American stock, this stock got slammed with the last recession and then got slammed with the current one and has not really recovered. In US$ terms, over the past 5 and 10 years, this stock has had a total return of 4.4% and 2.9%. In CDN$, this stock has basically broken even. Well, it could be worse. A lot of stocks have declined in total returns over the past 5 and 10 years.
The Dividend Payout Ratio for earnings has been over 100% over the past two years. It is expected to be below 60% and therefore much more reasonable this year. The Dividend Payout Ratio for Cash Flow has remained below 40% and therefore not a concern.
There has been a bit of growth in Revenue in US$ terms over the past 5 and 10 years, but not in CDN$ terms. There has been a bit of growth also in Book Value over the past 5 and 10 years. There has basically been no growth in Earnings or Cash Flow over the past 5 and 10 years, no matter what currency you look at. On the other hand, Return on Equity has not been bad, especially of late. The 5 year median ROE is 10.7% and the ROE for the financial year ending December 31, 2011 was 19.3%. The last two year’s ROE was 7% and 4.5%, respectively.
The debt ratios are fine, except for the Liquidity Ratio. The Liquidity Ratio is currently at 0.78. This means that the current assets cannot cover the current liabilities. Adding in Cash Flow helps a bit. The other ratios are fine. The Asset/Liability Ratio is currently at 2.28 and this is very good. The Leverage Ratio and the Debt/Equity Ratio are both fine. They are currently at 1.81 and 0.79 respectively.
I expect that this stock will go back to a total return of 8% per year. For this type of company, this is what would be expected for the long term. Currently, I will be keeping my shares, but they are only just over 1% of my portfolio.
Thomson Reuters Corp is the leading source of intelligent information for businesses and professionals. They combine industry expertise with innovative technology to deliver critical information to leading decision-makers. Through more than 50,000 people in over 100 countries, they deliver this must-have insight to the financial, legal, tax and accounting, healthcare and science and media markets, powered by the world’s most trusted news organization. They derive the majority of our revenues from selling electronic content and services to professionals, primarily on a subscription basis. Its web site is here Thomson Reuters. See my spreadsheet at tri.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 have often held the same stock in the trading account and RRSP accounts. When I go looking for something to buy, I look at what I already have to see if any would be a suitable buy. If I want to sell a stock or some of my shares in a company, I would first sell off stock in my RRSP account before my trading account.
This stock reports in US$. Needless to say, the stock has done better in US$ than in CDN$, especially of late. In respect to dividends, it is no exception. Dividends have only gone up in US$, which is the currency dividends are proclaimed in. In CDN$ terms, dividends have not always gone up. Also, the 5 and 10 year growth in dividends are a lot less in CDN$ then in US$.
For example, between 2009 and 2010, dividends increased in US$ by 3.6% and decreased in CDN$ by 6.2%. My spreadsheet shows that actual dividends I received per shares. (This is different from most CDN$ values on my spreadsheet, where I have used the year end currency exchange rate.)
The growth in Dividends in CND$ over the past 5 and 10 years is 4.3% and 1.4% per year. The growth in Dividends in US$ over the past 5 and 10 years is 8% and 5.4% per year. However, this is quite common for Canadian stocks that reports in US$ over the past while because our Canadian currency has basically been increasing against the US currency since 2003. This company reports in US$; as they do most of their business in US$ currency.
As with most American stock, this stock got slammed with the last recession and then got slammed with the current one and has not really recovered. In US$ terms, over the past 5 and 10 years, this stock has had a total return of 4.4% and 2.9%. In CDN$, this stock has basically broken even. Well, it could be worse. A lot of stocks have declined in total returns over the past 5 and 10 years.
The Dividend Payout Ratio for earnings has been over 100% over the past two years. It is expected to be below 60% and therefore much more reasonable this year. The Dividend Payout Ratio for Cash Flow has remained below 40% and therefore not a concern.
There has been a bit of growth in Revenue in US$ terms over the past 5 and 10 years, but not in CDN$ terms. There has been a bit of growth also in Book Value over the past 5 and 10 years. There has basically been no growth in Earnings or Cash Flow over the past 5 and 10 years, no matter what currency you look at. On the other hand, Return on Equity has not been bad, especially of late. The 5 year median ROE is 10.7% and the ROE for the financial year ending December 31, 2011 was 19.3%. The last two year’s ROE was 7% and 4.5%, respectively.
The debt ratios are fine, except for the Liquidity Ratio. The Liquidity Ratio is currently at 0.78. This means that the current assets cannot cover the current liabilities. Adding in Cash Flow helps a bit. The other ratios are fine. The Asset/Liability Ratio is currently at 2.28 and this is very good. The Leverage Ratio and the Debt/Equity Ratio are both fine. They are currently at 1.81 and 0.79 respectively.
I expect that this stock will go back to a total return of 8% per year. For this type of company, this is what would be expected for the long term. Currently, I will be keeping my shares, but they are only just over 1% of my portfolio.
Thomson Reuters Corp is the leading source of intelligent information for businesses and professionals. They combine industry expertise with innovative technology to deliver critical information to leading decision-makers. Through more than 50,000 people in over 100 countries, they deliver this must-have insight to the financial, legal, tax and accounting, healthcare and science and media markets, powered by the world’s most trusted news organization. They derive the majority of our revenues from selling electronic content and services to professionals, primarily on a subscription basis. Its web site is here Thomson Reuters. See my spreadsheet at tri.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, June 21, 2011
Bombardier Inc 2
I own this stock (TSX-BBD.B). I first bought this stock in November 1987 and then bought some more in April 1988. I have made a total return on this stock of 14.6% per year. About 3.6% per year of this total return would be dividends. We have been though a lot together, me and this stock. Bombardier had a massive run up and crashed in the last recession. I really cannot complain too much as my initial investment was small.
There is some insider selling, but this is minimal. There is no insider buying. However, the Bombardier family controls this company though multiple voting shares that it holds. It has 64% of the votes. A lot of stock options are outstanding on this company. Both the CEO and CFO have far more stock options than shares.
Only just over 5% of the company is owned by some 23 Institutions. This still can come to a lot invested as this company is worth some $12B. Institutions have increased their shares in this company by around 2.7M shares within the last 3 months.
The 5 year median Price/Earnings Ratio have a low of 10.3 and a high of 14.5. So the current one 14.3 is close to the high median value. I am not going to use the Price/Book Value as the Book Value has dropped significantly under the new IFRS accounting rules and the comparison of old and new P/B Ratios would not mean anything.
However, I can use the Price/Sales (or Revenue) Ratios. The 10 year P/S ratio is 0.63 and the current one is some 54% more at 0.67. This higher P/S ratio points to a rather high current stock price. However, a P/S Ratio under $1.00 is considered to be a good ratio.
The median yield over the past 3 years is 1.92% and the current one of 1.52% shows a rather high current stock price. However, the dividend has not been raised since it was reinstated in 2008. I would think that the aerospace part of the business would have to improve for this to happen. This comes through also with the Graham Price. I get a current Graham Price of $3.18. However, the one at the end of Financial Year January 2011 is higher at $4.85 and might be a better one to use.
The problem with the current one is the much lower book value figures. The current price of $6.59 is some 36% above the Graham Price of $4.85. The median difference over the past 10 years is 58%. So, by this measure, the current stock price is decent. The median high difference between the Graham Price and the stock price is 110%.
When I looked at analysts’ recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus would be Strong Buy. (See my site for information on analyst ratings.) Most of the recommendations are in the Strong Buy and Buy range. There are few Holds.
A number of analysts remarked that they think that the aerospace business is picking up. Bombardier’s transportation business is currently very strong. A lot of analysts seem quite bullish on this stock. Recently, when the market has been treading down, Bombardier has been flat or up.
I will continue to hold the shares I have. I think that the Bombardier/Beaudoin family has worked very hard to revive this company. It is one good think about a family owned company. I liked this company better when I first bought it when it had three divisions, not just the current two. The third division was recreational products (which included the snowmobile). The thing with the three divisions was that it seemed there was always one division, if not two, that were making money. I do not remember a time when at least one division was not making money.
However, if I currently had none of this stock, I would probably not be reviewing this company or buying its stock. I think I would instead go for a company like Toromont (TSX-TIH) or SNC-Lavalin (TSX-SNC). A large portion of the profitability of this company relies on the aerospace division. I would never buy an Airlines company (like Air Canada or Westjet). I do not think that they are the sort of stocks to hold for the long term. So, you can imagine, I would not be crazy about a company that makes airplanes. On the other hand, I have no plans to sell this company.
Bombardier is a world-leading manufacturer of innovative transportation solutions, from commercial aircraft and business jets to rail transportation equipment, systems and services. Headquartered in Montréal, Canada, Bombardier has a presence in more than 60 countries. The Bombardier family controls 64% of the voting rights under this stock. Its web site is here Bombardier. See my spreadsheet at bbd.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.
There is some insider selling, but this is minimal. There is no insider buying. However, the Bombardier family controls this company though multiple voting shares that it holds. It has 64% of the votes. A lot of stock options are outstanding on this company. Both the CEO and CFO have far more stock options than shares.
Only just over 5% of the company is owned by some 23 Institutions. This still can come to a lot invested as this company is worth some $12B. Institutions have increased their shares in this company by around 2.7M shares within the last 3 months.
The 5 year median Price/Earnings Ratio have a low of 10.3 and a high of 14.5. So the current one 14.3 is close to the high median value. I am not going to use the Price/Book Value as the Book Value has dropped significantly under the new IFRS accounting rules and the comparison of old and new P/B Ratios would not mean anything.
However, I can use the Price/Sales (or Revenue) Ratios. The 10 year P/S ratio is 0.63 and the current one is some 54% more at 0.67. This higher P/S ratio points to a rather high current stock price. However, a P/S Ratio under $1.00 is considered to be a good ratio.
The median yield over the past 3 years is 1.92% and the current one of 1.52% shows a rather high current stock price. However, the dividend has not been raised since it was reinstated in 2008. I would think that the aerospace part of the business would have to improve for this to happen. This comes through also with the Graham Price. I get a current Graham Price of $3.18. However, the one at the end of Financial Year January 2011 is higher at $4.85 and might be a better one to use.
The problem with the current one is the much lower book value figures. The current price of $6.59 is some 36% above the Graham Price of $4.85. The median difference over the past 10 years is 58%. So, by this measure, the current stock price is decent. The median high difference between the Graham Price and the stock price is 110%.
When I looked at analysts’ recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus would be Strong Buy. (See my site for information on analyst ratings.) Most of the recommendations are in the Strong Buy and Buy range. There are few Holds.
A number of analysts remarked that they think that the aerospace business is picking up. Bombardier’s transportation business is currently very strong. A lot of analysts seem quite bullish on this stock. Recently, when the market has been treading down, Bombardier has been flat or up.
I will continue to hold the shares I have. I think that the Bombardier/Beaudoin family has worked very hard to revive this company. It is one good think about a family owned company. I liked this company better when I first bought it when it had three divisions, not just the current two. The third division was recreational products (which included the snowmobile). The thing with the three divisions was that it seemed there was always one division, if not two, that were making money. I do not remember a time when at least one division was not making money.
However, if I currently had none of this stock, I would probably not be reviewing this company or buying its stock. I think I would instead go for a company like Toromont (TSX-TIH) or SNC-Lavalin (TSX-SNC). A large portion of the profitability of this company relies on the aerospace division. I would never buy an Airlines company (like Air Canada or Westjet). I do not think that they are the sort of stocks to hold for the long term. So, you can imagine, I would not be crazy about a company that makes airplanes. On the other hand, I have no plans to sell this company.
Bombardier is a world-leading manufacturer of innovative transportation solutions, from commercial aircraft and business jets to rail transportation equipment, systems and services. Headquartered in Montréal, Canada, Bombardier has a presence in more than 60 countries. The Bombardier family controls 64% of the voting rights under this stock. Its web site is here Bombardier. See my spreadsheet at bbd.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, June 20, 2011
Bombardier Inc
I own this stock (TSX-BBD.B). I first bought this stock in November 1987 and then bought some more in April 1988. I have made a total return on this stock of 14.6% per year. About 3.6% per year of this total return would be dividends. We have been though a lot together, me and this stock. Bombardier had a massive run up and crashed in the last recession. This stock has not really recovered.
It seemed to hit bottom in 2004 and 2005 and was steadily recovering until it was hit by the recent recession. Dividends were cut in half in 2003 and then stopped completely in 2005. The company reinstated dividends in 2008. This company had in the past increased its dividends regularly at very good rates prior to 2003. They have yet to raise the dividend rates since they were reinstated in 2008. This is because earnings and cash flow have not recovered sufficiently.
Generally speaking, the growth rates on this stock have been better over the past 5 years than over the past 10 years. For example, the growth in earnings over the past 5 and 10 years, in US$, is 26% per year and 0% per year, respectively. In CDN$, the growth is 23% per year and negative 4.8% per year, respectively. For cash flow, the growth in CDN$ over the last 5 and 10 years is 10% per year and negative 8% per year, respectively.
Revenue growth is not great. In CDN$ it has gone nowhere over the past 5 and 10 years. It does not matter if you look at just Revenue or Revenue per share. In US$, the growth in Revenue per share over the past 5 and 10 years is 3.7% per year and 5% per year, respectively. The Revenue estimates show that revenue is not expected to increase again until the Financial Year ending in January 2013.
None of the debt ratios are particularly great. The current Liquidity Ratio is 1.12 with the 5 year median ratio being better at 1.33. The current Asset/Liability Ratio is 1.08 with the 5 year median ratio at 1.18. This company has changed over to the IFRS accounting rules for the first quarterly report of 2012 dated March 30, 2011. (The Financial year for this company ends at 31st of January of each year.)
The main problem with the change to IFRS is that book value on this stock has dropped some 60%. However, the net income hasn’t changed much. For the year ending in January 2011, the Return on Equity is 17.7% and this is quite good. However, with the lowing of the Book Value for April 2011and little change in the net income over the 12 months ending in April 2011, the ROE is now up 156% to 45%. There are often anomalies when accounting rules are changed. It is hard to know how this will play out.
The financial statements for April 2011 show what the Book Value would be if it had been based on IFRS over the past 3 years. In this case, the Book Value would have increased by 15% from January 2011 to April 2011. The other thing that has happened with the lowing of the Book Value is that the Leverage Ratio has gone from 5.38 to 14.33 and the Debt/Equity Ratio has gone from 4.38 to 14.33.
I will continue to hold my shares in Bombardier Inc. Because I bought this stock so long ago, my actual cost is just $.60 per share. My ACB is a bit higher at $2.47 because I claimed the Capital Gain in 1994.
Bombardier is a world-leading manufacturer of innovative transportation solutions, from commercial aircraft and business jets to rail transportation equipment, systems and services. Headquartered in Montréal, Canada, Bombardier has a presence in more than 60 countries. The Bombardier family controls 54% of the voting rights under this stock. Its web site is here Bombardier. See my spreadsheet at bbd.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
It seemed to hit bottom in 2004 and 2005 and was steadily recovering until it was hit by the recent recession. Dividends were cut in half in 2003 and then stopped completely in 2005. The company reinstated dividends in 2008. This company had in the past increased its dividends regularly at very good rates prior to 2003. They have yet to raise the dividend rates since they were reinstated in 2008. This is because earnings and cash flow have not recovered sufficiently.
Generally speaking, the growth rates on this stock have been better over the past 5 years than over the past 10 years. For example, the growth in earnings over the past 5 and 10 years, in US$, is 26% per year and 0% per year, respectively. In CDN$, the growth is 23% per year and negative 4.8% per year, respectively. For cash flow, the growth in CDN$ over the last 5 and 10 years is 10% per year and negative 8% per year, respectively.
Revenue growth is not great. In CDN$ it has gone nowhere over the past 5 and 10 years. It does not matter if you look at just Revenue or Revenue per share. In US$, the growth in Revenue per share over the past 5 and 10 years is 3.7% per year and 5% per year, respectively. The Revenue estimates show that revenue is not expected to increase again until the Financial Year ending in January 2013.
None of the debt ratios are particularly great. The current Liquidity Ratio is 1.12 with the 5 year median ratio being better at 1.33. The current Asset/Liability Ratio is 1.08 with the 5 year median ratio at 1.18. This company has changed over to the IFRS accounting rules for the first quarterly report of 2012 dated March 30, 2011. (The Financial year for this company ends at 31st of January of each year.)
The main problem with the change to IFRS is that book value on this stock has dropped some 60%. However, the net income hasn’t changed much. For the year ending in January 2011, the Return on Equity is 17.7% and this is quite good. However, with the lowing of the Book Value for April 2011and little change in the net income over the 12 months ending in April 2011, the ROE is now up 156% to 45%. There are often anomalies when accounting rules are changed. It is hard to know how this will play out.
The financial statements for April 2011 show what the Book Value would be if it had been based on IFRS over the past 3 years. In this case, the Book Value would have increased by 15% from January 2011 to April 2011. The other thing that has happened with the lowing of the Book Value is that the Leverage Ratio has gone from 5.38 to 14.33 and the Debt/Equity Ratio has gone from 4.38 to 14.33.
I will continue to hold my shares in Bombardier Inc. Because I bought this stock so long ago, my actual cost is just $.60 per share. My ACB is a bit higher at $2.47 because I claimed the Capital Gain in 1994.
Bombardier is a world-leading manufacturer of innovative transportation solutions, from commercial aircraft and business jets to rail transportation equipment, systems and services. Headquartered in Montréal, Canada, Bombardier has a presence in more than 60 countries. The Bombardier family controls 54% of the voting rights under this stock. Its web site is here Bombardier. See my spreadsheet at bbd.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, June 17, 2011
Canadian Tire Corp 2
I own this stock (TSX-CTC.A). I first bought this stock in 2000. I bought more in 2009 and 2010. I have made a return of 11.2% per year on this stock. The dividend portion of this return would be around 1.5% per year. Realistic long term return on a retail stock is 8 to 9%, with dividends at 1 to 1.5%. Yields are never going to get very high on this stock. In the past, dividend yield on this stock has basically ranged from .85% to 2.50%. They have mostly been around 1% to 1.5%.
When I look at the insider trading report, I find that there is some $16.7M of insider selling and some $3.4M of insider buying. It all seems to be done by a couple of officers who own a substantial amount of Class A shares. This buying and selling represents a very small portion of what they hold (i.e. way under 1%). I do not know what to make of this, but it tells us nothing.
Both the CEO and CFO own more options that shares. This is also true of a lot, but not all, of the officers of this company. It is also a positive that the company has raised their dividend by 31%. Management obviously has faith in the future earnings of this company.
Almost 7% of the shares are owned by 8 institutions. There has been substantial amount of institutional buying of this stock over the last 3 months. They have increased their investment in this company by over 290% and a net of $11M. It is a positive that institutional investment in this stock has increased over the past 3 month. It is also a positive that the company has raised their dividend by 31%.
The 5 year median Price/Earnings Ratios have a low of 9.4 and 15.7. The current one of 11.64 is about average. I get a 10 year Price/Book Value Ratio of 1.35 and a current P/B Ratio 1.27. To show a great stock price, you would want the current ratio to be 80% of the long term ratio. However, the current ratio is lower and is some 93% of the long term ratio. This would show a reasonable current price.
I get a Graham Price of $77.02 and a current stock price of $62.39. The different is some 19%. Over the last 10 years the median difference between the Graham Price and the stock price has been 19%. So this also shows a current reasonable price.
The 5 year median dividend yield is 1.39% and the current dividend yield is 1.76%. This shows a very good current stock price.
When I look at analysts’ recommendations, I find Strong Buy, Buy, Hold and Underperform. The consensus recommendations would be Buy. However, I should point out that there are a lot of Hold recommendations. Basically, a number of analysts do not expect the stock price to grow much further within the next 12 months. Hold recommendations come with stock price of around $66.00. Some analysts with a hold felt that the current price is too high and a better purchase price would be high $50s.
A number of analysts mentioned the purchase of Forzani and feel this is good. This company is going into selling Major Appliances and there is some concern about this. Analyst also worry this might not work out because Major Appliance selling is a crowded market. Another thing is American stores like Target coming to Canadian. Another analyst mentioned that the stock has basically gone sideways since mid-2009.
This stock has recently been discussed in the Cdn Money Forum. There is a discussion on the company going into selling large appliances at Dominion Lending. There was an article on how the retail stock rose after Cdn Tire bought Forzani by the Executive Investment site.
There is talk that this company will have head winds going forward. Others feel that purchasing this stock is a way to participate in the economic recovery in retail. For me, I am pleased with the overall performance of this stock. The dividend yield is low, but the increases are decent, although they are erratic. The company will only increase dividends when they feel they can afford to.
Canadian Tire Corp engages in retail sales, financial services and petroleum sales. They own Canadian Tire Store, Gas Outlets, Parts Source Stores and Mark's Work Warehouse. The Canadian Tire stores offer a unique range of automotive, sports and leisure and home products. The company is controlled by the Billes family who own most of the voting shares. Its web site is here Canadian Tire. See my spreadsheet at ctc.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 the insider trading report, I find that there is some $16.7M of insider selling and some $3.4M of insider buying. It all seems to be done by a couple of officers who own a substantial amount of Class A shares. This buying and selling represents a very small portion of what they hold (i.e. way under 1%). I do not know what to make of this, but it tells us nothing.
Both the CEO and CFO own more options that shares. This is also true of a lot, but not all, of the officers of this company. It is also a positive that the company has raised their dividend by 31%. Management obviously has faith in the future earnings of this company.
Almost 7% of the shares are owned by 8 institutions. There has been substantial amount of institutional buying of this stock over the last 3 months. They have increased their investment in this company by over 290% and a net of $11M. It is a positive that institutional investment in this stock has increased over the past 3 month. It is also a positive that the company has raised their dividend by 31%.
The 5 year median Price/Earnings Ratios have a low of 9.4 and 15.7. The current one of 11.64 is about average. I get a 10 year Price/Book Value Ratio of 1.35 and a current P/B Ratio 1.27. To show a great stock price, you would want the current ratio to be 80% of the long term ratio. However, the current ratio is lower and is some 93% of the long term ratio. This would show a reasonable current price.
I get a Graham Price of $77.02 and a current stock price of $62.39. The different is some 19%. Over the last 10 years the median difference between the Graham Price and the stock price has been 19%. So this also shows a current reasonable price.
The 5 year median dividend yield is 1.39% and the current dividend yield is 1.76%. This shows a very good current stock price.
When I look at analysts’ recommendations, I find Strong Buy, Buy, Hold and Underperform. The consensus recommendations would be Buy. However, I should point out that there are a lot of Hold recommendations. Basically, a number of analysts do not expect the stock price to grow much further within the next 12 months. Hold recommendations come with stock price of around $66.00. Some analysts with a hold felt that the current price is too high and a better purchase price would be high $50s.
A number of analysts mentioned the purchase of Forzani and feel this is good. This company is going into selling Major Appliances and there is some concern about this. Analyst also worry this might not work out because Major Appliance selling is a crowded market. Another thing is American stores like Target coming to Canadian. Another analyst mentioned that the stock has basically gone sideways since mid-2009.
This stock has recently been discussed in the Cdn Money Forum. There is a discussion on the company going into selling large appliances at Dominion Lending. There was an article on how the retail stock rose after Cdn Tire bought Forzani by the Executive Investment site.
There is talk that this company will have head winds going forward. Others feel that purchasing this stock is a way to participate in the economic recovery in retail. For me, I am pleased with the overall performance of this stock. The dividend yield is low, but the increases are decent, although they are erratic. The company will only increase dividends when they feel they can afford to.
Canadian Tire Corp engages in retail sales, financial services and petroleum sales. They own Canadian Tire Store, Gas Outlets, Parts Source Stores and Mark's Work Warehouse. The Canadian Tire stores offer a unique range of automotive, sports and leisure and home products. The company is controlled by the Billes family who own most of the voting shares. Its web site is here Canadian Tire. See my spreadsheet at ctc.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.
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