Tuesday, May 26, 2015

Power Financial Corp. 2

Sound bite for Twitter and StockTwits is: Stock is at a good price. In a lot of the stock price testing, the stock price is below the relative median price and this suggests that the price is good. It is not cheap, but rather at a relatively good price. See my spreadsheet at pwf.htm.

I own this stock of Power Financial Corp. (TSX-PWF, OTC- POFNF). When I sold some bonds in 2001, I had money to spend. This was a stock on my hit list and was selling at a reasonable price. This stock was on Mike Higgs' dividend growth stocks and that is why I started a spreadsheet to investigate this stock in the first place.

When I look at insider trading, I find insider selling at $74.3M and no insider buying. Insider selling is at 0.28% of the market cap. This is a bit high. There is insider ownership by the Desmarais Family and they own some 65.7% of the outstanding shares. They have been doing some selling over the past few years. See article linked below. The CEO also owns shares worth around $14.5M or 0.06% of the company.

The 5 year low, median and high median Price/Earnings per Share Ratios are 10.38, 11.87 and 13.17. These are a bit lower than the 10 year values of 10.48, 12.13 and 14.60. The current P/E Ratio is 11.45 based on a stock price of $36.97 and 2015 EPS estimate of $3.23. This testing suggests that the stock price is reasonable, but towards the lower end of the reasonableness scale.

I get a Graham Price of $39.37. The 10 year low, median and high median Price/Graham Price Ratios are 0.83, 1.03 and 1.21 and the current P/GP Ratio is 0.94 based on a stock price of $36.97. This stock price testing suggests that the stock price is reasonable. It is a bit below the median P/GP Ratio and this is good. Also a P/GP Ratio of less than 1.00 shows also that the price is good.

I get a 10 year Price/Book Value per Share Ratio of 1.77 and a current P/B Ratio of 1.73. The current ratio is based on a BVPS of $21.33 and a stock price of $36.97. The current P/B Ratio is 2% lower than the 10 year median ratio. This stock price testing suggests that the stock price is reasonable.

The current Dividend Yield is 4.03%. The 5 year median dividend yield is 13% higher at 4.61%. This testing suggests that the stock price is reasonable, but towards the higher end of the reasonableness scale. However, interests have recently been high historically.

The historical average dividend yield at 3.92% is lower than the current dividend yield by 3%. This suggests that the stock price is reasonable. However, the historical median dividend yield at 2.98% is some 35% lower than the current dividend yield. This testing suggests that the stock price is reasonable, but towards the lower end of the reasonableness scale. Using a median value is thought to be a better reflection of value that an average value.

The analysts' recommendations are Buy and Hold. There are more Hold recommendations than Buy recommendations (4 to 3), so the consensus recommendations is a Hold. The 12 month stock price consensus is $40.70. This implies a total return of 14.12% with 4.03% from dividends and 10.09% from capital gains. This is a good return for an insurance company so it matches more to a Buy recommendation than a Hold recommendation. (That is a think there is a mismatch between the recommendations and expected total return over the next 12 months.)

This Financial Post article of 2014 by Barry Critchley talks about the third time in less than 6 years when the disposed of a major block of stock in Power Corp. Power Corp controls Power Financial Corp. This Financial Post article by Sean Silcoff talks about the restoration of dividend increases for this stock.

This is the second of two parts. The first part was posted on Monday, May 25, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.

This company is a holding and management company. Its operations provide a range of individual and corporate financial and fiduciary services in North America and Europe. It holds interest in the following companies: Great-West Lifeco, Great-West Life, London Life, Canada Life, Great-West Life & Annuity, Putnam Investments, IGM Financial, Investors Group Mackenzie Financial, and Pargesa Group. Its web site is here Power Financial.

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. Follow me on Twitter or StockTwits.

Monday, May 25, 2015

Power Financial Corp.

On my other blog I am today writing revising my web site to make it smartphone compatible continue...

Sound bite for Twitter and StockTwits is: Back to Dividend Growth Stock. I stuck it out with insurance companies during their recent bad times as I expected to eventually be rewarded. Several insurance companies have again started to grow their dividends. I expect that the growth will be low as long as interest rates are low. See my spreadsheet at pwf.htm.

I own this stock of Power Financial Corp. (TSX-PWF, OTC- POFNF). When I sold some bonds in 2001, I had money to spend. This was a stock on my hit list and was selling at a reasonable price. This stock was on Mike Higgs' dividend growth stocks and that is why I started a spreadsheet to investigate this stock in the first place.

As with other insurance companies, this company stopped increasing their dividends in 2009. Dividends were flat from 2009 to 2014 inclusive. In 2015 dividends were finally raised again and the increase was for 6.4%. The dividend growth is 0% and 6.7% per year over the past 5 and 10 years. The current dividend yield is quite good at the moment at 4.03%. The 5 year median is higher at 4.6%.

Dividend Payout Ratios are good with the 2014 DPR for EPS at 46.7% and for CFPS at 14.7%. The 5 year median values are for EPS at 58.15 and 16.4%.

The historical median dividend yield is much lower at 3% than the 5 year median dividend yield. If you use the median dividend yield to 2008 it is even lower at 2.8%. Also, the 10 year growth in dividends to 2008 was much higher than the current one at 18.2% per year. The thing is times will not always be tough for insurance companies, and if you are buying them now, you should also look to see what the characteristics of them were prior to 2008.

I bought stock in this company in 2001, 2004 and 2011. My total return is 8.83% per year with 4.75% from capital gains and 4.08% from dividends. I have received some $11.91 per share in dividends and my cost basis per share is 23.23. That means that dividends have covered some 51.35 of my share costs. On the shares I bought in 2001, my dividend yield on my original cost is 7.8%.

The recent total returns have not been that great as this stock, like other insurance companies, took a big hit in 2008. The 5 and 10 years total returns on this stock have been 8.05% and 4.81% per year. The portion of this return attributable to capital gains is at 3.77% and 1.02% per year. The portion of this return attributable to dividends is at 4.28% and 3.79% per year.

The number of outstanding shares has changed over the past 5 and 10 years, increasing only at 0.2% and 0.1%. The shares have increased due to Stock options mostly, but also for Employees Stock Participation Plan. Revenue growth has been moderate over the past 5 and 10 years. EPS growth has been moderate to good over the past 5 and 10 years and Cash Flow growth has been low to moderate over the past 5 and 10 years.

Revenue is up by 5% and 5.7% per year over the past 5 and 10 years. Revenue per Share is up by 4.8% and 5.6% per year over the past 5 and 10 years. Last year, 2014, was a good year for revenue for this company with Revenue up 44%. This year is expected to be good year for Revenue growth also.

EPS growth is up by 9.5% and 3.6% per year over the past 5 and 10 years. Growth in EPS has been good over the past 3 years and is expected to be moderate for this year.

Cash Flow is up by 2% and 5.8% per year over the past 5 and 10 years. CFPS is up by 1.8% and 5.7% per year over the past 5 and 10 years. The problem is 2011 which saw a big drop in cash flow. However, Cash Flow has been growing since then.

The Return on Equity was over 10% until 2008 and has been lower than 10% since then. The ROE for 2014 was just 7.4% and it has a 5 year median of 7.1%. The comprehensive income has varied over time from the ROE on Net Income. The ROE on comprehensive income in 2014 was 7.3% and this has a 5 year median of 7.3%.

The Liquidity Ratio is very good in 2014 and it has generally been very good. The Liquidity Ratio for 2014 is 2.08 and it has a 5 year median of 2.08. As with other financials, the Debt Ratio tends to be rather low and the Leverage and Debt/Equity Ratios tend to be rather high. The Debt Ratio for 2014 is 1.08 and the 5 year median is 1.10. The Leverage and Debt/Equity Ratios for 2014 are 12.93 and 11.93, respectively. The 5 year median values are 11.05 and 9.90.

This is the first of two parts. The second part will be posted on Tuesday, May 26, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.

This company is a holding and management company. Its operations provide a range of individual and corporate financial and fiduciary services in North America and Europe. It holds interest in the following companies: Great-West Lifeco, Great-West Life, London Life, Canada Life, Great-West Life & Annuity, Putnam Investments, IGM Financial, Investors Group Mackenzie Financial, and Pargesa Group. Its web site is here Power Financial.

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. Follow me on Twitter or StockTwits.

Friday, May 22, 2015

Fortis Inc. 2

Sound bite for Twitter and StockTwits is: Stock price is relatively reasonable. It is a core portfolio stock of mine, but I still do not like the Liquidity Ratio on this stock. Low Liquidity Ratio stocks can get into trouble when there is a recession. However, this is a utility stock and does get a steady cash flow. See my spreadsheet at fts.htm.

I own this stock of Fortis Inc. (TSX-FTS, OTC-FRTSF). It was on Mike's site showing Dividend Paying Canadian Growth stocks. I bought this stock as Newfoundland Light and Power Co. Ltd. Class A shares in 1987. I bought more in 1995 and 1998. In 2005 I sold some Fortis from my RRSP account as I needed to get $20,000 in this account and I was concerned about the debt liquidity of this stock. However, this stock continues to be one of my big stock holdings.

Last year the outstanding shares were increased by 1.38M shares for stock options. This is 0.50% of the outstanding shares and I think is a little high for a utility stock. Over the past year in insider trading, there was no insider buying but insider selling was at $9.4M. This is 0.09% of the outstanding shares. This seems a bit high also.

There is some insider ownership with the CEO owning shares worth around $6.7M and the CFO owning shares worth around $4.1M. The shares owned by the Chairman are worth around $0.5M.

The 5 year low, median and high median Price/Earnings per Share Ratios are 17.20, 18.72 and 20.76. The corresponding 10 year values are similar at 16.32, 18.48 and 20.62. The current P/E Ratio is 18.97 based on a stock price of $38.88 and 2015 EPS estimate of $2.05. This stock price test suggests that the stock price is relatively reasonable.

I get a Graham Price of $34.98. The 10 year low, median and high median Price/Graham Price Ratios are 1.04, 1.18 and 1.30. The current P/GP Ratio is 1.11 based on a stock price of $38.88. This stock price test suggests that the stock price is relatively reasonable.

I get a 10 year median Price/Book Value per Share Ratio of 1.59. The current P/B Ratio is 1.47 based on a BVPS of $26.33 and a current stock price of $38.88. The current P/B Ratio is 7.6% lower than the 10 year median P/B Ratio. This stock price test suggests that the stock price is relatively reasonable.

The current dividend yield is 3.5%. This is some 6% higher than the 5 year average of 3.3%. The historical average dividend yield at 4.96% is 29% higher than the current dividend yield of 3.5% and that is quite a bit higher. However, a lot of people think we are better off using median values. The historical median is 3.67% and this is just almost 5% higher than the current dividend yield. This stock price test suggests that the stock price is relatively reasonable.

When I look at analysts' recommendations, I find Buy, Hold and Underperform recommendations. Most recommendations are a Buy and the consensus is a Buy. The 12 months stock price is $42.00. This implies a total return of 11.52% with 8.02% from capital gains and 3.50% from dividends. This is a good total return from a utility stock.

This CBC article talks about Fortis selling off some of their real estate holdings. This article by Joseph Solitro of the Motley Fool suggests that this stock is currently at a good long term buying opportunity. In this article, Nelson Smith of the Motley Fool suggests that Fortis is overpriced with a P/E multiple of near 20 times earnings. By the way, if you have trouble getting the whole Motley Fool article, you can often go you and back into the article and it all will show. This article in Hydro World talks about Fortis buying more shares in Fortis Energy (Bermuda) Ltd.

This is the second of two parts. The first part was posted on Thursday, May 21, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.

Fortis is a diversified, international distribution utility holding company. Its regulated holdings include electric distribution utilities in five Canadian provinces and three Caribbean countries and a natural gas utility in British Columbia. Fortis owns and operates non-regulated generation assets across Canada and in Belize and Upper New York State. It also owns hotels and commercial office and retail space primarily in Atlantic Canada. Its web site is here Fortis.

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. Follow me on Twitter or StockTwits.

Thursday, May 21, 2015

Fortis Inc.

I have hit a milestone today as I started to bog on May 21, 2008, some 7 years ago.

Sound bite for Twitter and StockTwits is: Dividend Growth Utility. If you hold stocks over the very long term there will be ups and downs in growth rates. Why I hold over the longer term is the growth in dividends. On my original purchase I am earnings a dividend yield of 29%. See my spreadsheet at fts.htm.

I own this stock of Fortis Inc. (TSX-FTS, OTC-FRTSF). It was on Mike's site showing Dividend Paying Canadian Growth stocks. I bought this stock as Newfoundland Light and Power Co. Ltd. Class A shares in 1987. I bought more in 1995 and 1998. In 2005 I sold some Fortis from my RRSP account as I needed to get $20,000 in this account and I was concerned about the debt liquidity of this stock. However, this stock continues to be one of my big stock holdings.

This stock has moderate dividends and moderate dividend growth. The current dividend is 3.5% and the 5 year median dividend yield is 3.3%. The dividends have grown at 4.24% and 9% per year over the past 5 and 10 years. The 10 year growth is higher than usual because dividend growth was fast between 2005 and 2008. This probably will not happen again.

The Dividend Payout Ratio for EPS is a bit high in 2014 at 91%, but it is expected to moderate this year. The DPR for CFPS was higher this year than normal at 32%, but it is also expected to go lower to around 26% for this year. The 5 year median DPRs for EPS is 72% and for CFPS is 27%.

I have had this stock for just over 27 years. The total return is 13.9% per year with 8.19% per year from capital gains and 4.90% per year from dividends. My stock cost is $6.81per year and I have received $18.43 per share in dividends.

The 5 and 10 year total return to the end of 2014 was 10.03% and 12.35% per year. The dividend portion of this return was 3.71% and 3.94% per year, respectively. The capital gains portion of this return was 6.32% and 8.41% per year, respectively. The total return to date over the past 5 and 10 years is lower at 6.20% and 8.38% per year.

The outstanding shares have increased by 10% and 11% per year over the past 5 and 10 years. The shares have increased due to Share Issues, Stock options, DRIPs, Employee Participation Plan and Debenture Conversions. For me as a shareholder, I am interested in per share values to determine how well this company is growing.

Revenue growth is good, but Revenue per Share growth is non-existent to moderate. Earnings growth is moderate to good but EPS growth is non-existent to moderate. Cash Flow growth is good, but CFPS growth is low to moderate.

Revenue has growth at 8.2% and 16.8% per year over the past 5 and 10 years. Revenue per Share is down by 1.6% and up by 5% per year over the past 5 and 10 years. Revenue is expected to grow well in 2015.

Net Income is up 3.9% and 13.31% per year over the past 5 and 10 years. EPS is down by 1.5% and up by 3.3% per year over the past 5 and 10 years. EPS is expected to grow in 2015 by 46%, but it is only up by 3.5% in the first quarter.

Cash Flow is up by 10.3% and 17.3% per year over the past 5 and 10 years. CFPS is up by 0.2% and 5.5% per year over the past 5 and 10 years. Analysts seem to expect good growth in CFPS for 2015.

The Return on Equity has consistently been moderate on this stock. The ROE for 2014 was 4.6% and the 5 year median is 7%. The ROE on Comprehensive Income was a bit better in 2014 at 5.7% but it has a 5 year median of just 5.9%.

The Liquidity Ratio for 2014 was 0.73. If you add in cash flow after dividends it is 0.97. If you add in the current portion of the long term debt and cash flow after dividends it is 1.19. This is a low number but adequate. The Debt Ratio is good in 2014 at 1.53. Leverage and Debt/Equity Ratios are a little high but acceptable at 2.92 and 1.92.

This is the first of two parts. The second part will be posted on Friday, May 22, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.

Fortis is a diversified, international distribution utility holding company. Its regulated holdings include electric distribution utilities in five Canadian provinces and three Caribbean countries and a natural gas utility in British Columbia. Fortis owns and operates non-regulated generation assets across Canada and in Belize and Upper New York State. It also owns hotels and commercial office and retail space primarily in Atlantic Canada. Its web site is here Fortis.

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. Follow me on Twitter or StockTwits.

Wednesday, May 20, 2015

Thomson Reuters Corp. 2

On my other blog I am today writing about my portfolio withdrawal experience continue...

Sound bite for Twitter and StockTwits is: Current Price seems reasonable. I plan to hold on to this stock as a need it for diversification. I made most of my money so far in banks and utilities. You have to wonder about the long term viability of utility stocks. See my spreadsheet at tri.htm.

I own this stock of Thomson Reuters Corp. (TSX-TRI, NYSE-TRI). I bought this stock in 1985 so I have had it for a very long time, almost 30 years. I bought stock to give portfolio some balance as I had too many financial stocks. Performance has been mediocre. I have made a total return of 7.71% per year with 4.42% from capital gains and 3.29% from dividends. These figures are in Canadian dollars.

Over the past year in insider trading there was some $7.8M in insider selling and $7.6M in net insider selling. There was some insider buying, but not much. Insider selling was some 0.02% of the market cap and so relatively small.

As for insider ownership, the Thomson family through The Woodbridge Company Limited owns some 57% of this company which is worth just over $21B. Also, the CEO owns shares worth around $11.3M.

The 5 year low, median and high median Price/Earnings per Share Ratios are 13.61, 15.54 and 17.47. The corresponding 10 year ratios are higher at 16.72, 18.82 and 21.18. The current P/E Ratio is 30.39 based on a stock price of $49.27 and 2015 EPS of $1.62 CDN$ ($1.35 US$). This stock price testing suggests that the stock price is relatively high.

However, if you look at the Price/Adjusted EPS, they are at 17.29, 19.74 and 22.19 over the 5 year range. The current P/AEPS is 20.51 based on a stock price of $49.27 and 2015 AEPS estimate of $2.40 CDN$ ($2.00 US$). This stock price testing suggests that the stock price is relatively reasonable.

I get a 10 year Price/Book Value per Share Ratio of 1.69 and the current P/B Ratio 2.45, a value some 45% above the 10 year P/B Ratio. The current P/B Ratio is based on a stock price of $49.27 and 2014 BVPS of $20.06 CDN$. This stock price testing suggests that the stock price is relatively high. Using US$ value gives similar results.

If you do stock price testing using dividend yield, the stock price looks reasonable. The current dividend yield is 3.27%. This historical average and median dividends are 3.25% and 3.06%. These values are slightly lower than the current dividend yield. This stock price testing suggests that the stock price is relatively reasonable. Using US$ value gives similar results.

When I look at analysts’ recommendations, I find Buy, Strong Buy and Hold recommendations. The vast majority of the recommendations are a hold, so the consensus would be a Hold. The 12 month consensus stock price is $42.10 in US$. This would be $50.56 in CDN$ at current exchange rates. This implies a total return of 5.89% with 3.27% from dividends and 2.62% from capital gains.

Joseph Solitro of the Motley Fool thinks that Thomson Reuters’ current weakness represents a buying opportunity. Richard Blackwell writing in the Globe & Mail says that Thomson Reuters has been hit by currency headwinds. He is talking about the strong US dollar. Thomson Reuters has announced that it will repurchases up to $1B of shares by the end of next year.

This is the second of two parts. The first part was posted on Tuesday, May 19, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.

Thomson Reuters Corp is the leading source of intelligent information for businesses and professionals. The company delivers 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 their revenues from selling electronic content and services to professionals, primarily on a subscription basis. Thomson and Reuters amalgamated in 2008. Its web site is here Thomson and Reuters.

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. Follow me on Twitter or StockTwits.

Tuesday, May 19, 2015

Thomson Reuters Corp.

On my other blog I am today writing about the 4% withdrawal rule for portfolios continue...

Sound bite for Twitter and StockTwits is: Mediocre dividend growth stock. With my portfolio I tried to pick dividend growth stocks that would last me for a lifetime. This is not always easy. See my spreadsheet at tri.htm.

I own this stock of Thomson Reuters Corp. (TSX-TRI, NYSE-TRI). I bought this stock in 1985 so I have had it for a very long time, almost 30 years. I bought stock to give portfolio some balance as I had too many financial stocks. Performance has always been mediocre. I have made a total return of 7.71% per year with 4.42% from capital gains and 3.29% from dividends. These figures are in Canadian dollars.

I bought this stock on the TSX in CDN$. I have been holding it in a CDN$ Trading Accounts. Even though the dividends are paid in US$, each one is converted into CDN$ when deposited into to account. Dividends have been paid in US$ since 1996.

The dividends are moderate and the dividend increases are low. The current dividend yield is 3.27%. The dividend growth in US$ is at 3.7% and 5.9% per year over the past 5 and 10 years. The last dividend increase was in 2014 and the increase was at 1.5%

My spreadsheet records what dividends I have actually received in CDN$. For me, the dividend growth is at 3.1% and 3.9% per year over the past 5 and 10 years. These values are, of course, affected by the changing CDN$/US$ exchange rates.

The 5 and 10 year total return is 9.03% and 5.01% per year in CDN$. The portion of this return attributed to dividends is 3.27% and 2.82% per year. The portion of this return attributed to capital gains is 5.76% and 2.91% per year.

The total return in US$ is less at 5.28% and 4.81% per year in US$. The portion of this return attributed to dividends is 3.37% and 3.11% per year. The portion of this return attributed to capital gains is 1.91% and 1.70% per year.

The total outstanding shares have decreased by 0.8% and increased by 2% per year over the past 5 and 10 years. In Revenues, Earnings and Cash flow the growth is better in CDN$ terms than in US$ terms. However, reporting is done in US$, so I will talk about growth in US$ terms. Revenue growth is none existent to moderate. EPS growth is good, but company puts out an Adjusted EPS where growth is low. Cash Flow growth is none existent to moderate.

Revenue declined by 0.6% and grew by 4.5% per year over the past 5 and 10 years. Revenue per Share grew at 0.2% and 2.5% per year over the past 5 and 10 years.

EPS grew by 18.4% and 4.32% per year over the past 5 and 10 years. EPS has fluctuated quite a bit. If you look at EPS using 5 year running averages, EPS is down by 18% and 7% per year over the past 5 and 10 years. The Adjusted EPS is low at 1% and 1.9% per year over the past 5 and 10 years.

Cash Flow is down by 0.6% and up by 3.6% per year over the past 5 and 10 years. CFPS is up by 0.2% and 1.6% per year over the past 5 and 10 years.

The Return on Equity has often been lower than 10%. The ROE was only at or above 10% 4 times in the past 10 years and twice in the past 5 years. The ROE for 2014 was quite good at 13.6% but the 5 year median value for ROE is just 4.7%. A problem is that the ROE comprehensive income is just 0.3% in 2014. This ROE has a 5 year median value of just 2.1%. The problem with such a difference in comprehensive income suggests that the earnings are not of good quality.

The debt ratios are fine, but not great. The Liquidity Ratio is 0.79. When this ratio is below 1.00, it means that the current assets cannot current liabilities. If you add in cash flow after dividends, the Liquidity Ratio is just 1.09, a rather low number. I prefer this number to be 1.50 or better. The Debt Ratio is good at 1.92 in 2014. The Leverage and Debt/Equity Ratios are a little high at 2.09 and 1.09. I prefer these to be under 2.00 and under 1.00, respectively.

This is the first of two parts. The second part will be posted on Wednesday, May 20, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.

Thomson Reuters Corp is the leading source of intelligent information for businesses and professionals. The company delivers 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 their revenues from selling electronic content and services to professionals, primarily on a subscription basis. Thomson and Reuters amalgamated in 2008. Its web site is here Thomson and Reuters.

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. Follow me on Twitter or StockTwits.

Friday, May 15, 2015

SNC-Lavalin Group Inc. 2

Sound bite for Twitter and StockTwits is: Price is looking relatively cheap. I still see this stock as rather risky. You have to wonder if an expected 10% capital gain over the next year is worth the risk. See my spreadsheet at snc.htm.

I own this stock of SNC-Lavalin Group Inc. (TSX-SNC, OTC- SNCAF). This stock was one from Mike Higgs' list of dividend growth stocks. I liked the idea of low dividends and high dividend increases. When you are building up a portfolio, low dividends are good for tax reasons. High dividend increases are attractive for the future.

When I look at insider trading over the past year, I find $0.2M of insider buying and $0.9M of insider selling with net insider selling at $0.7M. This is 0.01% of the outstanding shares and therefore relatively quite small.

In 2014 the outstanding share were increased by 658,000 or 0.43% for stock options. There is some insider ownership with the CEO owning shares worth around $1.4M and the Chairman owning share worth around $1.4M. This is way under 1% of the outstanding shares and so relatively small. The Caisse de dépôt et placement du Québec is a large shareholder.

The 5 year low, median and high median Price/Earnings per Share Ratios are 16.06, 20.50 and 24.93. The 10 year corresponding ratios are similar at 16.61, 21.62 and 27.63. The current P/E Ratio is 20.99 based on a stock price of $45.33 and 2014 EPS estimate of $2.16. This stock price testing suggests that the stock price is relatively reasonable.

I get a Graham Price of $33.72. The 10 year low, median and high median Price/Graham Price Ratios are 1.56, 2.09 and 2.52. The current P/GP Ratio is 1.34 based on a stock price of $45.33. This stock price testing suggests that the stock price is relatively cheap.

I get a 10 year Price/Book Value per Share Ratio of 4.28. The current P/B Ratio is 1.94 based on a stock price of $45.33 and BVPS of $23.40. The current P/B Ratio is some 55% lower than the 10 year median P/B Ratio. However, I must say that a ratio of 4.28 is a bit high. This stock price testing suggests that the stock price is relatively cheap.

The current Dividend Yield is 2.21%. The 5 year median Dividend Yield is 1.94% a value some 13% lower. Recently because of company problems, the Dividend Yields are getting higher. This stock price testing suggests that the stock price is relatively reasonable.

The historical average Dividend Yield is 1.64% and the historical median Dividend Yield is 1.40%. These Dividend Yields are 35% and 57% lower than the current Dividend Yield of 2.21% and suggests that the stock price is relatively cheap.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendation. Most of the recommendations are a Buy and the consensus would be a Buy. The 12 month stock price consensus is $50.20. This implies a total return of 12.95% with 2.21% from dividends and 10.74% from capital gains.

This Financial Post article by Yadullah Hussain talks about Caisse de dépôt et placement du Québec raising their stake in SNC. It would seem that they own 12% of the shares worth around $820M. This Financial Post article by Damon van der Linde talks about SNC hoping to resolve their legal troubles. Joseph Solitro of the Motley Fool recently gave this stock a good review.

This is the second of two parts. The first part was posted on Thursday, May 14, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.

SNC-Lavalin are involved with engineering and construction work around the world, this includes infrastructure and Buildings; infrastructure and construction; power (nuclear, thermal, hydro etc); chemicals and petroleum; environmental projects; mining and metallurgy projects. They have offices and Canada and around the world, from Algeria to Vietnam, including Australia, Europe, Russia, Africa, Middle East, Asia, South America, USA. Its web site is here SNC-Lavalin.

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. Follow me on Twitter or StockTwits.

Thursday, May 14, 2015

SNC-Lavalin Group Inc.

Sound bite for Twitter and StockTwits is: Dividend Growth Industrial. I still like this stock. I have been selling it off in the RRSP/RRIF accounts because of the low dividend. However, I have started to buy shares for the TFSA and hope in the future to buy more. This is not a perfect dividend growth stock, but has positive points and probably will do well over the longer term. It has higher risks as it is an industrial stock. See my spreadsheet at snc.htm.

I own this stock of SNC-Lavalin Group Inc. (TSX-SNC, OTC- SNCAF). This stock was one from Mike Higgs' list of dividend growth stocks. I liked the idea of low dividends and high dividend increases. When you are building up a portfolio, low dividends are good for tax reasons. High dividend increases are attractive for the future.

First of all I will talk about dividends. The current dividend yield is 2.21% is relatively high for this company which has often had yields less than 1%. They have had some problems so the stock has declined and as yield moves in the opposite direction, yields have climbed.

This company had had a long history of dividend increases. These have slowed down recently with dividend increases since 2012 at just over 4% per year, including for 2015. The long term median increase was 23%. The growth in dividends over the past 5 and 10 years is at 9.9% and 18% per year.

In order to make sense out of the earnings reported on this stock, TD Waterhouse uses an Adjusted EPS which is core E&C (Engineering and Construction) earnings. This is because SNC shows EPS at $0.24 for 2013 and $8.74 for 2014. The adjusted EPS is $2.46 and this is more in line with what SNC was making prior to 2013. The company made money selling Infrastructure Concession Investments (ICI) investments in 2014.

The Dividend Payout Ratios seem fine. The 5 year median values are 33% and 22%. If we use the Adjusted EPS for 2014, the DPR is 39%. The DPR for CFPS for 2014 is 88%, a rather high value. Analysts seem to think that the cash flow in 2015 will be negative. However, they think that cash flow will be positive in 2016 and then the DPR for CFPS would be around 28%. The Cash Flow did turn negative for the first quarter of 2015.

I first bought this stock in 1998. I have had a good return of 25.57% per year with 23.90% from capital gains and 1.67% from dividends. I have received $7.53 per share in dividends and my cost per share is $5.66. So presently I have received more in dividends that I have paid for this stock.

This stock has not been so kind to recent investors. The 5 and 10 year total returns are a loss of 3.65% and a gain of 7.97% per year. The portion of these returns attributable to dividends is 1.73% and 2.02% per year over these periods. The portion of these returns attributable to capital gain/loss is a loss of 5.38% and gain of 5.95% per year over these periods.

Outstanding shares have not changed over the past 5 and 10 years. Shares have increased due to Stock Options and have decreased due to Buy Backs. Revenue growth is moderate to good. Earnings growth is good over the past 10 years but not so over the past 5 years. For Cash Flow there is no growth over the past 10 years and Cash Flow has declined over the past 5 years.

Revenue is up by 6.2% and 9.1% per year over the past 5 and 10 years. Revenue per Share is up by 6% and 9% per year over the past 5 and 10 years. If we look at the EPS to Adjusted EPS, EPS has growth of almost 1% per year over the past 5 years and 13.7% per year over the past 10 years.

Cash Flow per Share is flat for the past 10 years and down by 24% per year over the past 5 years. However, Cash Flow is uneven and if you look at CFPS using 5 year running averages, growth is at 5.4% and 12.8% per year over the past 5 and 10 years.

Until 2013, the Return on Equity has been good and always above 10%. In 2013 it was 1.8% and this year it is 40.2%. However, for 2014 if you look use the Adjusted Net Income, the ROE becomes a probably more realistic 11.3%.

A negative thing about this stock is that the debt ratios are not very good. The Liquidity Ratios tend to be low and just squeeze past 1.00 when you add in cash flow less dividends. Debt Ratios are low and Leverage and Debt/Equity Ratios are high. However, there has been improvement in the last two recently.

In 2014 the Liquidity Ratio is 0.97. If you add in cash flow less dividends the ratio becomes 0.99. The Liquidity Ratio taking off the current portion of the long term debt is 0.97 and if you add in cash flow after dividends it becomes 1.00.

The Debt Ratio for 2015 is good at 1.50. However, its 5 year median value is 1.29. The 1.50 ratio for 2014 is the best one ever. Leverage and Debt/Equity Ratios for 2014 are 3.02 and 2.02. These are better than the 5 year median ratio of 4.75 and 3.78. These ratios have recently been improving.

This is the first of two parts. The second part will be posted on Friday, May 15, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.

SNC-Lavalin are involved with engineering and construction work around the world, this includes infrastructure and Buildings; infrastructure and construction; power (nuclear, thermal, hydro etc.); chemicals and petroleum; environmental projects; mining and metallurgy projects. They have offices and Canada and around the world, from Algeria to Vietnam, including Australia, Europe, Russia, Africa, Middle East, Asia, South America, USA. Its web site is here SNC-Lavalin.

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. Follow me on Twitter or StockTwits.

Wednesday, May 13, 2015

Veresen Inc. 2

On my other blog I am today writing about my investment accounts at TD continue...

Sound bite for Twitter and StockTwits is: Stock price is relatively expensive and risky. I look at a number of values, and most point to a very high relative current stock price. Jordan Cove project seems to have a lot of outstanding risks at present. See my spreadsheet at vsn.htm.

I own this stock of Veresen Inc. (TSX-VSN, OTC- FCGYF). I bought this stock in 2008 as Fort Chicago Energy Partnership. At that time it was a publicly traded limited partnership with increasing and high dividends. In 2010 the company changed to a corporation.

Outstanding shares are not being increased for stock options. It is not that there are no stock options, but they are in the form of Performance Share Units and Restricted Share Units.

There is not much insider ownership. The CEO owns shares worth around $0.4M, the CFP owns shares worth around $0.5M and the Chairman owns shares worth around $0.9M. This all add up to very little. When I look at insider trading over the past year, I find $0.8M of insider buying and no Insider Selling.

The 5 year low, median and high median Price/Earnings per Share Ratios are 42.93, 47.89 and 52.85. These are a lot higher than the corresponding 10 year values of 20.71, 25.47 and 30.38. All these P/E Ratios are rather high for a utility. This stock used to have more reasonable P/E Ratios until the stock price started to climb in 2011 with no corresponding climb in EPS. The current P/E Ratio is 59.48 based on a stock price of $18.44 and 2015 EPS estimate of $0.31. This stock price testing, of course, is suggesting that the stock price is relatively expensive.

I get a Graham Price of $9.12. The 10 year low, median and high median Price/Graham Price Ratios are 1.35, 1.64 and 1.93. The current P/GP Ratio is 2.02 based on a stock price of $18.44. This stock price testing suggests that the stock price is relatively expensive.

If we look at Distributable Cash the Price/Distributable Cash Ratios are 10.42, 11.71 and 13.01. The current P/DI Ratio is 17.56 based on a stock price of $18.44 and 2015 DI estimate of 1.05. The $1.05 is lower than the 2014 DI by some 6.3%. When we look at 12 month ending at the first quarter compared to the 12 months ending in 2014, DI is down by 4.5%. So a decline for 2015 is not unreasonable. This stock price testing suggests that the stock price is relatively expensive.

The 10 year Price/Book Value per Share Ratio is 1.92. The current P/B Ratio at 1.55 is some 19% lower. The current P/B Ratio is based on a stock price of $18.44 and BVPS of $11.93. This stock price testing is suggesting that the stock price is relatively reasonable and heading for relatively cheap.

The lowering of debt has affected the book value. Over the past few years the debt ratios have improved as the Book Value has grown. Debt ratios are currently quite good. A few years ago debt ratios were not good at all.

I cannot do any dividend yield testing. The yields used to be much higher than they are today, and the dividend rate has not changed since 2008. This stock used to be a Limited Partnership before changing to corporation. Because of this change the yield is declining. It was expected to decline to 4 or 5%, but the yield is still 5.42%. This would imply that the stock price can still climb or that dividends will be cut. The Payout Ratios are high.

The 10 year median Price/Cash Flow per Share Ratio is 7.76. The current P/CF Ratio at 14.10 is some 105% higher. The P/CF Ratio is based on a stock price of $18.44 and 2015 CFPS estimate of $1.16, an increase of CFPS of around 12%. The difference between the CFPS for the 12 months to the end of the first quarter and the end of 2014 is an increase of 1%. I think that this stock price testing is suggesting that the stock price is relatively expensive.

When I look at analysts' recommendations I find Buy, Hold and Underperform recommendations. Most recommendations are a Buy and the consensus recommendation is a Buy. The 12 month stock price consensus is $19.10. This implies a total return of 9% with 5.42% from dividends and 3.58% from capital gains. You have to wonder about Buy recommendations and capital gains of only 3.6%.

This article in the Financial Post talks about Veresen Inc.'s Jordan Cove project. The CEO calls this a high-risk game. This article in Hydroworld talks about Veresen's first quarterly results for 2015. This Newswire article talks about Energy Fundamentals Group's recent win in court re its options on Jordan Cove Energy project.

This is the second of two parts. The first part was posted on Tuesday, May 12, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.

Veresen is a leading diversified energy infrastructure company that owns and operates energy infrastructure assets across North America. We are engaged in three principal business lines of Pipelines, Midstream and Power (gas-fired and renewable facilities). Its web site is here Veresen.

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. Follow me on Twitter or StockTwits.

Tuesday, May 12, 2015

Veresen Inc.

Sound bite for Twitter and StockTwits is: High dividend yield and risks. This used to be a dividend growth company, but it is currently not that. However, the dividend is still quite high at 5.42%. I will be keeping this stock, but I do not also have a lot invested in it. See my spreadsheet at vsn.htm.

I own this stock of Veresen Inc. (TSX-VSN, OTC- FCGYF). I bought this stock in 2008 as Fort Chicago Energy Partnership. At that time it was a publicly traded limited partnership with increasing and high dividends. In 2010 the company changed to a corporation.

Although I have made good money on this stock and the dividend yield is still quite good, I do wonder how well it will do in the future. I think that the stock is riskier than when I initially bought it. I have had this stock for just over 6 years. My total return is 27.76% with 16.55% from capital gains and 11.21% from dividends.

The other thing is that I have collected some $6.24 per share in dividends and this equals some 88% of the price I paid for this stock of $7.08 per share. The current dividend is 5.42%. In the future the portion of the total return attributable to dividends will be lower. Also, this stock has already has had the run up in share price from converting to a corporation, so the capital gain portion of the total return in the future will also be lower.

A problem with this stock is that the dividend has been level since 2008. I do not see this changing anytime soon. The Dividend Payout Ratio for 2014 is 416% for EPS and 94.19% for CFPS. The company also puts out a distributable cash value and the company is paying out 91.7% of this value in 2012. No one thinks that they will lower the dividend, but then no one thinks that it will rise anytime soon.

The 5 and 10 year total return on this stock is 16.39% and 11.35% per year. The portion attributable to dividends is 7.19% and 6.95% per year over these periods. The portion attributable to capital gains is 9.19% and 4.40% per year over these periods.

The outstanding shares have increased by 7.6% and 6.3% per year over the past 5 and 10 years. As a shareholder, I am going to be more interested in the per share value to tell me how well the company is growing. With the company, the only growth is over the past 10 years in cash flow. Otherwise there is no real growth.

With Revenue, there is a problem in judging whether or not there is growth. They have been investing in other projects and companies and they now have dividend and equity income rather than "revenue". These are not really the same thing. However, over the past 3 years Operating Revenue and Other Income has been increasing, so this is good.

They give out a Distributable Cash value and this has been increasing, but only at a low level with the 5 and 10 year growth at 0% and 2.4% per year. EPS is down by 3% and 10.5% per year over the past 5 and 10 years. In EPS, there has been some gain over the past 3 years.

Cash Flow is down by 1.4% and up by 2.3% per year over the past 5 and 10 years. CFPS is down by 8.4% and 3.8% per year over the past 5 and 10 years. Both Cash Flow and CFPS has been level over the past 3 years. This is not a great showing.

The only bright spot in growth is in Book Value. BVPS is up by 17% and 6.3% per year over the past 5 and 10 years.

With lousy earnings, we also have lousy Return on Equity. The ROE was 2.1% in 2014 and the 5 year median value was 4.5%. The ROE on comprehensive income was better at 5.3% with a 5 year median value of 8.3%. This suggests that Earnings might be a bit better than they appear.

Until recently, the Liquidity Ratio was low. The 5 year median value until this year was 0.85. The Liquidity Ratio for 2014 was very good at 2.18. The Debt Ratio has often been low (under 1.50). However, the one for 2014 is 2.15. Leverage and Debt/Equity Ratios used to be rather high. The current ones at 1.87 and 0.87 are good. Debt ratios have much improved over the past few years.

This is the first of two parts. The second part will be posted on Wednesday, May 13, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.

Veresen is a leading diversified energy infrastructure company that owns and operates energy infrastructure assets across North America. We are engaged in three principal business lines of Pipelines, Midstream and Power (gas-fired and renewable facilities). Its web site is here Veresen.

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. Follow me on Twitter or StockTwits.