I am continuing my review this stock (TSX-REI.UN) today, as I have not reviewed it since I received the annual report for the end of December 2008. I first bought this stock in January 1998 and then purchased some more in April 2000, January 2002 and finally in June 2006. To date I have made a return on this stock of 14.5% per year.
In looking at Insider Buying and Insider Selling, I find that there is a fair bit of Insider Buying. The CEO, CFO, Directors and Officers of this company have all increased their investments in the company. They are not big increases proportionate to what they own, but it show that they do have faith in the company.
When looking at spreadsheet ratios, I find that the P/E is quite high at 30 for 2009 based on the earnings estimate. Even the Trailing P/E is high at 24. The P/Distributable Income is more reasonable at 13 and 11 for this ratio and its trailing number, but as I said yesterday, it is hard to compare Distributable Income ratios with past years, as it is only recently that this calculating has been standardized. Even when looking at the low averages for P/DI, the current ratios are fairly close. Using P/DI, it would suggest that the price is reasonable, but not exceeding good.
When looking at the Graham Price, I find that the stock price is quite a bit above the Graham Price. The Graham Price for this stock has often been below the stock price. If you look at the Premium/Discount figure for Graham Price and stock price, you will find that the current premium on the stock price, compared to the Graham Price is a lot higher than the 10 year average and just below the 5 year average. This does not point to a current cheap stock price.
The last thing I want to talk about is the analysts’ recommend. There are lots of Hold ratings on this stock, and a few Strong Buys and some Buys. The mean rating would be a Buy. (See my site for information on analyst ratings.) The reason the consensus recommendation is a Buy when there are lots of Hold ratings is because there some Strong Buys for this stock and there are no ratings lower than a Hold.
The reason that there are many holds is that the stock price has increased quite a bit lately and some analysts feel that the distribution may be unsustainable. No one thinks that the whole distribution is in jeopardy. The company may continue the current distribution for a few years and not increase it has it has done for quite a few years now.
I am holding on to what I have now. I will also not be adding to my current shares. I have reloaded my spreadsheet. The stock price has gone up over 1% between yesterday and today. I have also made a few other changes.
This is an equity real estate trust, which owns a portfolio of retail properties across Canada. Its web site is www.riocan.com. See my spreadsheet at www.spbrunner.com/stocks/rei.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 at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets.
No comments:
Post a Comment