Equitable Group Inc.

Sound bite for Twitter and StockTwits is: Dividend Growth Financial. Price is reasonable and below the median. This suggests a good time to buy if you are interested in this stock. See my spreadsheet on Equitable Group Inc.

I do not own this stock of Equitable Group Inc. (TSX-EQB, OTC-EQGPF). I had read a glowing report on investing on this company in 2013, so I decided to check it out. It was interesting as it was loaning money to new immigrants, a class of people who generally have a difficult time getting loans and mortgages from our regular banks. It sounded intriguing.

The dividends are low and the dividend growth is moderate. The current dividend is 1.65% and it has a historical yield of 1.44%. The growth over the past 5 and 10 years is at 13.8% and 8% per year. The can afford their dividends as the Dividend Payout Ratio for 2016 is 9.7% with 5 year coverage at 9.8%. Note that mostly cash flow is ignored for banks as is the DPR for cash flow.

This bank has good growth in Revenue, Earnings and book value. For example, the growth in Revenue per Share over the past 5 and 10 years is at 13.8% and 14.7% per year. The growth in EOS is at 17% and 14.2% per year over the past 5 and 10 years.

The Return on Equity (ROE) is good and above 10% since 2003. Both the Book Value (Equity) and Net Income are rising. This is the best sort of ROE to have. The ROE for 2016 was 14.2% with a 5 year median of 15.2%. The ROE on Comprehensive Income is close with an ROE of 14.9% for 2016 with a 5 year median of 14.9% also.

The 5 year low, median and high median Price/Earnings per Share Ratios are 5.67, 7.20 and 8.43. The corresponding 10 year values are 5.58, 6.96 and 8.40. The historical ones are 6.07, 7.20 and 8.72. The current P/E Ratio is 6.40 based on 2017 EPS estimate of $9.07 and a current stock price of $58.08. These are quite low P/E Ratios. Some of the banks have low P/E Ratios but this seems to have the lowest. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a Graham Price of $110.63. The 10 year low, median and high median Price/Graham Price Ratios are 0.46, 0.58 and 0.70. The current P/GP Ratio is 0.52 based on a stock price of $58.08. This stock price testing suggests that the stock price is relatively reasonable and below the median.

The 10 year median Price/Book Value per Share Ratio is 1.08. The current P/B Ratio is 0.97 a value some 10.5% lower. The current P/B Ratio is based on a Book Value of $988M, BVPS of $59.98 and a stock price of $58.08. When the P/B Ratio is below 1.00 this means that the stock is selling below its theoretical breakup value. This stock price testing suggests that the stock price is relatively reasonable and below the median.

The historical dividend yield is 1.44%. The current dividend yield is 1.65% a value some 14.8% higher. The current dividend yield is based on dividends of $0.96 and a stock price of $58.08. This stock price testing suggests that the stock price is relatively reasonable and below the median.

The 10 year median Price/Sales (Revenue) Ratio is 3.65. The current P/S Ratio is 3.08 a value some 15.8% lower. The current P/S Ratio is based on 2017 Revenue estimate of $311M, Revenue per Share of $18.87 and a stock price of $58.08. This stock price testing suggests that the stock price is relatively reasonable and below the median.

When I look at analysts' recommendations I find Buy and Hold recommendations, with a consensus of Buy. The 12 month stock price is $67.18. This implies a total return of 17.32% with 15.67% from capital gains and 1.65% from dividends based on a current price of $58.08.

Ambrose O'Callaghan of Motley Fool likes this stock. Rob Logan on Ledger Gazette says National Bank raised their Q3 EPS estimate for Equitable. Financial Newsweek Staff on Financial Newsweek gives some technical analysis and also talk about Equitable's low Price to Book Ratio. See what analysts are saying about this stock on Stock Chase.

Equitable Group Inc. is a niche mortgage lender. The company's primary business is first charge mortgage financing, which offer through company's wholly owned subsidiary, Equitable Bank (formerly The Equitable Trust Company). Equitable Bank is a Schedule I bank pursuant to the Bank Act; it actively originates mortgages across Canada and serves single family, small & large commercial borrowers. Its web site is here Equitable Group Inc.

The last stock I wrote about was about was Medtronic Inc. (NYSE-MDT)... learn more. The next stock I will write about will be North West Company (TSX-NWC, OTC-NWTUF)... learn more on Monday November 30, 2017 around 5 pm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

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