Wednesday, May 16, 2012

Ford 1 Of 5 Interesting Dividend Plays

Investors would do well to follow some of the suggested guidelines when it comes to looking for new investment ideas. These are not absolute rules; they are just suggestions and there are always exceptions to the rule. The goal is to try to satisfy as many of them as possible. The stocks on this list generally satisfied the suggested criteria. It is important that investors have a plan when it comes to looking for new investments. We have provided some guidelines, and this information can be obtained here: "Our suggested guidelines when searching for new investment ideas."

Ford Motor Company (F) is an example of a stock that meets the suggested criteria but is a play that we would be cautious about getting into.

  • Net income increased from $2.7 billion in 2009 to $20.2 billion in 2011
  • EBITDA increased from $15.9 billion in 2009 to $17.3 billion in 2011
  • Cash flow per share increased from $1.97 in 2009 to $2.74 in 2011
  • Sales jumped from 118.3 billion in 2009 to $136 billion in 2011
  • It has a ROE of 199%
  • A Low payout ratio of 12%
  • A decent interest coverage ratio of 3
  • Annual EPS before NRI increased from $- 01.9 to $1.51
  • It also sports a good current and quick ratio of 1.9 and 1.8 respectively

Negative Developments

  • It has negative levered free cash flow of $-17 billion
  • A quarterly earnings growth of -45%
  • A quarterly revenue growth of -2.00%
  • A five year sales growth of -4.9%
  • A rather lofty long term debt to equity ratio of 5.08%

While on one side of the equation Ford looks pretty good, when the negative metrics are factored in, plays such as Mosaic (MOS), Emerson Electric (EMR) and Starbucks (SBUX) make for better investments. However, individuals willing to take on some risk can wait for Ford to test the 9-9.50 ranges and then sell puts with strikes in the 7.00-8.00 ranges.

Company: Ford Motor Co (F)

Growth

  1. Net Income ($mil) 12/2011 = 20213
  2. Net Income ($mil) 12/2010 = 6561
  3. Net Income ($mil) 12/2009 = 2717
  1. EBITDA ($mil) 12/2011 = 17368
  2. EBITDA ($mil) 12/2010 = 18885
  3. EBITDA ($mil) 12/2009 = 15969
  4. Cash Flow ($/share) 12/2011 = 2.74
  5. Cash Flow ($/share) 12/2010 = 3.53
  6. Cash Flow ($/share) 12/2009 = 1.97
  1. Sales ($mil) 12/2011 = 136300
  2. Sales ($mil) 12/2010 = 120900
  3. Sales ($mil) 12/2009 = 118300
  1. Annual EPS before NRI 12/2007 = -0.19
  2. Annual EPS before NRI 12/2008 = -3.13
  3. Annual EPS before NRI 12/2009 = 0
  4. Annual EPS before NRI 12/2010 = 1.96
  5. Annual EPS before NRI 12/2011 = 1.51

Dividend history

  1. Dividend Yield = 1.89
  2. Dividend Yield 5 Year Average 12/2011 = 0.08
  3. Dividend 5 year Growth 12/2011 = N/A

Dividend sustainability

  1. Payout Ratio 09/2011 = 0.12
  2. Payout Ratio 5 Year Average 12/2011 = 0.01

Performance

  1. Percentage Change Price 52 Weeks Relative to S&P 500 = -30.65
  2. Next 3-5 Year Estimate EPS Growth rate = 7.24
  3. EPS Growth Quarterly(1)/Q(-3) = 137.1
  4. Return on Investment 12/2011 = 6.28
  5. Return on Investment 09/2011 = 6.28
  1. Current Ratio 12/2011 = 1.91
  2. Current Ratio 5 Year Average = 1.93
  3. Quick Ratio = 1.81
  4. Cash Ratio = 1.68
  5. Interest Coverage Quarterly = 3.02

Company: Emerson Electric Company (EMR)

Basic Key ratios

  1. Percentage Held by Insiders = 0.85
  2. Relative Strength 52 weeks = 52
  3. Dividend 5-year Growth = 6.88
  4. Cash Flow 5 -year Average = 3.64
  5. Dividend Yield 5-Year Average = 2.88

Growth

  1. Net Income ($mil) 12/2011 = 2480
  2. Net Income ($mil) 12/2010 = 2164
  3. Net Income ($mil) 12/2009 = 1724
  1. EBITDA ($mil) 12/2011 = 4721
  2. EBITDA ($mil) 12/2010 = 3956
  3. EBITDA ($mil) 12/2009 = 3397
  1. Cash Flow ($/share) 12/2011 = 4.46
  2. Cash Flow ($/share) 12/2010 = 3.8
  3. Cash Flow ($/share) 12/2009 = 3.26
  1. Sales ($mil) 12/2011 = 24222
  2. Sales ($mil) 12/2010 = 21039
  3. Sales ($mil) 12/2009 = 20915
  1. Annual EPS before NRI 12/2007 = 2.66
  2. Annual EPS before NRI 12/2008 = 3.11
  3. Annual EPS before NRI 12/2009 = 2.27
  4. Annual EPS before NRI 12/2010 = 2.69
  5. Annual EPS before NRI 12/2011 = 3.24

Dividend history

  1. Dividend Yield = 3.3
  2. Dividend Yield 5 Year Average 12/2011 = 2.88
  3. Dividend 5 year Growth 12/2011 = 6.88

Dividend sustainability

  1. Payout Ratio 09/2011 = 0.51
  2. Payout Ratio 5 Year Average 12/2011 = 0.47

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 11.16
  2. EPS Growth Quarterly(1)/Q(-3) = -101.37
  3. 5 Year History EPS Growth 12/2011 = 2.01
  4. 5 Year History EPS Growth 09/2011 = 2.01
  5. ROE 5 Year Average 12/2011 = 23.37
  1. Current Ratio 12/2011 = 1.38
  2. Current Ratio 5 Year Average = 1.43
  3. Quick Ratio = 1.12
  4. Cash Ratio = 0.42
  5. Interest Coverage Quarterly = 15.03

Company: The Mosaic Company (MOS)

Basic Key ratios

  1. Percentage Held by Insiders = 0.52
  2. Number of Institutional Sellers 12 Weeks = 1
  3. Relative Strength 52 weeks = 34
  4. Dividend 5-year Growth = 0
  5. Cash Flow 5 -year Average = 3.56
  6. Dividend Yield 5-Year Average = 0.27

Growth

  1. Net Income ($mil) 12/2011 = 2515
  2. Net Income ($mil) 12/2010 = 827
  3. Net Income ($mil) 12/2009 = 2350
  1. EBITDA ($mil) 12/2011 = 3777
  2. EBITDA ($mil) 12/2010 = 1737
  3. EBITDA ($mil) 12/2009 = 3366
  4. Cash Flow ($/share) 12/2011 = 5.47
  5. Cash Flow ($/share) 12/2010 = 3.03
  6. Cash Flow ($/share) 12/2009 = 5.23
  1. Sales ($mil) 12/2011 = 9938
  2. Sales ($mil) 12/2010 = 6759
  3. Sales ($mil) 12/2009 = 10298
  1. Annual EPS before NRI 12/2007 = 0.95
  2. Annual EPS before NRI 12/2008 = 4.55
  3. Annual EPS before NRI 12/2009 = 4.27
  4. Annual EPS before NRI 12/2010 = 1.9
  5. Annual EPS before NRI 12/2011 = 4.34

Dividend history

  1. Dividend Yield = 1.00
  2. Dividend Yield 5 Year Average 12/2011 = 0.27
  3. Dividend 5 year Growth 12/2011 = 0

Dividend sustainability

  1. Payout Ratio 09/2011 = 0.04
  2. Payout Ratio 5 Year Average 12/2011 = 0.05

Performance

  1. Percentage Change Price 52 Weeks Relative to S&P 500 = -28.29
  2. Next 3-5 Year Estimate EPS Growth rate = 17.96
  3. EPS Growth Quarterly(1)/Q(-3) = 140.5
  4. 5 Year History EPS Growth 12/2011 = 15.63
  5. ROE 5 Year Average 12/2011 = 20.95
  6. Return on Investment 12/2011 = 16.66
  1. Current Ratio 12/2011 = 3.67
  2. Current Ratio 09/2011 = 3.67
  3. Current Ratio 06/2011 = 3.03
  4. Current Ratio 5 Year Average = 2.99
  5. Quick Ratio = 2.81
  6. Cash Ratio = 2.33
  7. Interest Coverage Quarterly = N/A

Valuation

Book Value Quarterly = 27.81

Price/ Book = 1.76

Price/ Cash Flow = 8.93

Price/ Sales = 1.87

EV/EBITDA 12 Mo = 4.93

Company: Starbucks Corp (SBUX)

Basic Key ratios

  1. Percentage Held by Insiders = 2.71
  2. Number of Institutional Sellers 12 Weeks = 2

Growth

  1. Net Income ($mil) 12/2011 = 1246
  2. Net Income ($mil) 12/2010 = 946
  3. Net Income ($mil) 12/2009 = 391
  4. 12months Net Income this Quarterly/12 months Net Income 4Q's ago = 21.43
  5. Quarterly Net Income this Quarterly/same Quarter year ago = 18.46
  1. EBITDA ($mil) 12/2011 = 2394
  2. EBITDA ($mil) 12/2010 = 2011
  3. EBITDA ($mil) 12/2009 = 1162
  4. Cash Flow ($/share) 12/2011 = 2.3
  5. Cash Flow ($/share) 12/2010 = 2.05
  6. Cash Flow ($/share) 12/2009 = 1.57
  1. Sales ($mil) 12/2011 = 11700
  2. Sales ($mil) 12/2010 = 10707
  3. Sales ($mil) 12/2009 = 9775
  1. Annual EPS before NRI 12/2007 = 0.87
  2. Annual EPS before NRI 12/2008 = 0.71
  3. Annual EPS before NRI 12/2009 = 0.8
  4. Annual EPS before NRI 12/2010 = 1.28
  5. Annual EPS before NRI 12/2011 = 1.52

Dividend history

  1. Dividend Yield = 1.20
  2. Dividend Yield 5 Year Average 12/2011 = 0.62
  3. Dividend 5 year Growth 12/2011 = N/A

Dividend sustainability

  1. Payout Ratio 09/2011 = 0.42
  2. Payout Ratio 5 Year Average 12/2011 = 0.15

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 17.78
  2. EPS Growth Quarterly (1)/Q(-3) = -117.65
  3. 5 Year History EPS Growth 12/2011 = 20.08
  4. ROE 5 Year Average 12/2011 = 25.4
  5. Return on Investment 12/2011 = 24.05
  6. Current Ratio 12/2011 = 2.21
  7. Current Ratio 09/2011 = 2.21
  8. Current Ratio 06/2011 = 1.96
  9. Current Ratio 5 Year Average = 1.32
  10. Quick Ratio = 1.36
  11. Cash Ratio = 1.18
  12. Interest Coverage Quarterly = 52.92

Valuation

  1. Book Value Quarterly = 6.82
  2. Price/ Book = 8.07
  3. Price/ Cash Flow = 23.88
  4. Price/ Sales = 3.29
  5. EV/EBITDA 12 Mo = 16.61

Company: Sempra Energy (SRE)

Growth

  1. Net Income ($mil) 12/2011 = 1365
  2. Net Income ($mil) 12/2010 = 749
  3. Net Income ($mil) 12/2009 = 1129
  1. EBITDA ($mil) 12/2011 = 3164
  2. EBITDA ($mil) 12/2010 = 2089
  3. EBITDA ($mil) 12/2009 = 2618
  4. Cash Flow ($/share) 12/2011 = 8.62
  5. Cash Flow ($/share) 12/2010 = 7.71
  6. Cash Flow ($/share) 12/2009 = 7.95
  1. Sales ($mil) 12/2011 = 10036
  2. Sales ($mil) 12/2010 = 9003
  3. Sales ($mil) 12/2009 = 8106
  1. Annual EPS before NRI 12/2007 = 4.26
  2. Annual EPS before NRI 12/2008 = 4.43
  3. Annual EPS before NRI 12/2009 = 4.78
  4. Annual EPS before NRI 12/2010 = 3.93
  5. Annual EPS before NRI 12/2011 = 4.47

Dividend history

  1. Dividend Yield = 3.7
  2. Dividend Yield 5 Year Average 12/2011 = 2.96
  3. Dividend 5 year Growth 12/2011 = 11.78

Dividend sustainability

  1. Payout Ratio 06/2011 = 0.43
  2. Payout Ratio 5 Year Average 12/2011 = 0.35

Performance

  1. Next 3-5 Year Estimate EPS Growth rate = 7
  2. EPS Growth Quarterly(1)/Q(-3) = -113.08
  3. ROE 5 Year Average 12/2011 = 13.07
  4. Return on Investment 06/2011 = 5.52
  5. Current Ratio 06/2011 = 0.56
  6. Current Ratio 5 Year Average = 0.77
  7. Quick Ratio = 0.48
  8. Cash Ratio = 0.15
  9. Interest Coverage Quarterly = 4.35

Conclusion

The markets are still in a corrective phase and will most likely remain volatile for the better part of the second quarter. Long-term investors can use strong pullbacks to slowly start deploying money into long-term investments. One of the best ways to do this is by selling naked puts at strikes you would not mind owning the stock at.

Disclaimer

This list of stocks is meant to serve as a starting point. Please do not treat this as a buying list. It is imperative that you do your due diligence and then determine if any of the above plays meet with your risk tolerance levels. The Latin maxim caveat emptor applies - let the buyer beware.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: EPS and Price Vs industry charts obtained from zacks.com. A major portion of the historical data used in this article was obtained from zacks.com. Earnings estimate and growth charts sourced from dailyfinance.com

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