In our last Number Cruncher we discussed how Manulife (MFC), Quebecor (QBR.B) & Hydro One (H) are companies with multiple qualities. Now, we will look at these with our software Stockpointer.
Let’s start with MFC
The company has a high score of 72 which is explained by the performance (69.8) and risk (20.1) score. The company strengths are more oriented toward its low valuation risk than its incredible performance although the company’s sales grew at a respectable 21% in the last 5-year period. Its performance spread has been positive in the last 3 years, but it declined during the period.
If the FGV is below the historical average, the company is considered cheap relative to the historical average. The company is around its historical mean, but a favorable environment, as mentionned in the Number Cruncher, could push the stock towards its 2017 peak.
Let’s continue with QBR.B.
QBR.B has a solid SP score of 74 fueled by both its strong performance (80) and low risk (27.9) score. Our system evaluates QBR.B to be a quality and growth company. The company increased its performance spread, in other words, the difference between the return on capital and the cost of capital, increased on a relative basis by 56.6% compared to the previous year. The company rose significantly its EPS although annual sales growth matched the inflation during the period.
The company grew its earnings per share steadily in the last 5-year and as a consequence the share price followed the same trend. A fairly straightforward relationship.
Our third pick: H
Hydro has a strong score of 72 explained by its performance score (70.8) and risk score (25) while being identified as a quality and value by our software. Utilities tend to have lower performance score in our system because their return on capital is generally low, but they compensate it by having more leverage than a traditionnal company. Earnings per share rose strongly in the last 3-year and the performance spread has followed the same trend. Sales also started to expend more vigorously 3 years ago. On the other hand, the company’s dividend yield has declined over the past 3 years. The company has potentially increased its capital expenditures instead of hiking its dividend. We do not see this negatively.
As mentionned in the Number Cruncher, the company has an excellent ESG score. It is indeed involved in nuclear power, but it is certainly much better than coal-fired power plant. The company has had only a few events, and they have all been rated at a low level of controversy.
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