Stock Valuation & Dividend Analysis: Stockland Corp Ltd (SGP)

Name of Company Country of Origin/ Exchange Traded Sector Stock Price
STOCKLAND CORP LTD Australia/
ASX
Real Estate – REITs – REIT – Diversified AUD4.13
@ 03 Sep 2018
COMPANY PROFILE Stockland Corp Ltd develops and manages real estate projects. It invests in retail, office, logistics and office park properties as well as in residential properties and retirement living facilities.

Stockland is a diversified property developer and investor. About 75% of EBIT is rental income from its Australian commercial property portfolio, split among retail (72% of the portfolio), office (8%), and industrial (20%). Residential and retirement living contribute 20% and 5% of EBIT, respectively. Low but stable growth is expected from the commercial portfolio. Residential will be the strongest near-term earnings driver, underpinned by price growth and improved affordability driving volume.

Stock Code SGP
Stock Valuation and Dividend Analysis Below

Stockland Corp Dividend Yield

For stocks that has a history of paying meaningful dividends, the stock price is often dependent on how much dividend the company pays.
At the price of AUD4.13 as at 03 Sep 2018, Stockland Corp Ltd is trading at a Dividend Yield of 6.5%. This is a 10.3% discount to its historical average Dividend Yield of 5.8%.  (Note: The lower/higher the dividend yield, the more expensive/cheaper the stock is.)
Is the stock overvalued? One should not just look at one indicator to determine the fair value of a stock.
ProThinker believes in using a combination of valuation methods to decide whether a stock is over or undervalued? The five ratios we use are Price to Earnings, Price to Sales, Price to Cash Flow, Price to Book and Dividend Yield. We use multiple methods to value a stock because each has its benefits as well as shortcomings. Price to Earnings and Price to Cash Flow Ratios relate stock price to profitability but are meaningless when the comany has negative earnings or cash flows. Price to Sales Ratio is more stable because sales are never negative. However, this does not tell us whether the company is able to sell profitably. Price to Book Ratio gives us an indication as to how much we are paying for the company’s assets but it is not directly related to the company’s profitability. Dividend Yield cannot be used for companies that are paying little to no dividends.
While it is important to value stocks based on multiple valuation methods, this often leads to differing views on valuation. One indicator may suggest that a stock is overvalued while another suggest that it is undervalued. This does not help an investor who needs to make a definite decision whether to buy, hold or sell the stock. That is why we advocate the use of a Composite Valuation Indicator, which is derived from the best combination of the five indicators above. A Composite Valuation Indicator will give you ONE conclusion on whether a stock is under or over valued.
To find out more about our valuation methodology, click here. 
We should not only be concerned about the amount of dividends, we should determine if the dividends paid out by the company are sustainable. One way to do that is to compare dividends paid out to the cash flows that the company is generating.
The company usually pays out more dividends than its funds from operations, which is not good.

Stockland Corp Dividend vs Funds from Operations (FFO)

Source of Data: Company description, historical financial statements data and price data are from gurufocus.com or moneycontrol.com. Estimates are from marketscreener.com – Thomson Reuters.
Disclaimer: This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither ProThinker nor any other party guarantees its accuracy or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of ProThinker. Copyright(c) 2018. All rights reserved.

 

 

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