The Canadian stocks on our list have debt-to-equity ratios that exceed 90% and could experience balance sheet weakness in this rising interest rate environment
SmallCapPower | February 13, 2019: An important metric to look at when analyzing the financial health of a company is the debt-to-equity ratio. If this ratio is too high, the company might be at risk of cutting its dividend or selling assets. Generally, the lower the ratio, the better, with some exceptions (capital-intensive industries or banks), a ratio of 100% would indicate that the Company has one dollar of equity for every one dollar of debt. The Canadian stocks we’ve discovered have debt-to-equity ratios that exceed 90%.
*Share prices as at close February 11, 2019, data obtained from S&P Capital IQ
Extendicare Inc. (TSX:EXE) – $7.63
Healthcare
Extendicare is a healthcare company that provides care and services for seniors in Canada. The Company offers long-term care, retirement living, and home health care services, which includes nursing care, speech and physical therapy, and assistance with various activities. Extendicare also provides liability insurance products in the United States. On January 30, 2019, the Company announced a monthly dividend of $0.04 per share, which is to be paid on February 15.
- Market Cap: $668.1 Million
- Debt-to-Equity: 407.7%
- Dividend Yield: 6.4%
- 5-Day Return: +1.3%
- 1-Month Return: 8.0%
Sienna Senior Living Inc. (TSX:SIA) – $17.61
Healthcare
Sienna Senior Living is a seniors’ living provider with 87 residential homes in Canada. The Company offers a wide variety of living options, including assisted and independent living, long-term and residential care, and specialized services and programs. The Company focuses on national growth with hopes to drive long-term value up for shareholders. With over 12,000 employees, Sienna is determined to help residents live everyday fully. On November 2018, the Company released its Q3/18 financial results, highlighted by a 18.0% increase in year-over-year revenue.
- Market Cap: $1.2 Billion
- Debt-to-Equity: 175.4%
- Dividend Yield: 5.2%
- 5-Day Return: +0.2%
- 1-Month Return: +7.0%
Cogeco Communications Inc. (TSX:CCA) – $74.97
Media and Entertainment
Cogeco Communications is a communication operator focused on Canada and the United States. The Company provides Internet, video, and telephony services to both residential and business customers through its two-way broadband fibre networks. On January 10, 2019, Cogeco Communications released its Q1/19 financial results, highlighted by a 16.3% increase in revenue and a 11.2% increase in free cash flow year-over-year. Moreover, Cogeco Communications increased its dividend to $0.525 per share from $0.475 per share.
- Market Cap: $3.7 Billion
- Debt-to-Equity: 165.8%
- Dividend Yield: 5.2%
- 5-Day Return: -0.9%
- 1-Month Return: -0.3%
Corus Entertainment Inc. (TSX:CJR.B) – $5.85
Media and Entertainment
Corus Entertainment is a leading content and media company that creates quality brands and content across a variety of platforms for audiences around the world. The Company’s portfolio encompasses 44 speciality television services, 39 radio stations, animation software, digital assets, and more. Corus’ premium brands include a variety of networks such as W Network, Food Network, Global Television, National Geographic, Disney Channel Canada, YTV and Nickelodeon. On October 19, 2018, Corus Entertainment announced its Q4/18 and year-end results, reporting free cash flow of $349M for the year, an increase from $292.7M from the year prior.
- Market Cap: $1.7 Billion
- Debt-to-Equity: 91.0%
- Dividend Yield: 6.6%
- 5-Day Return: -0.4%
- 1-Month Return: +0.2%
Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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