Finning International Inc.

Sound bite for Twitter and StockTwits is: Cheap to reasonable. I tend to think that the best stock price test is using Dividend Yield. This test uses no estimate and uses current data. The problem using P/E Ratios for Industrial stocks is that earnings tend to be volatile. It has been a tough recovery for a lot of companies, but Finning seems to currently have momentum. See my spreadsheet on Finning International Inc.

I do not own this stock of Finning International Inc. (TSX-FTT, OTC-FINGF). When I was in the market to buy an industrial stock in this area in 2007, I look at this stock was well as Toromont Industries (TSX-TIH). At the time I liked Toromont better, so that is what I bought. Now, the only reason I would not buy this company is because I own Toromont Industries Ltd. They are both involved with Caterpillar equipment, although the companies are often classified in different sectors. I classify these companies as industrials, but Stock Channel classifies Finning as Construction and Finning as Industrial.

Dividends are low to moderate. Lately the dividend is higher than it has ever been before. The current dividend is 2.74%. The current dividend is based on dividends of $0.73 and a stock price of $26.67. The 5 year median dividend yield is 2.40%, and the historical median dividend is 1.64%. The dividend growth is moderate. The dividends have grown at 9.1% and 11.4% per year over the past 5 and 10 years.

This year dividends have not increased. The company has raised it dividends every year since 2002 with the exception of 2009. Between 1996 and 2001 dividends were flat. The last time the dividends were decreased was in 1991. So really dividend changes are a mixed bag.

Last year was not a good year and the company had an earnings loss. However, if you compare the dividends paid over the paid 5 years to the EPS over the past 5 years, the Dividend Payout Ratio is 48.6%. The 5 year median Dividend Payout Ratio is 30.8%. (The median is what the payout is most likely to be.) The DPR for CFPS for 2015 is 18.2% with a 5 year median of 12.5%. So it seems that the company can afford the dividends.

2015 was not a good year as they had an earnings loss. However, the earnings loss was mainly due an asset impairment loss. Analysts expect the company to have positive earnings again in this year. This seems reasonable.

The 5 year low, median and high median Price/Earnings per Share Ratios are 11.13, 13.17 and 15.20. The corresponding 10 year ratios are 14.47, 15.85 and 19.23. The corresponding historical ratios are 12.03, 14.99 and 17.80. The current forward P/E Ratio is 39.22 based on a stock price of $26.67 and 2016 EPS estimate of $0.68. The forward P/E Ratio corresponding with the 2017 EPS estimate of $1.25 is 21.34. All this would seem to suggest that this stock price testing shows the stock price to be relatively expensive.

I get a Graham Price of $13.13. The 10 year low, median and high median Price/Graham Price Ratios are 1.15, 1.44 and 1.71. The current P/GP Ratio is 2.03 based on a stock price of $26.67. This stock price testing suggests that the stock price is relatively expensive.

I get a 10 year Price/Book Value per Share Ratio of 2.34. The current P/B Ratio is 2.37 a value that is just 1.25 higher than the 10 year ratio. The current P/B Ratio is based on BVPS of $11.27 and a stock price of $26.67. This stock price suggests that the stock price is relatively reasonable and around the median.

The historical median Dividend Yield is 1.64%. The current dividend is 67% higher at 2.74%. The current dividend is based on dividends of $0.73 and a stock price of $26.67. This stock price testing suggests that the stock price is relatively cheap.

Dividend yields have been higher lately than historically. The 5 year median dividend yield is 2.40%. This is 14% below the current yield. Against the 5 year median, the stock price is relatively reasonable and below the median.

When I look at analysts' recommendations, I find Strong Buy, Buy, Hold and Underperform Recommendations. Most of the recommendations are a Hold and the consensus is a Hold. The 12 month stock price consensus is $24.72.

Yesterday Hazel Jackson on Frisco Fastball talked about recent analysts coverage with 2 rating it a "Buy", 2 "Sell", while 4 "Hold". This means 25% are positive. Will Ashworth on Motley Fool says why he does not like this stock. However, they did not repurchase 10% of the shares. So far there has been no repurchase in 2016. In 2015 they repurchased 2.5% of the outstanding shares for around $20.76 per share. (I must admit I also do not like share repurchase plans and often they are not repurchased at a good price.) Mostly the analysts like this stock at Stock Chase.

I will have only one entry for this stock this year. However, I did a more complete report on this company in 2015 and you can see that report here and here.

The last stock I wrote about was about was Crescent Point Energy Corp. (TSX-CPG, NYSE-CPG)... learn more . The next stock I will write about will be WiLan Inc. (TSX-WIN, OTC-WILN)... learn more on Monday, December 5, 2016 around 5 pm.

This company sells, rents and provides customer support services for Caterpillar equipment and engines. They cover Canada, UK, Argentina, Bolivia, Chile and Uruguay. Its web site is here Finning International Inc.

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.

See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits.