Stella-Jones Inc.

Sound bite for Twitter and StockTwits is: Dividend Growth Materials. It would seem on some measures that the stock is relatively expensive. Also, I generally do not like buying stocks which have a dividend yield of less than 1%. However this is a good stock with great debt ratios and good ROEs. See my spreadsheet on Stella-Jones Inc.

I do not own this stock of Stella-Jones Inc. (TSX-SJ, OTC- STLJF). I started a spreadsheet on this stock in mid-2009 because of a favorable report I read on this stock. It was considered to be a dividend growth stock and I am always on the lookout for dividend growth stocks.

The company has very good debt ratios. The Liquidity Ratio for 2016 is 8.57 with a 5 year median ratio of 8.46. The Debt Ratio for 2016 is 2.10 with 5 year median ratio of 2.10. The Leverage and Debt/Equity Ratios for 2016 is 1.91 and 0.91.

The Return on Equity has been 15% or above for the past 5 years. It has been above 10% for the past 10 years. The ROE for 2016 is 15% with 5 year median of 15.5%. The Comprehensive Income has varied but is similar with 2016 ROE on Comprehensive Income at 13.5% and 5 year median of 19.8%. Another good factor is the Book Value (or Equity) has been increasing by 23.4% and 21.3% per year over the past 5 and 10 years.

The 5 year low, median and high median Price/Earnings per Share Ratios are 15.76, 20.24 and 22.30. The 10 year corresponding ratios are 12.31, 15.52 and 19.71. The corresponding historical ratios are 8.14, 10.60 and 13.35. The current P/E Ratio is 24.23 based on 2017 EPS estimate of $2.05 and a stock price of $49.68. The 2018 P/E Ratio is 20.79 based on 2018 EPS estimate of $2.39 and a stock price of $49.68. This stock price testing suggests that the stock price may be reasonable, but it is certainly above the median and close to expensive.

I get a 2017 Graham Price of $26.61 and a 2018 Graham Price of $28.73. The 10 year low, median and high median Price/Graham Price Ratios are 0.99, 1.32 and 1.68. The current P/GP Ratio is 1.87 and for 2018 is 1.73. These P/GP Ratios are based on a stock price of $49.68. This stock price testing suggests that the stock price is relatively expensive.

The 10 year median Price/Book Value per Share Ratio is 2.53. The current P/B Ratio is 3.24 a value some 28% higher based on Book Value of $1,064M, Book Value per Share of $15.35 and a stock price of $49.68. This stock price testing suggests that the stock price is relatively expansive.

The historical median dividend yield is 1.14%. The current dividend yield is 0.89% based on dividends of $0.44 and a stock price of $49.68. The current dividend yield is some 22% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expansive.

They certainly can afford their dividend. The Dividend Payout Ratio for 2016 is 18% with 5 year coverage of 16%. The DPR for CFPS is 10% with 5 year coverage of 9.5%. This are very good rates. Also the growth in dividends is good with growth at 26% and 27.6% per year over the past 5 and 10 years.

The 10 year median Price/Sales (Revenue) Ratio is 1.56. The current P/S Ratio is 1.85 based on 2017 Revenue estimate of $1,863M, Revenue per share of $26.87 and a stock price of $49.68. The 2018 P/S Ratio is 1.80 based on 2018 Revenue estimate of $1,919M, Revenue per Share of $27.68 and a stock price of $49.68. The current P/S Ratio and the 2018 P/S Ratio is some 18% and 15% respectively above 10 year median P/S Ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.

When I look at analysts' recommendations, I find Buy (4) and Hold (4) recommendations. The consensus would be a Buy. The 12 month stock price consensus is $52.88. This implies a total return of 7.33% with 6.44% from capital gains and 0.89% from dividends based on a current stock price of $49.68.

Liliana Gabriel on Simply Wall Street takes a look at this stock. A JCTY Staff Writer on JCTY News talks about this stock. See what analyst are saying on Stock Chase. They generally like this company.

Stella-Jones Inc. is a leading North American producer and marketer of industrial pressure treated wood products, specializing in the production of railway ties and timbers as well as wood poles supplied to electrical utilities and telecommunications companies. The Company also provides treated consumer lumber products and customized services to lumber retailers and wholesalers for outdoor applications. Other products include marine and foundation pilings, construction timbers, highway guardrail posts and treated wood for bridges. It has sales in Canada and US. Its web site is here Stella-Jones Inc.

The last stock I wrote about was about was First Capital Realty (TSX-FCR, OTC-FCRGF)... learn more. The next stock I will write about will be Keg Royalties Income Fund (TSX-KEG.UN, OTC-KRIUF)... learn more on Monday, December 18, 2017 around 5 pm.

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.

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