Thursday, November 26, 2009

Dorel Industries Inc 2

I am continuing my review this stock (TSX-DII.B) today as I have updated my spreadsheet with the December 2008 annual report and I have not reviewed it since then. I owned this stock at one time and then sold it because I did not think it was going anywhere, and they paid no dividends. In 2007, they started to pay dividends. I would like to see some consistent annual increases in dividends before I consider this stock for buying again.

When I look at Insider Selling and Insider Buying reports, I find that one director has recently sold some of his stock. This selling does not tell me much. The other thing I notice is that Dorel is buying back Class B shares for cancellation.

When you look at spreadsheet ratios, I find that the P/E is low. Based on the earnings estimates for this year, I get a P/E of just 8. On sites that use the last 12 months of earnings, the P/E is still low at 10. However, the P/E for this stock has been quite low lately. The 5 year average Low P/E is just over 8 and the 5 year High P/E is just 12. P/E ratios of 10 or less are considered low.

The dividend yield on this stock is low at only 1.6%. Dividends were only started in 2007, so we have little to base long term yield. However, even in this short time, dividend yield has been about 1.6%. You would thing that if the earnings and cash flow would be better this year, dividends might have been raised. Although some analysts feel that, the company will be raising the dividends in the future.

The other ratio to look at is the Price/Book Value and this ratio is less than 60% of the 10 year average. Anything less than 80% of the 10 year average is a very good ratio. The other thing pointing to a good price is the Graham Price. The Graham Price is almost 50% higher than the stock price. The reason for this is that the Book Value is quite high and about equal to the stock price. The Book Value has been growing faster than either the Cash Flow or the earnings.

Most of the above ratios and the Graham price point to a very good current stock price. This is especially true where the book value and the stock price are equal. The problem with this stock is that both the earnings and cash flow were higher in 2004 than they were in 2008. Both these items are expected to improve in 2009.

Globe investor gives this stock a 4 star rating. When I look at analysts recommendations, I find that there are Buy recommendations and Hold recommendations. The consensus recommendation will be a Buy. (See my site for information on analyst ratings.) There are more buy recommendations that hold recommendations. It seems to me that the difference between the buy and hold recommendations is how much the stock price is expected to rise this year. Some do not expect the stock price to rise much this year and others expect an 8 to 9% rise in stock price.

Dorel Industries Inc. is a world class juvenile products and bicycle company. Dorel’s branded products include Safety 1st, Quinny, Cosco, Maxi-Cosi and Bébé Confort in Juvenile, as well as Cannondale, Schwinn, GT, Mongoose and SUGOI in Recreational/Leisure. Dorel’s Home Furnishings segment markets a wide assortment of furniture products, both domestically produced and imported. Dorel has facilities in seventeen countries, and sales worldwide. There concentrated ownership of this company by the Schwartz family (66%) and Segel family (17%). There are two classes of shares, Class A with multiple voting (10) and Class B, with subordinate voting rates (1). Its web site is See my spreadsheet at

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. See my website at for a list of the stocks for which I have put up spreadsheets. Also, look at other investing notes on my website at

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