Monday, October 4, 2010

Dorel Industries Inc 2

I do not current own this stock (TSX-DII.B). I held it at one time from May 1999 to July 2006. I did not make any money from it as it sold it at about what I paid for it. This stock was not given dividends at that time. I sold it because I had had it more than 5 years, and it had not gone anywhere. I also did not expect it to do anything anytime soon.

First of all, on the Insider Trading what I see is some $3.6M of insider selling and almost no insider buying. Not what you like to see, but we are in a recession, and it is hard to know why people are selling. The selling is also way less than 1% of the market capital of this stock. This is a stock with two classes of shares, one is a class A stock that has 10 votes per share and one is class B that has 1 vote per share. The Schwartz and Segel families between them have 83% of the votes of this company. Both Class A and Class B shares are traded on the TSX.

The 5 year median P/E low is 7.6 and the 5 year median high is 10.7. The current P/E ratio at 8.7 is between these figures. The average P/E is 9.2, so the current P/E is better than average. I get a Graham Price of $54.57 and the current stock price $33.60 is almost 40% below this. The stock price of this stock is often below the Graham Price, but this current difference is better than average.

When I look at the Price/Book Value ratio, I get a current one of 0.98 and a 10 year average of 1.53. First, this P/B ratio is about 64% of the long term average and the stock price is trading below the book value. Both of these items point to a very good current stock price. When looking at the dividend yield, we do not have much to work with as dividends just started in 2007. However, the average yield is 1.8% and the current yield 1.8%. The reason the average yield is at 1.8% is because the stock price in 2009 was quite low and this significantly boosted the dividend yield.

When I look at analysts’ recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus would appear to be Buy. (See my site for information on analyst ratings.) All the analysts I looked at feel that this company should return a decent profit over the next 12 months. The analysts with the Hold recommendations seem to feel that the 3rd and 4th quarters for this company will not be a good as the first two quarters.

Now that this company is paying a dividend and if I were looked for another consumer stock, I would certainly consider this one. At the moment, I have enough consumer stocks in my portfolio. I will continue to track this company.

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 here Dorel. See my spreadsheet at dii.htm.

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 for stocks followed and investment notes. Follow me on twitter.

1 comment:

  1. Thanks for your post. Just found it today (March 4, 2011).

    I've been buying Dorel b shares since March of 2009. I presume the insider selling has something to do with the drop in the stock in the last year (off about 20%). That and the fact the control of the company by the two families.

    They seem to run a good business so I'm holding for a while.