Canam Group Inc

I was going to review Bell Alient (TSX-BA). However, I do not think the financial statements give a true view of what is going on. (Or, in other words, I find them confusing.) I will look at this again next year. In any event, this stock did not appear to have any positive earnings or cash flow for 2010.

The stock I want to review today is Canam Group Inc. (TSX-CAM). I do not own this industrial stock. Often Industrial stocks lead in the recovery from a recession. However, this is not what this company is doing. Of course, we are in a balance sheet recession and it is expected to be a long recovery. This company is into constructions, with exposure to the US market. We probably should not expect a quick turnaround.

We have companies reporting on their 3rd quarter. At this time, most of the analysts tend to agree what sort of earnings a company will have for the year. Everyone seems to be agreeing this company will have a loss of $.78 a share. The company has suspended their dividend payments after making two dividend payments for this year.

The dividends on this company were never great. The 5 year median dividend yield is just 1.85%. The dividend payout ratios tended to be, correspondingly, low. The company has suspended dividends before when they were not making any money. I would expect that dividends will be resumed when earnings improve.

Growth in sales is expected to be good this year and mediocre next year. Earnings and cash flow are expected to be positive in 2012. There has not been much growth over the 5 and 10 years in revenue, earnings or cash flow. If you had invested in this company 5 or 10 years ago, your total return would be 5.6% and 2%, with around 2.5% of this total return in dividends.

The good thing about this company is that it has a very good balance sheet. The current Liquidity Ratio is 1.87 with a 5 year median ratio of 2.28. The current Asset/Liability Ratio is 1.73 with a 5 year median ratio of 2.68. The current Leverage and Debt/Equity Ratios are fine at 2.37 and 1.37. Their 10 year median ratios are 2.04 and 1.04. All the current ratios are not as good as the longer term ones, but this is to be expected when a company has stopped earning money.

Tomorrow, I will look at the stock price of this company and what the analysts say. This is no doubt a risky stock, but even though it has been hammered by the current market, it still has a good balance sheet.

Canam Group specializes in the design and fabrication of construction products and solutions for the commercial, industrial, institutional, multi-unit residential, and bridge and highway infrastructure markets.
This company has offices in Canada, US, Saudi Arabia, United Arab Emirates, India, Romania France and China. Its web site is here Canam. See my spreadsheet at cam.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.