Dorel Industries Inc

I do not own this stock (TSX-DII.B), but I used to. I started to follow it because it was on the Investment Reporter list of stocks. I bought the stock in 1999 and 2000 and sold it in 2006. I lost 7.8% of the value of my investment. At the time, I did not see that the stock would be going anywhere anytime soon, so I sold.

This was not a dividend paying stock at the time that I held it. However, in 2007 the company started to pay dividends. They were quite low at first, just over 1%. The current dividend rate is 2.34% and the year median rate is 1.68%. The median dividend yield is rather low. However, dividend growth has been good at 12.7% per year over the past 5 years.

What about total return? Well, basically shareholders have not been making any money for the past 5 and 10 years. Share price is back to where it was in 2000 and 2001. The stock price seems to peak in 2004 and has not made it back to that peak yet. It was recovering in 2010, but stock price has fallen down a fair bit in 2011.

The portion of the total return attributable to dividends is less than 1% over the past 10 years and around 1.8% over the past 5 years. The Dividend Payout Ratios are correspondingly low with DPRs for earnings at around 15% and for cash flow around 13%.

This company started to report in US$ in 2000. The dividends are also paid in US$. This will means, that for Canadian stock holders, the dividends will fluctuate with the currency. Also, because our currency has been rising against the US currency, the company has done better in US$ than in CDN$. However, this is a Canadian company and to me, what is important is how well it does in CDN$ terms.

Generally speaking, the company has done better over the past 10 years than over the past 5 years. Since the last annual statement is December 2010, a lot of my figures are to that date. The only figures known for 2011 are the stock prices and dividends as discussed above.

In CDN$ terms, revenue has increased by 2.5% and 6.7% per year over the past 5 and 10 years. It is expected that the revenue for 2011 will be higher than 2010 by 6.6%. (Please note that often when we are getting close to the annual statements the estimates are often more accurate, but not necessarily so.)

In CDN$ terms, earnings has growth by 3.5% and 9.4% per year over the past 5 and 10 years. However, earnings are expected to be substantially lower in 2011 than they were in 2010. Cash Flow, in CDN$ terms, has grown by 1.6% and 7.4% per year over the past 5 and 10 years. Here again, cash flow is expected to be substantially lower in 2011 than in 2010.

This company is owned and controlled by the Schwatz family. As for a lot of such companies, the debt ratios tend to be very good and this company is no exception. The current Liquidity Ratio is 2.37, the current Asset/Liability Ratio is 2.45, the current Leverage Ratio is 1.69 and the current Debt/Equity Ratio is 0.69.

The Return on Equity has generally been, but not always, in the good range of 10% to 15%. The ROE for 2010 was 10.8% as was the 5 year median rate. However, the ROE for last 12 months is lower at 8.4%. The ROE based on the comprehensive income for 2010 was lower at 8.2%. The 5 year median ROE based on the comprehensive income was at 10.8%.

The Price/Earnings Ratios has been rather low on this company, with the 5 year median low and high P/E ratios being 7.48 and 10.48. The current P/E Ratio based on stock price of $25.08 is a little lower than the 5 year median low at 7.37 and therefore shows a good relative price.

I get a Graham Price of $53.05 and this is some 53% higher than the stock price of $25.08. However, the Graham Price has always been higher than the stock price, but the low difference is the stock price being 32% lower than the Graham Price. This also points to a good current stock price.

The 10 year median Price/Book Value Ratio is 1.14, a rather low value. The current P/B Ratio at 0.69 is only 60% of this. This shows a good stock price at different levels. The stock is trading below the Book Value and also it is 60% below the 10 year median value. This shows a very good current stock price.

Looking at dividends, the current dividend at 2.34% is almost 40% higher than the 5 year median dividend yield of 1.68 and this shows a very good current stock price.

Looking at insider trading, there is a very minimal amount of insider buying. Some 38% of this company’s stock is owned by institutions. Over the past 3 months they have marginally reduced their shares (by 1.5%).

When I look at analysts’ recommendations, I Strong Buy, Buy and Hold. The consensus recommendations would be a Buy. The Buy recommendation comes with a 12 months stock price of $31. There are lots more Buy recommendations than any other recommendations.

There was an article on beaten down stocks at G&M and this company was included. There was also an article in the Financial Post about the stock been beaten down and about their Polish purchase. Another blogger has recently reviewed this stock. See the Frankly Speaking blog.

Generally MPL Communications (the owner of Investment Reporter) is good at picking good long term value stocks. They again recommended this stock in November 2011. See their website and insert the “DII.B” symbol. If you click on “profile” tab, other tabs, such as “Advice” will come up. Click on “Advice” tab.

Personally, I have moved to other consumer discretionary stocks and I am not currently interested in this one. I will continue to follow it.

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.