Wednesday, November 21, 2012

Goodfellow Inc

On my other blog I am today writing about DB and DC Pension plans...continue...

I own this stock Goodfellow Inc. (TSX-GDL). I had read a favorable report on this stock in 2009 and at one time the Investment Reporting was pushing this stock. I bought some stock in December 2010 and then some more in February 2011. The stock has not been doing well lately, so I have just held it and not bought anymore. I now have had this stock for 2 years and have lost 18.4% per year, including dividends or 19.8% excluding dividends. Or, in other words my stock is down by 32%. My dividends account for only 1.4% of the return.

Dividends have fluctuated on this stock. They paid what they can afford to and this is why they fluctuated. They also only pay dividends twice a year, not the general quarterly dividends. When I bought this stock, dividends had just been reduced by 66.7%. They were reduced from $.30 semi-annually to $.10 semi-annually.

The company has increased the dividends by some 50% to $.15 semi-annually for the 2013 financial year. However, you only know what the dividend is going to just before it is granted as they declared the dividends in a news release just before it is paid.

The company has the financial year in August each year. To August 2012 the 5 year total return was a 6.11% per year loss, with a 10.39% per year capital loss and dividends at 3.68% per year. To August 2012, the 10 year total return was 9.75% per year with a capital gain of 2.66% per year and dividends at 7.56% per year.

Over the past 5 year outstanding shares have decreased by 0.15% and over the past 10 years they have increased by 0.14%. These are just marginal changes. There are some options, but few. Recently the company has been buying back shares.

When I look at revenue growth and revenue growth per share over the past 5 and 10 years, the growth rate is 0%. Earnings per share are down over both the last 5 and 10 years at 19.62% over the past 5 years and by 5.31% over the past 10 years. There have been no years of negative earnings, but earnings tend to fluctuate.

Cash Flow per Share is also down by 38% per year and 17% per year over the past 5 and 10 years. Here again, there has been no years of negative cash flow, but cash flow does fluctuate. Book Value per share growth is so-so, with growth of 3% per year over the past 5 years and 6% per year over the past 10 years.

Mostly Return on Equity has not been great, but this has also fluctuated between 13% and 2.5%. The ROE for the financial year ending in August 2012 is quite low at 3.8%. The 5 year median value is better at 6.9%. The ROE on comprehensive income is the same as the ROE on net income.

The debt ratios are very good. This stock is greatly affected by the business cycle and you would want the debt ratios to be very good. The current Liquidity Ratio is 2.28. The current Debt Ratio is 2.64. Generally speaking you want these ratios to be 1.50 or better. However, the company is right to have such strong debt ratios to see them though the bad times that come in their industry.

The current Leverage and Debt/Equity Ratios are also good at 1.61 and 0.61.

I plan to continue to hold this stock as I feel that I will do fine in it over the longer term. However, I do not have a large investment in this company and will probably never have a very large investment in the company.

Goodfellow Inc. is one of eastern Canada's largest independent re-manufacturers and distributors of lumber and hardwood flooring products. The company serves customers throughout Canada, the United States and abroad including the UK and China and the Middle East. H.Q is Delson, Quebec, just outside Montreal. It is about 60% owned by insiders. Its web site is here Goodfellow. See my spreadsheet at gdl.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 or StockTwits.

1 comment:

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