Finning International Inc

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I do not own this stock (TSX-FTT, OTC- FINGF). I am following this stock as it is a dividend paying stock and it is on the Dividend Aristocrats list, (see indices). I do not own any of this stock as the company is quite similar to Toromont Industries Ltd (TSX-TIH, OTC-TMTNF), which I do own.

The company has a good record of dividend increases. The dividend growth over the past 5 and 10 years is at 13% and 18% per year, respectively. Although, when the company first started to pay dividends, they did not do much in the way of dividend increases until 2002. Also, dividend increases have slowed down since 2009 and the latest increase for 2012 was for 7.7%.

The Dividend Payout Ratios are good with the 5 year median DPR for earnings at 34% and the DPR for cash flow is also around 34%. The DPR for earnings is expected to be around 29% for 2012 and the DPR for cash flow around 17% for 2012.

The 5 year median dividend yield at 2.1%. The current dividend yield is 2.46%. Over the years, the dividend yield has often been lower than 2%.

For people who have held this stock for the last 15 years, the dividend yield on their original purchase price would be in the 7 to 8% range. At the current rate of increases, it would seem that holding this stock for the next 15 years would get you into this range.

Total return is low for the past 5 years, coming in at 0.45% per year. The dividend's return was at 1.9% per year. That means that there was a capital loss of 1.45% per year over this period. The 10 year return is better at 10.4% per year. The dividends returned 2.1% per year. There was a capital gain of 8.31% per year.

The outstanding shares have decreased over the past 5 years at rate of 0.9% per year and have increased over the past 10 years at the rate of 1.2% per year. In recent years there has been some increase in shares due to stock options being exercised. In the past they have done some repurchasing of shares, but they have not done this recently.

Revenue has increased over the past 5 and 10 years at the rate of 4% and 6.1% per year, respectively. Over the past 5 and 10 years Revenue per Share has increased by 4.9% and 4.8% per year, respectively. (The difference between these two is of course because of the change in outstanding shares.)

Earnings per Share are up by 6% per year over the past 5years and up 8.5% per year over the past 10 years. The cash flow per share did not do as well as CFPS is down by 3.3% per year over the past 5 years and only up by 3.2% per year over the past 10 years.

Book Value per Share growth is low also, with BV declining some 2.9% per year over the past year and going up 4.4% per year over the past 10 years.

The Return on Equity for net income for the financial year of 2011 was 19.3%, a good ROE. It has been lower in the last few years and the 5 year median ROE is 12.3%. The ROE on comprehensive income for the financial year of 2011 was 16.8%. The 5 year median ROE for comprehensive income is quite low at 7.9%. Ideally, you might want these ROE values to be closer.

The Liquidity Ratio is generally good, with the current one at 1.55 and the one for the 2011 financial year at 1.59. The Debt Ratio is ok with a current one at 1.41 and the one for the 2011 financial year at 1.49. The 5 year median Debt Ratio is better at 1.62. Ideally, these ratios should be at 1.50 or better.

The Leverage and Debt/Equity Ratios are ok at 3.41 and 2.41and relatively higher than in the past as the 5 year median ratios are 2.76 and 1.76, respectively.

The company has a fair bit of debt, but they are getting loans at reasonable rates and they have used some of this money raised to purchase acquisitions. However, this is an industrial stock and it has not been a great market for industrial stocks since the last recession. Comparatively, this stock has not done badly.

This company sells, rents and provides customer support services for Caterpillar equipment and engines. They cover Canada, UK, Argentina, Bolivia, Chile and Uruguay. Its web site is here Finning. See my spreadsheet at ftt.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.