Richelieu Hardware Ltd 2

On my other blog I am today writing about modest money blogger's entry on great Canadian Blogs...continue...

I own this stock of Richelieu Hardware Ltd (TSX-RCH, OTC- RHUHF). I first bought this stock in 2007 because it was on the Investment Reporter's list of good stocks to own. After I bought it the stock proceed to go down for the next two years. When I reviewed the stock in March 2009, I had lost 16% per year. So in 2009, I bought some more. To date, I have earnings of 20.28% per year on this stock.

When I look at insider trading I find $1.6M of insider selling and a bit of insider buying with a net of insider selling of $1.4M. The selling is all by officers of the company and seems to be concerning options. The buying is by officers and directors and buying seems mainly under the company's stock plan. The company is also buying back shares for cancellation.

According to Reuters some 44% of the outstanding shares are owned by institutions and they have sold just over 3% of the shares over the past 3 months.

The CEO has shares worth $47.36M, and his options are worth $11.7M. The CFO has very few shares and options worth $0.5M. An officer has very few shares and options worth $0.6M. A director has very few shares and has very few options. This is just to give you an idea on insider share ownership and option values. The CEO owns 6.8% of the outstanding shares.

The 5 year low, median and high median Price/Earnings Ratios are 12.05, 14.37 and 16.65. I calculated the current P/E of 16.88 using 2013 earnings of $2.34 and stock price of $39.50. I get a Graham Price of 26.81 and the 10 year low, median and high median Price/Graham Price Ratios of 12.94, 29.49 and 42.62. The current P/GP Ratio is 47.35.

The 10 year Price/Book Value per Share is 2.52. The current P/B Ratio is 2.89 a value almost 15% higher. The 5 year dividend yield is 2.58% and the current dividend yield is 1.22% a value some 23% higher.

All my stock testing shows that the current stock price is relatively high, although not excessively so.

There are not many analysts following this stock. I find two with recommendations of Buy and Hold. The 1 year consensus stock price is $40.50. This implies a total return of 3.75% with 1.22% from dividends and 2.53% from capital gains.

Localized USA blog says that Scotia Capital, in the latter part of January increased their target price on this stock. They have an outperform call on this stock (which is the same as a buy).

This company is a distributor, importer and manufacturer of specialty hardware and complementary products. Its products are kitchen and bathroom cabinets, furniture, and window and door. It is also involved with residential and commercial woodworking industry. It has a large customer base of hardware retailers. Its web site is here Richelieu. See my spreadsheet at rch.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.