Wajax Corp 2

On my other blog I am today writing about buying stocks for income...continue...

I do not own this stock of Wajax Corp (TSX-WJX, OTC-WJXFF). TD Waterhouse put out a report on good dividend paying stocks to own in November 2011. This was a stock they named. I had not heard of it before, so I decided to investigate it.

When I look at insider trading I find some insider buying ($0.9M) and no insider selling. Insiders do not seem to have options per se, but they have option like vehicles called Rights Share Ownership Plan and Rights Directors' Deferred Share Unit Plan.

The CEO has shares worth $1.4M and has options worth $0.5M. The CFO has shares worth $0.8M and has options worth $0.1M. An officer has shares worth $0.3M and has options worth $0.2M. A director has some shares and has options worth $0.8M. This is just to give you an idea on insider share ownership and option values.

The 5 year low, median and high median Price/Earnings per Share Ratios are 6.75, 9.25 and 11.67. The current P/E Ratio is 11.6 based on a stock price of $34.57 and 2013 earnings of $2.98. This test suggests that the stock price is within the relatively reasonable range, but on the high side.

I get a Graham Price of $35.01. The 10 year low, median and high median Price/Graham Price Ratios are 0.64, 0.94 and 1.19. The current P/GP Ratio is 1.11 based on a stock price of $34.57. This test suggests also that the stock price is within the relatively reasonable range, but on the high side.

The 10 year median Price/Book Value per Share Ratio is 2.63. The current P/B Ratio is 2.40 based on a stock price of $34.57 and Book Value per Share of $14.38 (1st Quarter of 2013). The current ratio is 91% of the 10 year median ratio. This test suggests that the stock price is relatively reasonable.

The 5 year median dividend yield is 6.62%. The current dividend yield is 6.94%. The current dividend yield is some 4.8% higher than the 5 year median dividend yield based on a stock price of $34.57 and dividends of $2.40. This test suggests that the stock price is relatively reasonable. You like a current dividend yield higher than the 5 year median. The current dividend yield is not that much higher than the 5 year median dividend yield so this puts the stock price in the relatively reasonable range. However, you should note that the dividends have recently been lowered.

When I look at analysts' recommendations, I find Buy and Hold recommendations. Since most recommendations are a Hold, the consensus recommendation would be a Hold. The12 month stock price consensus is $34.10. This implies a 12 month total return of 5.58% with 6.94% from dividends and a capital loss of 1.36%.

G&M has an article about insiders at Wajax going bargain hunting. Another G&M article talks about this stock being cheap.

This stock depends on the oil and gas industries which have been weak for a while. While no one expects another cut to the dividends, no one also seems to expect too much to happen with this stock soon either. The most important stock tests of P/B Ratio and dividend yield show that the stock price is relatively reasonable. However, this is an industrial stock, so the risk level would be rather high. See my spreadsheet at wjx.htm.

This is the second of two parts. The first part was posted on Thursday, August 1st, 2013 and is available here.

Wajax is a leading Canadian distributor and service support provider of mobile equipment, industrial components and power systems. Reflecting a diversified exposure to the Canadian economy, Wajax has three distinct business divisions. The organization's customer base covers core sectors of the Canadian economy mining, oil and gas, forestry, construction, manufacturing, industrial processing, transportation and utilities. Its web site is here Wajax.

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.