TransForce Inc

I am putting up on my other blog my notes from the World Money Show 2013 in Toronto. I will put up these notes as I transcribe them here.

I do not own this stock TransForce Inc. (TSX-TFI, OTC-TFIFF). I read a report called "6 Canadian Dividend Stocks That Fly Under the Radar" by John Heinzl in April of 2013. See the report here. This is one of the stocks mentioned. There was also a good review of this stock by Advice Hotline by MPL Communications. This Advice Hotline emails can be subscribed for free at MPL Communication's site.

The first think I looked at is dividends and wanting to know the answer to do they increase their dividends. This company was an income trust from 2002 to 2008 and then changed to a corporation. As an income trust they paid monthly dividends and then switched to quarterly as a corporation. They also decreased the dividends almost 75% at this change. Dividends are, of course, down over the past 5 and 10 years and the decrease was at 20.8% per year over the past 5 years and at 8.1% per year over the past 10 years.

I still consider this a dividend growth company because they have a past history of dividend growth and also a current history. The last dividend increase is for 2012 and the increase is at 13%. There has been no increase in 2013 and all dividends for 2013 have been declared.

The company has not only paid dividends, but special dividends over the years. It is a good sign when a company that has converted from an income trust starts to increase their dividends again.

The next questions, of course, is has this stock made money for its shareholders. The answer here is yes. The 5 and 10 year total return are at 21.09% and 21.67% per year to the end of 2012. The dividend portion of this return is at 4.56% and 11.59% per year over these periods. The capital gain portion of this return is at 16.54% and 10.08% per year over these periods.

The total return to date over the past 5 and 10 years is also very good at 45.10% and 17.76% per year. The dividend portion of this return is 6.07% and 9.18% per year and the capital gain is 39.03% and 8.48% per year.

The thing to note is that when they decreased their dividends, the stock has a sharp decline. The other thing to note is that the current dividend is at 2.41% and the dividend income that shareholders got over the past 5 and 10 years will not be repeated.

Next, I went through the financial statements for 2012 and 5 years ago (2007) and see that the company has had reasonable 5 year growth in revenue, earnings and book value. The one thing that is disappointing is the low Liquidity Ratio. For 2012 it was 1.20 which is better than the 1.16 of 2007. The Debt Ratio is fine at 1.52 for both years. The current Leverage and Debt/Equity Ratios are fine but a bit high at 2.76 and 1.76.

I finished the financial statements from 1996 to the end of 2012 and took a look at the second quarterly results for 2013 and the 2013 and 2014 estimates. Analysts expect an increase in revenues for 2013 of 12%. However, there was a 2% decline in revenues using 12 months to the end of the second quarter in June 2013.

Analysts expect a decline in earnings and cash flow in 2013and there was a decline looking at the last 12 months to June 2013 compared to the 12 month period to December 2012.

The return on equity to the end of December 2012 was 21.2% and the 5 year median ROE is 15.6%. The ROE based on comprehensive income is a bit lower at 19.8% for the 2012 financial year. There is only a 6.5% difference so this is fine.

I think that this will be a dividend growth company in the future. Debt Ratios are not where I would like to see them. Liquidity Ratio is a bit lower than I like and Debt/Equity Ratio a bit higher than I would like. See my spreadsheet at tfi.htm.

This is the first of two parts. Second part will be posted on Thursday, October 31, 2013 and will be available here.

TransForce Inc. is a North American leader in the transportation and logistics industry operating across Canada and the United States through its subsidiaries. TransForce companies service the following segments: Package and Courier; Less-Than-Truckload; Truckload, which includes specialized truckload and dedicated services; Specialized Services, which includes services to the energy sector, waste management, logistics and ancillary transportation services. Its web site is here TransForce.

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.