Finning International Inc. 2

I do not own this stock Finning International Inc. (TSX-FTT, OTC-FINGF). When I was in the market to buy an industrial stock in this area in 2007, I look at this stock was well as Toromont Industries (TSX-TIH). At the time I liked Toromont better, so that is what I bought.

When I look at insider trading, I find $1M of insider selling and $1.3M of insider buying for $0.3M of net insider buying. Insiders not only options, but have Performance Share Units, Units Deferred Share Units and Share Appreciation Rights. They have a rather new CEO who has $1M in shares and the CFO has $0.5M in shares. There is little insider ownership.

I get 5 year low, median and high median Price/Earnings Ratios of 12.28, 16.16 and 20.03. The current P/E Ratio is 12.80 based on a stock price of $24.84 and 2013 earnings of $1.94. The earnings estimate is lower than last year's EPS, but the 12 month EPS to the 3rd quarter is $2.07 a value 5% higher than last year's EPS. This implies that the actual earnings for 2013 might be higher than the estimate.

I get a Graham Price of $21.05 and the 10 year low, median and high median Price/Graham Price Ratios are 1.18, 1.45 and 1.62. This implies that the stock price is relatively low as the current P/GP Ratio is 1.18.

The 10 year Price/Book Value per Share Ratio is 2.52 and the current P/B Ratio is 2.45. The current ratio is about 97% of the 10 year P/B Ratio and this suggests that the current stock price is reasonable.

The current dividend yield is 2.46% and the 5 year median dividend yield is 2.13%. It is good the dividend yield is higher than the 5 year median dividend yield by around 15%. This stock price test suggests that the stock price is reasonable to cheap. Using the historical high and median dividend yield, the current yield is higher than the median dividend yield, but not above the historical high. This suggests that the current stock price is cheap than average.

When I look at analysts' recommendations, I find Strong Buy, Buy, Hold and Underperform. The consensus recommendations would be a Buy. The 12 month target price is $28.10. This implies total returns of 15.58% with 2.46% from dividends and 13.12% from capital gains.

The site WKRB talks about some recent analysts upgrades on this stock. The Happy capitalism blogger reviewed this stock last year and said you should be cautious.

There is nothing stellar, but the company is doing fine. Stock price is reasonable to cheap. See my spreadsheet at ftt.htm.

This is the second of two parts. The first part was posted on Monday, December 2, 2013 and is available here.

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.

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.