Toromont Industries Ltd. 2

I own this stock of Toromont Industries Ltd. (TSX-TIH, OTC-TMTNF). This is one of the stocks I bought after selling Loblaws in 2008. This was a stock on Mike Higgs' Canadian Dividend Growth Stock list. I bought more in 2008 after selling Onex and AGF Management.

The insider trading report shows that there was insider selling of $2.4M and net insider selling of $2.4M. There was a very small amount of insider buying. This is less than 1% (0.08%) of the market cap of this stock. Insiders not only option but other option like vehicles called Rights Deferred Share Units. (See my site for information on Insider Trading.)

Outstanding shares were increase by 443,000 shares in 2013 with a book value of $8.3M and this numbers of shares was worth $11.8 at the end of 2013. Also, this number of shares was less than 1% (0.58%) of the outstanding shares at the end 2013.

The 5 year low, median and high median Price/Earnings per Share Ratios are 12.31, 14.15 and 16.15. The current P/E Ratio is 15.39 based on a stock price of $25.85 and 2014 earnings estimate of $0.58. This stock price tests suggests that the stock price is reasonable, although it is at the higher end of the reasonable range. (See my site for information on Price/Earnings Ratio.)

I get a Graham Price of $16.84. The 10 year low, median and high median Price/Graham Price Ratios are 12.0, 1.40 and 1.60. The current P/GP Ratio is 1.53. This stock price test suggests that the stock price is reasonable, although it is at the higher end of the reasonable range. (See my blog for information on the Graham Price.)

I get a 10 year Price/Book Value per Share Ratio of 2.74 and the current P/B Ratio is 3.45. The current ratio is based on a Book Value per Share of $7.50 and a stock price of $25.85. The current P/B Ratio is some 26% higher than the 10 year P/B Ratio and this stock price test suggests that the stock price is high. (However, the 5 year median P/B Ratio is higher than the 10 year P/B Ratio at 3.23 and the current P/B Ratio is only 6% higher than the 5 year median ratio.) (See my blog for information Book Values.)

The 5 year median dividend yield is 2.23% and the current dividend yield is 4% higher at 2.32%. This stock price test suggests that the stock price is reasonable. If you look at historical dividend yields, the average is 2.3% which is only 1% lower than the current dividend yield and the median is 1.84% which is 26% lower than the current dividend yield. On an historical basis, the stock price would appear to be reasonable to cheap.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The Hold recommendation is the most common and it is the consensus recommendation. The 12 month target stock price is $27.30. This implies a 12 month total return of 7.93% with 2.32% from dividends and 5.61% from capital gains. (See my blog for information on analyst ratings .)

The blogger Dividend Blogger has this stock and recently talked about the dividend increase.

This is a dividend growth stock and most of my stock tests suggest that the stock price is reasonable. This is especially so of the historical dividend yield test. I note that most analysts have no enthusiasm for this stock. See my spreadsheet at tih.htm.

This is the second of two parts. The first part was posted on Monday, April 14, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

There are two sections to this company. The Equipment Group is for Caterpillar dealerships. CIMCO is a market leader in the design, engineering, fabrication and installation of industrial and recreational refrigeration systems. Its web site is here Toromont Industries.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

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