Contrans Group Inc. 2

I do not own this stock of Contrans Group Inc. (TSX-CSS, OTC-CTFIF). I got this stock off an article in the Globe and Mail called "15 dividend stocks where payouts are expected to grow". This number cruncher article dated in February 2013 was looking for companies with earnings growth over the last 12 months and a decent Dividend Payout Ratio. (You may not be able to access this article beyond the pay wall.)

In the insider trading reporting there is a very small amount of insider selling and no insider buying. There are stock options but there was no increase in outstanding shares in 2013 due to stock options. The CEO owns almost all the Class B shares worth around $18.3M. He also has Class A shares worth around $50.9M. The CEO is also chairman of the Board. There is an officer that owns shares worth around $6M and a director with shares worth around $3.4M. So, there is good insider ownership.

The 5 year low, median and high median Price/Earnings per Share Ratios are 10.53, 13.84 and 16.05. The current P/E Ratio is 14.59 based on a stock price of $14.74 and 2014 EPS estimate of $1.01. This stock price test suggests that the stock price is relatively reasonable.

I get a Graham Price of $11.62. The 10 year low, median and high median Price/Graham Price Ratios are 0.87, 1.06 and 1.27. The current P/GP Ratio is 1.27. This stock price test suggests that the stock price is relatively reasonable, but at the very high end of that range.

I get a 10 year median Price/Book Value per Share Ratio of 1.87. The current P/B Ratio is 2.48 a value some 32% higher. . This stock price test suggests that the stock price is relatively expensive.

The 5 year median dividend yield is 4.38% and the current dividend yield is 4.07% a value some 7% higher. Since dividend yield used to be a lot higher, using historical dividend yield in a stock price test makes no sense. However, a 4.07% dividend yield is a good one. The 5 year median dividend yield stock price test suggests that the stock price is relatively reasonable.

The analysts' recommendations are Buy and Hold. The consensus recommendation is a Hold. The 12 month consensus stock price is $15.50. This implies a total return of 9.23%, with 4.07% from dividends and 5.16% from capital gains.

A recent article in the Financial Post suggest for the trucking industry in Canada demand is beginning to overtake supply. The Dividend Blogger talks about this stock and its dividend increases. He thinks that if the 1 year return is less than the dividend increase then there might be a buying opportunity. An article in Trucking News talks about this company selling off its waste collection subsidiaries.

Sound bit for Twitter and StockTwits is: stock price is probably still reasonable. Stock rose some 32.8% last year and some 10.99% so far this year. Dividends increased 25% in 2013 and 20% in 2014. So over the past two years the capital gain is close to the dividend increases.

You expect that that the capital gains and the dividend increase would be roughly the same. So, analysts' expectations of 5.16% further rise would put the capital gain increase a bit higher than dividend increases. See my spreadsheet at css.htm.

This is the second of two parts. The first part was posted on Thursday, July 24, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

Contrans Group Inc. is engaged in freight transportation. It provides freight transportation services to shippers located in Canada, as well as in the eastern, mid-western and southern United States. Its web site is here Contrans.

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.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.