Dorel Industries Inc. 2

I do not own this stock of Dorel Industries Inc. (TSX-DII.B, OTC- DIIBF). I am following this stock because I used to own it. I am always curious about what happens to stocks after I no longer hold them. This was a stock recommended by Investment Reporter as a conservative investment. I sold the stock because I had it for 5 years from 1999 and it was going nowhere. I sold in 2006. I bought it in 1999 before I stopped working and at that time I did not mind buying stocks with no dividends.

When I look at insider trading, I find insider selling of $0.6M and no insider buying. There is insider ownership by the Schwartz family. There are two levels of stock Class A with multiple voting rights (10) and Class B with subordinate voting rights (1). Most of the Class A shares is owned by insiders.

There is insider ownership with the CEO having shares with some $52M, the CFO having shares worth also around $52M and an officer owning shares worth around $48M. These are combinations of Class A and B shares and are members of the Schwartz family.

Outstanding shares were increase by around 282,000 shares in 2013 with a book value of $7.6M and this number of shares was 0.9% of outstanding shares and worth around $11.4M at the end of 2013. Outstanding shares were increase around 354,000 in 2014 with a book value of $8.5M and this number of shares was 1.12% of outstanding shares and worth $14.3M at the end of 2012. For most companies, the increase in outstanding shares for stock options is less than 1% and generally less than one half of 1%. I find increases in outstanding shares for stock options relatively high for this company.

The 5 year low, median and high Price/Earnings per Share Ratios are 7.35, 8.91 and 10.60. These are slightly lower than the corresponding 10 year ratios. The current P/E Ratio is 10.61 based on a stock price of $36.70 and 2014 EPS of $3.46 CDN$ (or $3.17 US$). This stock price test would suggest that the stock price is relatively high. These P/E Ratios are rather low ratios.

I get a Graham Price of $60.49. The 10 year low, median and high median Price/Graham Price Ratios are 0.54, 0.63 and 0.72. The current P/GP Ratio is 0.61. This stock price test would suggest that the stock price is relatively reasonable. Any P/BP Ratio below 1.00 suggests that the stock price is cheap.

I get a 10 year median Price/Book Value per Share Ratio of 0.91. The current P/B Ratio is 0.78 based on a stock price of $36.70 and BVPS of $47.03. This stock price test would suggest that the stock price is relatively reasonable. Also, a stock is considered to be on the cheap side when the P/B Ratio is 1.50 and lower.

The 5 year median dividend yield is 2.44% and the current dividend yield of 3.57% is some 46% higher. The historical average dividend yield is 2.50% and the current dividend yield of 3.57% is some 42% higher. On this basis, the stock price is cheap. However, the stock price has been cheaper since dividends started in 2007 as the historical high dividend yield is 3.72%.

According to the G&M Dorel reports a good second quarter in 2014. Another G&M report talks about profits rising by nearly 15% in Dorel's Recreation Division. The WKRB News Analysis site talks about 9 analysts giving this stock a Hold recommendation.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus recommendation would be a Buy. The 12 months stock price consensus is $40.80. This implies total returns of 14.72% with 3.57% from dividends and 11.17% from capital gains.

Sound bit for Twitter and StockTwits is: Stock price is reasonable to cheap. If you look at the P/E Ratios, P/GP Ratios and P/B Ratios, this stock has consistently been on the cheap side as all these ratios have been mostly quite low. It is obvious that investors have seldom put a high rating on this stock. See my spreadsheet at dii.htm.

This is the second of two parts. The first part was posted on Thursday, August 7, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

Dorel Industries Inc. is a world class juvenile products and bicycle company. Dorel's Home Furnishings segment markets a wide assortment of both domestically produced and imported furniture products, principally within North America. Dorel has facilities in seventeen countries, and sales worldwide. Its web site is here Dorel.

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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