Friday, October 3, 2014

K-Bro Linen Inc. 2

I do not own this stock of K-Bro Linen Inc. (TSX-KBL, OTC- KBRLF). People were talking about this stock at the 2009 Toronto Money Show. This was one income trust being touted as currently a good buys with very good yield. It was also recommended by Aaron Dunn who is the Senior Equity Analyst for Keystone Publishing Corp, a publisher of Canadian investment newsletters.

When l look at insider trading, if find $0.3M of insider selling and net insider selling at $0.3M. There is a bit of insider buying. Net insider selling is just 0.11% of market cap and so it small. There is some insider ownership with the CEO owning shares worth around $4.3M.

In 2013 an outstanding share were increased by some 40,000 shares which are around 0.57% of the outstanding shares and is around normal for most companies. This number of shares had a book value of $1.2M and would be worth around $1.6M at the end of 2013.

The 5 year median Price/Earnings per Share ratios are 13.52, 16.18 and 18.84. The 8 year median P/E Ratios are similar. The current P/E Ratio is 24.13 based on a stock price of $38.60 and 2014 EPS estimates of $1.60. EPS are slightly down and if you use the last 12 months EPS of $1.43 the P/E Ratio would be 26.99. This stock price test suggests that the stock price is relatively expensive. The P/E Ratios are not that high but we are talking about a Laundry company here.

I get a Graham Price of $19.17. The 9 year Price/Graham Price Ratios are 0.91, 1.09 and 1.27. The current P/GP Ratio is 2.01. This stock price test suggests that the stock price is relatively expensive. A P/GP Ratio of 2.01 is a rather high one.

The 8 year Price/Book Value per Share ratio is 1.60 and the current P/B Ratio is 3.78 based on a stock price $39.80 and BVPS of $10.21. The current P/B Ratio is some 137% higher than the 8 year P/B Ratio. This stock price test suggests that the stock price is relatively expensive.

When I look at analysts' recommendations, I find Buy and Hold recommendations. Most recommendations are a Hold and the consensus recommendations would be a Hold. The 12 month stock price consensus is $41.30 and this implies a total return of 10.10% with 6.99% from capital gains and 3.11% from dividends.

Jesse Guidry at Detroit Gate discusses the company's second quarterly results.

Sound bit for Twitter and StockTwits is: Unfortunately, stock price is not cheap or even reasonable. Last year I thought the stock was expensive. I notice that so far this year the stock price is down by 2.5%. The stock peaked in August at $40.40 which was an increase over last year of just 2% over end of 2013 stock price. See my spreadsheet at kbl.htm.

This is the second of two parts. The first part was posted on Thursday, October 02, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

K-Bro is the largest owner and operator of laundry and linen processing facilities in Canada. K-Bro provides a comprehensive range of general linen and operating room linen processing, management and distribution services to healthcare institutions, hotels and other commercial accounts. K-Bro currently has seven processing plants in six Canadian cities: Quebec City, Toronto, Edmonton, Calgary, Vancouver and Victoria. Its web site is here K-Bro Linen.

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.

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