CCL Industries Inc. 2

On my other blog I am today writing about the presentation at the World Money Show in Toronto by Money Saver Magazine with John DeGoey.

I do not own this stock of CCL Industries Inc. (TSX-CCL.B, OTC-CCDBF). In 2009 I read a favorable report on this stock of which I had also heard of before. This is also a dividend paying stock and in 2009 it was on Dividend Achievers list.

When I look at insider trading I find net insider selling at $49.6M. There is a very minor amount of insider buying. Net insider selling equals some 1.8% of the market cap of this stock and on a relative basis this is quite high.

Also, in 2013 outstanding shares were increased by 916,000 for stock options. This amount is some 2.66% of outstanding shares and again is quite high. You would expect the percentage to be under 1% and ideally under 0.5%. These stock options have a book value of $20M. This number of shares was worth $72.6M at the end of 2013.

The 5 year low, median and high median Price/Earnings per Share Ratios are 11.69, 13.22 and 15.03. The corresponding 10 years values were a bit lower at 11.34, 13.14 and 14.81. The current P/E Ratio is 18.77 based on a stock price of $122.20 and 2014 EPS estimate of $6.51. This stock price test suggests that the stock is relatively expensive. A P/E of 18.77 is not a particularly high one on an absolute basis. But this is an industrial stock, so I would expect that P/E would be more in line with the stock's history.

A 2014 EPS estimate of $6.51 may see high considering that the EPS for 2013 was at 2.99. However, if you look at EPS for the last 12 months ending in the third quarter of September 30, 2014, the EPS is $5.45.

I get a Graham Price of $69.96. The 10 year low, median and high Price/Graham Price Ratios are 0.75, 0.89 and 1.01. The current P/GP Ratio is 1.77. This stock price test suggests that the stock price is relatively expensive.

I get a 10 year Price/Book Value per Share Ratio of 1.39. The current P/B Ratio is 3.76 a value some 170% higher. The P/B Ratio of 3.76 is based on a BVPS of $32.46 and a stock price of $122.20. This stock price test suggests that the stock price is relatively very expensive. A P/B Ratio of 1.39 is on an absolute basis a low ratio. On an absolute basis a P/B Ratio of 3.76 is not that high.

I get a 5 year median dividend yield of 2.20%. The current dividend yield of 0.98 is some 55% higher. Using the historical average and historical median dividend yields of 2.35% and 2.13%, the current dividend yield is some 58% and 54% higher. This stock price test suggests that the stock price is relatively very expensive. Personally, I do not buy dividend stock with a dividend yield under 1%.

When I look at analysts' recommendations I find Strong Buy and Buy. The consensus recommendation would be a Buy and most analysts' recommendations are a Buy. The 12 month stock price consensus target is $139.00. This implies a total return of 14.73% with 13.75% from capital gains and 0.98% from dividends.

A recent Forbes article says this stock is oversold based on RSI reading. They were using a price of $104.44. By my methods $104.44 is still in overbought range. (Oversold means the price is low or cheap.) The Mideast Times reports that some analysts have raised their target price to $140.00.

Sound bit for Twitter and StockTwits is: Stock price expensive to very expensive. Also insiders are selling off their shares. This could be a momentum buy, but I do not see this as a good entry point for a long term buy. See my spreadsheet at ccl.htm.

This is the second of two parts. The first part was posted on Monday, November 10, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

CCL Industries Inc. provides state-of-the-art specialty packaging solutions to some of the world's largest producers of consumer brands in personal care, cosmetic, healthcare, household and specialty food and beverage products. CCL is the world's largest supplier of innovative and secure labeling solutions to leading global companies in the consumer product and healthcare sectors and supplies aluminum containers and plastic tubes for major consumer brands of personal care, household products and specialty food and beverages. With headquarters in Toronto, Ontario, Canada, CCL Industries operates production facilities in North America, Europe, Latin America, Asia and Australia. Its web site is here CCL 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.

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