Finning International Inc. 2

On my other blog I am today writing about Buy Backs continue...

I do not own this stock of Finning International Inc. (TSX-FTT, OTC-FINGF). When I was in the market to buy an industrial stock in this area in 2007, I look at this stock was well as Toromont Industries (TSX-TIH). At the time I liked Toromont better, so that is what I bought.

When I look at insider trading, I find 1.5M of insider buying and 3.8M of insider selling with a net insider selling of $2.3M. On a relative basis this is low as it is only 0.05% of the stock's market cap. There is some insider ownership with Chairman having shares worth around $4.6M, the CEO having shares worth around $0.3M and the CFO having shares worth around $0.4M.

In 2013 outstanding shares worth increased for stock options by 354,000 with a book value of $10.3M. These numbers of shares were worth $9.6M at the end of 2013. The increase in share is reasonable being some 0.21% of the outstanding shares.

The 5 year low, median and high median Price/Earnings per Share Ratios are 11.13, 13.17 and 15.20. The 10 year corresponding ratios are higher at 14.14, 18.53 and 21.52. The current P/E Ratio is 12.70 based on a current price of $24.01 and 2014 EPS estimate of 1.89. Also, the P/E Ratio for 2014 is lower at 11.33 based on a current stock price of $24.01 and 2015 EPS estimate of $2.12. All this suggests that the stock price is relatively reasonable.

I get a Graham Price of 22.35. The 10 year low, median and high Price/Graham Price Ratios are 1.18, 1.45 and 1.62. The current P/GP Ratio is 1.07 based on a stock price of $24.01. The stock price test suggests that the stock is relatively cheap.

The 10 year Price/Book Value per Share Ratio is 2.53. The current P/B Ratio is 2.04 a value some 19% lower. This is based on a PBPS of $11.75 and a stock price $24.01. The stock price test suggests that the stock is relatively reasonable. The current P/B Ratio would have to be 20% lower than the 10 year P/B Ratio to be cheap, but the price is certainly getting there.

The 5 year median dividend yield is 2.13% and the current dividend yield at 2.96% is some 39% lower. The current dividend yield is lower than the highest dividend yield in the last 5 years, but it is lower than the median high dividend yield. The stock price test suggests that the stock is at a relatively good price.

The historical average dividend yield is 2.15% and the historical median dividend yield is 1.55%. The current dividend at 2.96% is some 38% and 91% lower than these values. All this suggests that the stock price is relatively cheap.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus recommendation is a Buy. The 12 month stock price consensus is $30.60. This implies a total return of 30.40% with 2.96% from dividends and 27.45% from capital gains.

This stock currently has an average recommendation of a Hold from Analysts according to The Legacy. On the other hand, Forbes says that this stock is very oversold. The whole point is to be good stocks when they are cheap. The Rental Equipment Register talks about a new expanded store in Lloydminster, Alberta.

Sound bit for Twitter and StockTwits is: stock price is cheap to reasonable. The best way to invest is to buy good stocks when they are cheap. The second best is when stocks are reasonably prices. I wonder if this stock will recover to meet the 12 month consensus stock price, but if you are in a stock for the longer term what a stock does in just one year does not matter that much. See my spreadsheet at ftt.htm.

This is the second of two parts. The first part was posted on Tuesday, December 09, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

This company sells, rents and provides customer support services for Caterpillar equipment and engines. They cover Canada, UK, Argentina, Bolivia, Chile and Uruguay. Its web site is here Finning.

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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