Russel Metals Inc. 2

Sound bite for Twitter and StockTwits is: Price is reasonable. This stock has come down lately so now maybe the time to buy. See my spreadsheet at rus.htm.

I own this stock of Russel Metals Inc. (TSX-RUS, OTC-RUSMF). In 2007 I needed to reduce my holdings of Loblaws and buy something to help replace the dividends I had been earning. With Russel Metals, both Mike and TD recommend buying at this time.

When I look at insider trading, I find 9.4M of insider buying and 10.9M of insider selling for net insider selling of 1.5M. The outstanding shares were increased by 708,000 shares for stock options for 2014. The book value of these shares was $17.5M and this number of shares was worth $18.3M at the end of 2014.

This number of shares for stock options represents 1.15% of outstanding shares. This is rather high as most companies increase shares by around 0.50% for stock options. The increase for stock options was also high in 2013 at 1.21%. However, the increase in outstanding shares for stock options was 0.47%, 0.16% and 0.22% in the years of 2010 to 2012.

There is some insider ownership with the CEO owing shares worth around $3.2M and the CFO owning shares worth around $2.3M. However, the above shares are only some 0.35% of the outstanding shares of this company and so a very small percentage.

The 5 year low, median and high median Price/Earnings per Share Ratios are 13.80, 16.09 and 19.21. The corresponding 10 year values are lower at 11.58, 14.00 and 15.99. The current P/E Ratio is 16.85 based on a stock price of $26.79 and 2015 EPS estimate of $1.59. Note that the 2015 EPS estimate is some 18.5% lower than the EPS for 2014 of $1.95. However, it would seem that analysts expect lower EPS in 2015 than there was for 2014. This stock price testing suggests that the stock price is relatively reasonable.

I get a Graham Price of $23.31. The 10 year low, median and high median Price/Graham Price Ratios are 0.88, 1.05 and 1.22. The current P/GP Ratio is 0.97 based on a stock price of $26.79. This stock price testing suggests that the stock price is relatively reasonable.

The 10 year Price/Book Value per Share Ratio is 1.79. The current P/B Ratio at 1.76 is some 1.2% lower. The current P/B Ratio is based on a Book Value per Share value of $15.18 and a stock price of $26.79. This stock price testing suggests that the stock price is relatively reasonable.

The 5 year median dividend yield is 4.94% and the current dividend yield at 5.67% is some 14.8% higher. The current dividend yield is based on dividends of $1.52 and stock price of $26.79. This stock price testing suggests that the stock price is relatively reasonable.

The historical average dividend yield is 6.19% and the historical median dividend yield is 5.12%. The historical average dividend yield is some 8.34% higher than the current dividend yield and suggests that the stock price is relatively reasonable. The historical median dividend yield is probably a better measure and is 10.8% below the current dividend yield. The historical median dividend yield stock price test suggests that the stock price is relatively reasonable.

When I look at analysts' recommendations, I find Buy and Hold recommendations. There are more Hold recommendations (3 to 2) than Buy recommendations, so the consensus recommendation is a Hold. The 12 month stock price is $27.00. This implies a total return of 6.46% with 0.78% from capital gains and 5.67% from dividends.

This article in Sleek Money talks about Scotiabank lowering their 12 months stock price to $26.00 from $26.50 recently. According to NASDAQ, Russel Metals was named as a Top 25 stock by Canada Stock Channel in August 2014. In March 2015 Andrew Walker of Motley Fool says why this company should be on your stock watch list.

This is the second of two parts. The first part was posted on Wednesday, April 22, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.

Russel Metals Inc. is one of the largest metals distribution and processing companies in North America. The Company primarily distributes steel products and conducts its distribution business in three principal business segments: metals service centers; energy tubular products and steel distributors. Its web site is here Russel Metals.

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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