Wednesday, April 22, 2015

Russel Metals Inc.

On my other blog I am today writing about Goodwill and Intangible Assets continue...

Sound bite for Twitter and StockTwits is: Industrial Dividend Growth Stock. If you are in stocks for the longer term, they are going to have difficulties at some point and probably cut dividends. Having a diversified portfolio will see that some stocks are doing well as others are not. Not all bear markets and recession affect companies in the same way. 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.

This company started to pay dividends in 2000. They have a fairly good record of dividend increases, but did decrease them by about 44% in 2009. The latest increase was for 8.6% and the 5 and 10 years dividend growth rates are 7.9% and 7.6% per year. However, the yearly dividend at $1.52 is still lower than the $1.80 dividend of 2008.

The Dividend Payout Ratios for 2014 was at 75% for EPS and 52% for CFPS. The 5 year median DPRs are 82% for EPS and 61% for CFPS. The projected DPRs for 2015 are expected to be 96% for EPS and 72% for CFPS. Analysts seem to expect both the EPS and CFPS to drop in 2015.

Outstanding shares have increased by 2% and 0.6% per year over the past 5 and 10 years. Shares have increased due to Stock Options, Share Issues and Bond Conversions. They have decreased due to Buy Backs. There has been low to good growth in Revenue, no growth to good growth in EPS and Cash Flow.

The problem is 2009 when Revenue and Cash Flow dropped and they had an earnings loss. 2009 was not a good year for this company. Things have been picking up for this company since then.

Revenue is up by 14% and 4.8% per year over the past 5 and 10 years. Revenue per Share is up by 14% and 2.6% per year over the past 5 and 10 years. EPS is up by 27% and down by 5.9% per year over the past 5 and 10 years. The good growth in EPS is because 5 years ago they had an earnings loss.

Cash Flow is up by 42.6% and down by 2% per year over the past 5 and 10 years. CFPS is up by 42% and down by 4% over the past 5 and 10 years. Again, good growth is showing over the past 5 year because of negative cash flow 5 years ago.

Return on Equity was below 10% 3 times in last 10 years and 2 times in the last 5 years. The ROE for 2014 is 12.8% and the 5 year median is 11.9%. The ROE on comprehensive income for 2014 is 16.5% and the 5 year median is 13.8%. The good ROE for comprehensive income suggests that the earnings are of good quality.

This is a small company in a rather risky business and as such it has relatively good debt ratios, especially for the Liquidity Ratio. The Liquidity Ratio for 2014 is 2.91. The Debt Ratio is 1.90. Leverage and Debt/Equity Ratios are a little higher than what I like to see at 2.12 and 1.12.

This is the first of two parts. The second part will be posted on Thursday, April 23, 2015 and will be 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.

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

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