Toromont Industries Ltd. 2

Sound bite for Twitter and StockTwits is: stock price is reasonable to expensive. It is only the 5 year median and historical median dividend yield tests that suggest that the current stock price could be relatively reasonable. All other testing is showing the stock price as relatively expensive. See my spreadsheet at tih.htm.

I own this stock of Toromont Industries Ltd. (TSX-TIH, OTC-TMTNF). This is one of the stocks I bought after selling Loblaws in 2008. I bought more in 2008 after selling Onex and AGF Management. This was a stock on Mike Higgs' Canadian Dividend Growth Stock list.

The outstanding shares were increased by 414,000 shares in 2014 for stock options. This had a book value of $8.7M and the value of this number of shares at the end of 2014 is $11.8M. This number of shares is 0.54% of the outstanding shares.

There is some insider ownership with the CEO owning shares worth around $2.2M and the Chairman owning shares worth around $58.3M. These shares in total would be around 2.8% of the outstanding shares.

The 5 year low, median and high median Price/Earnings per Share Ratios are 13.62, 15.25 and 16.88. These are a bit higher than the corresponding 10 year P/E Ratios of 12.68, 14.70 and 16.52. The current P/E Ratio is 19.16 based on a stock price of $33.72 and 2015 EPS estimate of $1.76. This stock price testing suggests that the stock price is relatively expensive.

I get a Graham Price of $18.50. The 10 year low, median and high median Price/Graham Price Ratios are 1.21, 1.41 and 1.57. The current P/GP Ratio is 1.82 based on a stock price $33.72. This stock price testing suggests that the stock price is relatively expensive.

The 10 year median Price/Book Value per Share Ratio is 2.85. The current P/B Ratio at 3.90 is some 36.7% higher. The current P/B Ratio is based on a Book Value per Share of $8.65 and a stock price of $33.72. This stock price testing suggests that the stock price is relatively expensive.

The current dividend yield is 2.02% based on dividends of $0.68 and a stock price of $33.72. The 5 year median dividend yield is 2.16% which is only 6.8% above and this suggests that the stock price is relatively reasonable. The historical median dividend yield is 1.85% and this is some 9% below the current dividend yield and suggests that the stock price is relatively reasonable.

The dividend yield test that says otherwise is the historical average dividend yield of 3.05%. This is some 34% higher than the current dividend yield of 2.02% and suggests that the stock price is relatively expensive. A median value is often preferred to an average value as it shows were the yield is most like to be.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The vast majority of the recommendations are a Hold. The consensus recommendations would be a Hold. The 12 month stock price consensus would be $30.60. This is below the current stock price. This implies a total return loss of 7.24% with a capital loss of 9.25% and dividends of 2.02%.

Dakota Financial News says that on April 8, 2015 nine brokerages gave this stock a rating of Hold and one issued a Buy recommendations on Toromont Industries. This Globe and Mail article by Brenda Bouw talks about how Toromont is weathering the oil price storm. This article in the Winnipeg Free Press talks about a boost in quarter four profits and dividends for Toromont.

This is the second of two parts. The first part was posted on Monday, April 20, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.

There are two sections to this company. The Equipment Group is for Caterpillar dealerships. CIMCO is a market leader in the design, engineering, fabrication and installation of industrial and recreational refrigeration systems. Its web site is here Toromont.

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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