Canam Group Inc.

Sound bite for Twitter and StockTwits is: Price is reasonable to expensive. This is a small cap with a dividend. It might be a very interesting investment. On some absolute basis the stock could be considered to be cheap, for example when the P/GP Ratio is less than 1.00. See my spreadsheet at cam.htm.

I do not own this stock of Canam Group Inc. (TSX-CAM, OTC-CNMGA) but I used to. I bought this at the end part of 2011 because I thought that the market had gone overboard in punishing the stock because of a dividend cut and the company was having a tough time. I thought I could make a few thousand dollars for my RRIF account and that is what I did.

Dividends have been inconsistent with this company. They seem to give dividends out in good times and cut them in bad times. There was no dividend between mid-2011 and 2014. It was some 14 years ago when they increased the dividend to $0.16 per year and it has not changed, except to be cut. So this is not a dividend growth stock, at least not at the present.

One thing I look at is how much of a stock's original cost would be covered by dividends. If you had held this stock for 15, 20 or 25 years, dividends would have covered 29%, 58% and 62% of the original cost of your stock if you paid a median price.

The dividend yields have mostly been low. The current dividend yield is 1.13% based on a stock price of $14.13. The historical median dividend yield is 1.34%. If you had paid a median price for this stock and have held it for 15, 20 or 25% years, your current dividend yield on your original purchase price would be 2.02%, 3.74% and 3.91%. This is nothing to write home about.

Shareholders have done fine over the past 5 and 10 years. The total returns over the past 5 and 10 years are at 14.99% and 8.53% per year. The portion of this total return attributable to dividends is 0.77% and 1.34% per year. The portion of this total return attributable to capital gain is 14.21 and 7.18% per year.

The number of outstanding shares has decreased by 1.2% and 0.7% per year over the past 5 and 10 years. Shares have increased because of share issues, stock options and decreased because of buy backs. Over the past 5 and 10 years Revenue has had good to moderate growth, Earnings has had good growth and Cash Flow has had good growth. However for both Earnings and Cash Flow, there have been a lot of fluctuations year to year and if you look at 5 year running averages, there is no growth.

Revenue has grown at 14.5% and 6.1% per year over the past 5 and 10 years. Revenue per Share is up by 15.9% and 5.4% per year over the past 5 and 10 years. Even with Revenue, if you look at 5 year running average growth for Revenue per Share, growth is at 7.2% and 0.2% per year over the past 5 and 10 years. There has been fluctuation in Revenue year to year also.

EPS is up by 9.7% and 22.3% per year over the past 5 and 10 years. However, looking at 5 year running averages, EPS declined by 23% and increased by 6.3% per year over the past 5 and 10 years. This is because the company earned nothing in 2010 and had a loss in 2011.

Cash flow is up by 4.6% and 5.6% per year over the past 5 and 10 years. Cash Flow per Share is up by 5.9% and 4.8% per year over the past 5 and 10 years. Cash flow has also fluctuated year to year and if you look at 5 year running averages, CFPS is down by 23.4% and 10.4% per year over the past 5 and 10 years. The main reason for this is a negative Cash Flow in 2011.

The Return on Equity is low. The ROE for 2014 was 6.4% and the 5 year median is 4.7%. The ROE on comprehensive income is better and for 2014 it was 11.4% but the 5 year median is lower at just 2.2%.

Debt Ratios are generally good. The Liquidity Ratio for 2014 was 1.65 and the 5 year median is 2.03. Good Liquidity Ratios help see companies through the bad times. The Debt Ratio for 2014 was 1.65 and the Leverage and Debt/Equity Ratios for 2014 were 2.19 and 1.19. These last ratios are a little high.

The 5 year Price/Earnings per Share ratios are 9.90, 13.27 and 18.39. The corresponding 10 year ratios are lower at 8.76, 12.71 and 15.78. The current P/E Ratio is 13.72 based on a stock price of $14.13 and 2015 EPS estimate of $1.03. This stock price testing suggests that the stock price is relatively reasonable.

I get a Graham Price of $16.35. The 10 year Price/Graham Price Ratios are 0.55, 0.78 and 1.02. The current P/GP Ratio is 0.86 based on a stock price of $14.13. This stock price testing suggests that the stock price is relatively reasonable. On an absolute basis, a P/GP Ratio of less than 1.00 says that a stock is cheap.

I get a 10 year Price/Book Value per Share Ratio of 1.01. The current P/B Ratio is 1.23 based on a stock price of $14.13 and BVPS $11.53. The current P/B Ratio is some 22% above the 10 year P/B Ratio. This stock price testing suggests that the stock price is relatively expensive. However note that on an absolute basis P/B Ratios of 1.50 or lower are considered good ratios.

The current Dividend Yield is 1.13% based on a dividend of $0.16 and a stock price of $14.13. The only other dividend yield I can compare it to is the historical median dividend yield which is 1.34%, a value some 15.5% higher. This stock price testing suggests that the stock price is relatively reasonable but going towards expensive.

When I look at analysts' recommendations, I find only Buy recommendations so the consensus is a Buy. The 12 month stock price consensus is $17.00. This implies a total return of 21.44% with 1.13% from dividends and 20.31% from capital gains.

This Financial Post article by Damon van der Linde talks about speculation that the company might be awarded the steel contract for the multi-billion-dollar replacement of Montreal's Champlain Bridge. Then there is a Newswire article saying that Canam did signed a letter of commitment with SNC-Lavalin. In this addition of Me and My Money at the G&M the investor likes Canam Group. On Legacy, Taylor Nule talks about analysts' ratings for this stock.

I will have only one entry for this stock as I must do on some stock because I cover too many stocks to do double entries on all that I follow.

Canam Group specializes in the design and fabrication of construction products and solutions for the commercial, industrial, institutional, multi-unit residential, and bridge and highway infrastructure markets. This company has offices in Canada, US, Saudi Arabia, United Arab Emirates, India, Romania France and China. Its web site is here Canam.

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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