Wednesday, August 5, 2015

Dorel Industries Inc.

On my other blog I am today writing about possible cheap dividend stocks for August 2015 continue...

Sound bite for Twitter and StockTwits is: Not great return, Consumers Discretionary stock. The stock price has not really gone anywhere over the past 10 years. I am glad I sold this stock. See my spreadsheet at dii.htm.

I do not own this stock of Dorel Industries Inc. (TSX-DII.B, OTC-DIIBF), but I used to. This was a stock recommended by Investment Reporter as a conservative investment. I sold the stock in 2006 because I had it for 7 years from 1999 and it was going nowhere. I bought it in 1999 before I stopped working and at that time I did not mind buying stocks with no dividends.

This stock started to pay a dividend in 2007. However, dividends are paid in US$ so you will never know exactly what you will get because of the exchange rates. Currently the dividend is $1.20 in US$ and the dividend yield in US$ is 4.71%. Dividends have grown by 19% and 18.1% per year over the past 5 and 10 years in US$ terms.

With the current exchange rate the dividends in CDN$ would be $1.57 and the dividend yield is 4.69%. The growth in dividends in CDN$ would be 21.6% and 20.8% over the past 5 and 10 years. You might experience a slightly different rate if you were invested in this stock as I am only using one exchange rate per year whereas if you got dividends in Canada, dividends would be converted in CDN$ 4 times a year.

I did not earn any money on this 7 year investment. I had a loss of 1.2% per year or 7.7% in total. If I had kept my stock I would have earned to date around 1.38% per year in capital gains and possibly another 2.48% in dividends for a total return per year of 3.86%. I am not sorry to have sold.

So how have current shareholders faired over the past 5 and 10 years? The total return over the past 5 and 10 years is 2.66% and 4.33% per year with a loss of 0.68% and a gain of 1.90% per year in capital and with dividends of 3.33% and 2.43% per year. This is a rather low return.

Outstanding shares have declined by 0.4% and 0.2% per year over the 5 and 10 years. Shares have increased due to Share Options and have declined due to Buy Backs. There has also been some conversion of Class A shares to Class B shares. Revenue growth is moderate. EPS was negative in 2014, but using 5 year running averages there is no growth or little growth. Cash Flow growth is moderate. For Cash Flow if you use 5 year running averages, growth is moderate to good. Since reporting is in US$, I will talk about growth in US$ terms. .

Revenue growth over the past 5 and 10 years is at 4.6% and 4.7% per year in US$. Revenue per Share growth is at 5% and 4.9% per year over the past 5 and 10 years. Analysts expect a modest growth in 2015 at around 3.7%. If you compare Revenue to the end of 2014 and to the end of the first quarter, Revenue has grown at 7% in US$.

For 2014 the EPS was negative. It is expected to be positive in 2015. If you look at 5 year running averages, the EPS is down by 4.7% and up by 2.8% per year over the past 5 and 10 years. If you compare EPS to the end of 2014 and to the end of the first quarter, EPS is down 62% in US$ terms.

Cash Flow is up by 2.6% and 3% per year over the past 5 and 10 years in US$. Cash Flow per Share is up by 3% and 3.2% per year over the past 5 and 10 years in US$. Analysts expect good growth in Cash Flow for 2015. If you compare Cash Flow to the end of 2014 and to the end of the first quarter, Cash Flow is down 89% in US$ terms.

The Return on Equity has been over 10% once in the past 5 years and 4 times in the past 10 years. The ROE for 2014 was a negative 1.8% and the 5 year median was 8.3%. The ROE on comprehensive income was a negative 9.1% in 2014 and this ROE has a 5 year median of 7.4%. When the ROE on comprehensive income is a lot lower than for net income you have to wonder about the quality of the earnings.

Debt Ratios are good in 2014. The Liquidity Ratio was 1.88 and the Debt Ratio was 1.91. The Leverage and Debt/Equity Ratios was 2.10 and 1.10. (Note these ratios are the same using US$ or CDN$.)

This is the first of two parts. The second part will be posted on Thursday, August 6, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.

Dorel Industries Inc. is a world class juvenile products and bicycle company. Dorel's Home Furnishings segment markets a wide assortment of both domestically produced and imported furniture products, principally within North America. Dorel has facilities in seventeen countries, and sales worldwide. Its web site is here Dorel.

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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