Wednesday, September 30, 2015

Wajax Corp.

On my other blog I am today writing Streams of Income continue...

Sound bite for Twitter and StockTwits is: Price is cheap to reasonable with risk. The price testing gives a very mixed bag. I like to P/GP Ratio and P/B Ratio testing best, so I will go with these. The company certainly has some current problems. This makes it a little risky. See my spreadsheet on Wajax Corp. .

I do not own this stock of Wajax Corp. (TSX-WJX, OTC- WJXFF). TD Waterhouse put out a report on good dividend paying stocks to own in November 2011. This was a stock they named. I had not heard of it before, so I decided to investigate it.

This company has only been paying dividends from since 2004. The dividends have gone down as well as up. The company just recently changed their dividend payments from monthly to quarterly and reduced the dividends by some 58%. They have exposure to the oil and gas industry and we all know that is not going well at present.

Even with the cut in dividends, the dividend yield is still good at 4.56% based on a stock price of $21.94 and dividends of $1.00. This stock used to be an income trust and their dividends were very high in the past. However, they are unlikely to reach past highs again.

Shareholders were making a good return until the end of 2041, but this stock is down some 28% this year. The stock price actually peaked in 2012 at $52.61. The 5 year total return on this stock to the end of 2014 was 18.31% per year. Total return to date is a lot lower with the 5 year total return at -1.90% with 7.95% from dividends and a capital loss of 9.85%. The 10 years return is better, mostly because of dividends. The 10 year total return was 8.41% with 11.71% from dividends and a capital loss of 3.31%. In the future total return is going to reply more on capital gain than dividends.

Dividend Payout Ratios was rather high at 99.2% in 2014. It is expected to be at 83% in 2015, but then go back up to around 100% in 2016. The DPR for CFPS is better with the DPR for 2014 at 44% and for the 12 month period to the end of the second quarter at 58.4%.

The Return on Equity is fine as is the debt ratios, so I should move on to other things, like what is its relative price.

The 5 year low, median and high median Price/Earnings per Share Ratios are 10.00, 11.76 and 13.52. The 10 year corresponding ratios are lower at 6.57, 9.43 and 11.71. The 10 year ratios are low because this is a small cap company with the market often below 500M. The current P/E Ratio is 15.45 based on a stock price of $21.94 and 2015 EPS estimate of $1.42. Even though 15.45 is a not a very high P/E Ratio it is relatively high for this company. This stock price testing suggests that the stock is relatively expensive.

I get a Graham Price of $24.79. The 10 year low, median and high Price/Graham Price Ratios are 0.74, 1.03 and 1.32. The current P/GP Ratio is 0.89 based on a stock price of $21.94. This stock price testing suggests that the stock price is reasonable and below the relative median.

The 10 year Price/Book Value per Share Ratio is 2.54. The current P/B Ratio is 1.14 based on a stock price of $21.94 and BVPS of $19.24. The current P/B Ratio is some 55% lower than the 10 year P/B Ratio. This stock price testing suggests that the stock price is cheap.

The historical dividend yields are not good to use for dividend yield testing as the dividend yields were very high when this stock was an Income Trust company. Also, the dividends have recently been lowered. The 5 year dividend yield is 6.62% and the current dividend yield is 4.56% based on dividends of $1.00 and a stock price of $21.94.

It is interesting that the Price/Cash Flow per Share Ratio testing says that the stock is expensive and P/S Ratio testing says that the stock price is cheap. Current P/CF Ratio based on 12 month cash flow to the end of the second quarter is 10.83 compared to the 10 year median P/CF Ratio of 6.48. The current P/S Ratio is 0.27 compared to the 10 year median P/S Ratio of 0.46.

When I look at analysts' recommendations, I find Buy and Hold Recommendations. Most of the recommendations are a Hold and the consensus recommendation would be a Hold. The 12 month stock price consensus is $25.50. This implies a total return of 20.78% with 4.56% from dividends and 16.23% from capital gains.

The site of Financial Wisdom Works talks about recent ratings by analysts. Most ratings are a Hold. Doug Watt of Motley Fool talks about this company's recent dividend cut. The site Stock Chase talks about recent analysts' comments on 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.

Wajax is a leading Canadian distributor and service support provider of mobile equipment, industrial components and power systems. Reflecting a diversified exposure to the Canadian economy, Wajax has three distinct business divisions. The organization's customer base covers core sectors of the Canadian economy - mining, oil and gas, forestry, construction, manufacturing, industrial processing, transportation and utilities. Its web site is here Wajax Corp.

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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