TransForce Inc.

On my other blog I am today writing about some of the companies I looked at more closely in by recent monthly update learn more...

Sound bite for Twitter and StockTwits is: Div. growth Co. in transportation, logistics services. This industrial company is doing fine. Debt ratios are not what I like to see. Dividend Payout Ratios are good. See my spreadsheet on TransForce Inc.

I do not own this stock of TransForce Inc. (TSX-TIF, OTC-TFIFF). I read a report called "6 Canadian Dividend Stocks That Fly Under the Radar" by John Heinzl in April of 2013. This is one of the stocks mentioned. There was also a good review of this stock by Advice Hotline by MPL Communications.

Company was an income trust from 2002 to 2008. When it changed to a corporation it dropped monthly distributions for quarterly distributions. Dividends dropped almost 75%. Since 2011 it has been increasing its dividends. The growth over the past 5 and 10 years is 7.7% per year over 5 years and a negative growth of 6.7% per year over the past 10 years.

The dividend yield high occurred in 2008 with the yield over 20%. However, yields have been treading down since then to the current one of 2.71% based on a stock price of $25.10 and dividends of $0.68. The 5 year median dividend yield is 2.93%. So currently the dividends are rather low, but the increases are good with the latest increase at 17.2% in 2015.

The Dividend Payout Ratios are good. The DPR for 2014 for EPS is 46% and for CFPS is 29%. The 5 year median values are 41% for EPS and 14% for CFPS. The values for 2015 are expected to be similar at 39% for EPS and 19% for CFPS.

Shareholders have done well with this stock, especially over the last 5 years. Total return over the past 5 and 10 years is at 18.08% and 8.27% per year. The portion of this total return attributable to dividends is at 3.23% and 4.33% per year. The portion of this total return attributable to capital gains is at 14.94% and 3.94% per year. Note that in future dividends the dividend portion of total return will be lower than in the past.

Outstanding shares have increased by 1.4% and 3.7% per year over the past 5 and 10 years. Shares have increased due to Share Issues and Stock Options and have decreased due to Buy Backs. Revenue growth has been good. EPS has been low to good. Cash Flow growth has been non-existent to moderate.

Good Revenue growth is necessary for EPS and Cash Flow Growth. For this company, Revenue growth has been at 15% and 12.7% per year over the past 5 and 10 years. Revenue per Share growth is at13.4% and 8.7% over the past 5 and 10 years. Analysts expect good growth in Revenue of around 15% in 2015. If you look at the 12 month period to the end of 2014 and the 12 month period to the end of the third quarter, Revenue is up by 16.5%.

EPS is a little different. It seems that 5 years ago was a bad year and so EPS over the past 5 years is up by some 60% per year. However, if you look at 5 year running averages over the past 5 years, EPS is just up 1% per year. EPS is up just 0.8% per year over the past 10 years. Here if you look at 5 year running averages EPS is up by 6.9% per year. Analysts expect good growth in EPS for 2015 at 27%. If you look at the 12 month period to the end of 2014 and the 12 month period to the end of the third quarter EPS is up by 25%.

Cash Flow is up by 1.3% and 5% per year over the past 5 and 10 years. CFPS is down by 0.1% and up by 1.2% per year over the past 5 and 10 years. If you look at 5 year running averages, CFPS is up by 6.6% and 10.5% per year over the past 5 and 10 years. Analysts expect good growth in Cash Flows for 2015 at some 21%. If you look at the 12 month period to the end of 2014 and the 12 month period to the end of the third quarter, Cash Flow is up by 28%.

The Return on Equity has been below 10% once in the past 5 years. The ROE for 2014 was at 12.4% and the 5 year median is 14.9%. The ROE on comprehensive income was at 12.5% for 2014 and its 5 year median is 14.7%. When these ROEs are close it suggests that the earnings are of good quality.

One thing I do not like about this company is the debt ratios. The Liquidity Ratio for 2014 is just 0.83. That means that current assets cannot cover current liabilities. If you add in cash flow after dividends, this ratio rises to just 1.16. I like this ratio to be 1.50 for a margin of safety. If you have to muck around to get this ratio to look better, this is not good.

The Debt Ratio for 2014 is 1.43 (and even lower at the third quarter at 1.40). I like this to be at 1.50 for a margin of safety. The Leverage and Debt/Equity Ratios are a little high at 3.34 and 2.34. I would prefer that they be under 2.00 and 1.00, respectively. This is a cautionary note. The problem with bad debt ratios is that they point to the possibility that a company may not do well in bad times. If you are a long term investor this is an important point.

This is the first of two parts. The second part will be posted on Tuesday, November 10, 2015 and will be available here. The first part talks about the stock and the second part talks about the stock price.

TransForce Inc. is a North American leader in the transportation and logistics industry operating across Canada and the United States through its subsidiaries. TransForce companies service the following segments: Package and Courier; Less-Than-Truckload; Truckload, which includes specialized truckload and dedicated services; Specialized Services, which includes services to the energy sector, waste management, logistics and ancillary transportation services. Its web site is here TransForce Inc.

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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