Sound bite for Twitter and StockTwits is: Stock on sale! Yes, this company currently has some problems, but it is a good dividend growth stock and the great time to buy such stocks is when they are cheap. The only reason I would not buy this stock is because I own a similar stock in Toromont Industries. See my spreadsheet on Finning International Inc.
I do not own this stock of Finning International Inc. (TSX-FTT, OTC-FINGF). When I was in the market to buy an industrial stock in this area in 2007, I look at this stock was well as Toromont Industries (TSX-TIH). At the time I liked Toromont better, so that is what I bought.
In insider trading there is both insider buying and insider selling. There is a net of insider selling of $0.5M or 0.02% of the outstanding market cap. Both CEO and CFO have more shares this year than last year. CEO has shares worth around $1.9M, CFO has shares worth around $0.2M and the Chairman has shares worth around $3.1M. Of course all these add up to less than 1% of the outstanding shares.
The 5 year low, median and high median Price/Earnings per Share Ratios are 11.13, 13.17 and 15.20. The corresponding 10 year P/E Ratios are 12.92, 17.33 and 20.59. The historical median P/E is 15.54. The current P/E Ratio is 13.49 based on a stock price of $18.08 and EPS estimate for 2015 of 1.34. This stock price testing suggests that the stock price is relatively reasonable and probably around the relative median.
I get a Graham Price of $20.19. The 10 year low, median and high median Price/Graham Price Ratios are 1.15, 1.41 and 1.60. The current P/GP Ratio is 0.90 based on a stock price of $18.08. This stock price testing suggests that the stock price is cheap. Also, a P/GP Ratio of 1.00 or less also suggests a cheap stock price.
I get a 10 year median Price/Book Value per Share Ratio of 2.34. The current P/B Ratios is 1.34 based on a stock price of $18.08 and BVPS of $13.51. The current P/B Ratio is some 43% lower than the 10 year median P/B Ratio. This stock price testing suggests that the stock price is relatively cheap.
The current dividend yield is 4.04% based on a stock price of $18.08 and dividends of $0.73. The historical high dividend yield is 4.07% and the current one is with 1% of this. This stock price testing suggests that the stock price is cheap.
When I look at analyst's recommendations, I find Strong Buy, Buy, Hold, Underperform and Sell recommendations. Most of the recommendations are a Hold and the consensus is a Hold. The 12 month stock price is $20.95. This implies a total return of 19.91% with 15.87% from capital gains and 4.04% from dividends.
This Canadian Press News Item on News 1130 talks about Finning cutting 8% of its work force. This was prompted by slowing equipment sales. It has caused a drop in the shares of this company. This article on CBC News talks also about the layoffs as this company is feeling the repercussions of the decline in commodity prices. Finning says that it is transforming the company.
This is the second of two parts. The first part was posted on Monday, December 07, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.
This company sells, rents and provides customer support services for Caterpillar equipment and engines. They cover Canada, UK, Argentina, Bolivia, Chile and Uruguay. Its web site is here Finning International 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.
See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.
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