Goodfellow Inc.

Sound bite for Twitter and StockTwits is: Could be cheap. On most testing this stock seems rather cheap. Since it is a small cap that is little traded this could explain why it is mostly cheap. It is certainly not an expensive stock. See my spreadsheet on Goodfellow Inc.

I own this stock of Goodfellow Inc. (TSX-GDL, OTC-GFELF). I started to look at this stock when I was searching for small cap stocks that paid dividends. It looked like an interesting stock. Goodfellow is a small cap stock that the Investor Reporter has written about a number of times.

This company is the type that twice annually declares dividends that they believe that they can afford to pay. So dividends go up and down depending on how well the company is or is not doing.

So how well has this company done in giving out dividends? First dividend yields are moderate. The current dividend yield is 3.41% and the 5 year median dividend yield is 3.74% and the historical median dividend 3.79%. There has not been any increase in dividends if you look at growth over the past 5 and 10 years. In fact dividends have been on the decline since 2010. Dividend growth is a negative 10% and 4% per year over the past 5 and 10 years.

If you had bought this stock exactly 5, 10 or 15 years ago, 17.8%, 39% and 147% of your original cost would be covered by dividends. If you had bought this stock exactly 5, 10 and 15 years ago, you would be earning 3.3% 2.8% and 7.5% on your original cost. The reason we have such a poor showing for after 10 years is because 10 years ago, the stock price was relatively quite high.

For this company it has been a long slow recovery from its top in 2010. However, revenue, earnings and cash flow have increased over the past couple of years. For example revenue is up by 3.5% and 7.8% for the past two years. EPS has been increasing since the low of 2011 and has increased by 32% and 23% for the past two years.

Shareholders have not done badly over the past 5 years with a total return of 9.94% per year with 4.75% per year from dividends and 5.19% per year from capital gains. The 10 years total return is a negative 2.59% per year with 3.13% per year from dividends and capital loss of 5.72% per year.

The 5 year low, median and high median Price/Earnings per Share Ratios are 14.03, 14.68 and 15.32. The 10 years corresponding ratios are lower at 8.78, 11.23 and 13.20. This historical median P/E Ratio at 8.69 is even lower. The current P/E Ratio is 10.15 based on a stock price of $10.25 and last 12 months EPS of $1.01. This stock price testing suggests that the stock price is cheap to reasonable. However, the stock price is below the median.

I get a Graham Price of $18.50. The 10 year low, median and high median Price/Graham Price Ratios are 0.54, 0.63 and 0.70. The current P/GP Ratio is 0.55. This stock seems to generally trade below the Graham Price. The stock price testing suggests again that the stock price is cheap to reasonable and below the median.

A reason that this stock has been quoted as cheap is because it trades below its Book Value per Share. The BVPS is current at $15.06 and the stock price is $10.25. The current P/B Ratio is 0.68. However, this is not much below the 10 years median P/B Ratio of 0.70. The stock price testing suggests again that the stock price is cheap to reasonable and below the median.

The only suggestion that this stock may not been as cheap as it appears is using the dividend yield. The current dividend yield is 3.41% and the historical median dividend yield is higher at 3.79%. What you want is a stock trading at a dividend yield higher than the historical median yield. However, the current yield is not that much lower than the historical at some 9.9% lower.

Because this is a small cap stock with little volume there are no analyst seems to be following this stock.

There is a news item on Benzinga about Goodfellow acquiring Quality Hardwoods Ltd. located in Powassan, Ontario. There is a news item on Stock House about Goodfellow reporting its annual result for November 2015. There is an interesting article by Robert Tattersall in the Globe and Mail about stocks trading below their book value. This stock is included.

The last time Investment Reporter talked about this stock in December 2015 they said Goodfellow Inc. remains buys for price gains and dividends.

I will have only one entry for this stock this year. However, I did a more complete report on this company in 2015 and you can see those reports here and here.

On last Friday I wrote about Emera Inc. (TSX-EMA, OTC-EMRAF) learn more. The next stock I will write about will be Bombardier Inc. (TSX-BBD.B, OTC-BDRBF)... learn more on Wednesday, February 24, 2016.

Goodfellow Inc. is one of eastern Canada's largest independent re-manufacturers and distributors of lumber and hardwood flooring products. The company serves customers throughout Canada, the United States and abroad including the UK and China and the Middle East. H.Q is Delson, Quebec, just outside Montreal. It is about 60% owned by insiders. Its web site is here Goodfellow 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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