Toromont Industries Ltd.

Sound bite for Twitter and StockTwits is: Price is reasonable to expensive. I will, of course, continue to hold on the shares I have in this company. I have made a decent return on this stock and I expect over the long term to continue to make a decent return. See my spreadsheet on Toromont Industries Ltd.

I own this stock of Toromont Industries Ltd. (TSX-TIH, OTC-TMTNF). This was a stock on Mike Higgs' Canadian Dividend Growth Stock list.

The Dividend Paid per Share on this stock can be quite different depending on how it is calculated. If you look strictly at dividends, I have received $4.50 per share for stock price coverage of 16.4% in 8.2 years. However, they also spun off Enerflex which gave me some $10.22 more per share in returned value. This spin off covered another 37.3% of the share cost. But this event will probably not happen again.

In 2015 the outstanding share were increased by 721,000 or by 0.93% for stock options. I think that this is rather high. For the companies I follow the median increased for stock options is 21% and 70% of the companies I cover increased the outstanding shares by 49% or less.

The other thing I noticed is that there was relatively a lot of Net Insider Selling which was at 0.32% over the past year. For the companies I follow, the median NIS is 0.02% and 70% of the companies have NIS at 11% or less. Looking closer at this company, I see that both the CEO and CFO increased their shares by 25% and 21% since I last looked at this company. The Chairman of the board did not change the number of shares he has. He has shares worth some $71M. Most of the selling is by the company's officers. Insiders seem to selling off a lot of their stock options.

Because of the sector that they are in they were hit rather hard in the last recession. There has been good growth in Revenue, Earnings and Cash Flow over the past 3 years. Revenue has not come back to the peak of 2010, but Earnings and Cash Flow have.

I have had this stock since 2007 and my total return is 8.73% per year with 6.61% from capital gains and 2.12% from dividends. (In calculating CC the money from Enerflex is in with the capital gains.) Dividends have been increasing and the last increase was in 2015 and was for 5.9%. The company often does two dividend increases in a year. Last year the dividends were increased by 13.8% over those of 2014. This year dividends year over year are up by 9.1%.

Dividends were cut when they spun off Enerflex. The dividends cut from Toromont were distributed by Enerflex. This has affected the growth of dividends over the past 5 and 10 years, giving growth of dividends at just 1.6% per year over the past 5 years and at 7.5% for dividends over the past 10 years.

The 5 year low, median and high median Price/Earnings per Share Ratios are 13.62, 15.25 and 16.88. They are a bit higher than the corresponding 10 year values of 12.68, 14.70 and 16.52. Also they are of a narrow range than the historical values of 12.31, 14.62 and 18.38. The current P/E Ratio is 16.81 based on a stock price of $33.62 and 2016 EPS estimate of $2.00. However, you look at this P/E Ratio is a rather high and is above the relative median using P/E Ratios.

I get a Graham Price of $33.62. The 10 year low, median and high median Price/Graham Price Ratios are 1.21, 1.41 and 1.57. The current P/GP Ratio is 1.59 based on a stock price of $33.62. This stock price testing suggests that the stock price is relative expensive.

You get a slightly different story by looking at dividend yield. The 5 year median dividend at 2.13% is just slightly less than the current dividend yield of 2.14% based on dividends of $0.72 and a stock price of $33.62. The historical dividend yield is even lower at 1.91% and some 12% lower than the current dividend yield. This stock price testing suggests that the stock price is reasonable and below the relative median.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. Most of the recommendations a Buy and the consensus recommendation is a Buy. The 12 month consensus stock price is $34.25. The stock price is close to this and has in the recent past been higher than this consensus stock price.

On this site of Franklin Independent a staff member looked at how analysts were rating this company and concluded they were 63% positive. Maddie Sorensen of Financial Market News talks about a director selling shares. Jonathan Ratner of the Financial Post say that this company may benefit from Federal Government's new infrastructure money.

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.

The last stock I wrote about was Manulife Financial Corp. (TSX-MFC, NYSE-MFC)... learn more... The next stock I will write about will be Russel Metals Inc. (TSX-RUS, OTC-RUSMF)... learn more on Monday, April 11, 2016 around 5 pm.

Also, on my book blog I have put a review of the book The Colder War by Marin Katusa. learn more...

The company serves its customers through two industry-leading service platforms: FirstService Residential, North America's largest manager of residential communities; and FirstService Brands, one of North America's largest providers of essential property services delivered through individually branded franchise systems and company-owned operations. Its web site is here Toromont Industries Ltd.

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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