Canam Group Inc.

Sound bite for Twitter and StockTwits is: Price is cheap to reasonable. This is a relatively small but growing company. It could do very well if governments invest in infrastructure. See my spreadsheet on Canam Group Inc.

I do not own this stock of Canam Group Inc. (TSX-CAM, OTC-CNMGA). I started following this stock in September 2009 as I read a favorable review on it. I am interested in small cap companies that pay dividends, so this company fits into what I want to investigate.

Dividends were started in 1999, but they have been on a rollercoaster ride. They have gone up and down and been cancelled and reinstated. Dividends were restarted in 2014 and since then have been flat. If you had bought this stock 5, 10, 15 or 20 years ago at a median price, dividends would have paid for 8.3%, 13%, 19% and 69% of your stock's cost. If you have bought this stock 5, 10, 15 or 20 years ago at a median price you would be earning a dividend yield of 2.8%, 1.7%, 1.9% or 4.2%.

The current dividend yield is low and it is hard to say when or if ever the dividends would increase. The company had never paid a higher dividend than it is paying at present. It has gotten as high as the current dividend in the past. The current dividend yield is just 1.49% based on dividends of $0.16 and a stock price of $10.75.

Can shareholders make any money on this stock? It probably depends on when it is bought. For the 5 and 10 years to the end of 2015, the Total Return was 14.60% and 8.35% per year. The dividend portion of this return was at 0.78% and 1.35% per year. The capital gain portion of this return was at 13.82% and 7.00% per year.

However, if you bought this stock 5 or 10 years ago to the present date the story is different for both the 5 and 10 years periods. . For the 5 and 10 years to the present, the Total Return is 22.58% and 2.73% per year. The dividend portion of this return is at 1.32% and 1.22% per year. The capital gain portion of this return was at 21.26% and 1.50% per year. It would seem you need to pick your entry point carefully.

Ten years ago from the present it was not so much that the stock's price was high, but today's price is after a fall of the stock's price by 23% in 2016. This can account for the low 2.7% total return over 10 years. Five years ago from the present this stock was at a low point and this accounts for the 22.6% total return over past 5 years.

This stock has very good debt ratios. This enables a company to ride out the bad times. The Liquidity Ratio for 2015 is 2.01 and the 5 year median ratio is also 2.01. The Debt Ratio for 2015 is 2.15 and its 5 year median ratio is 2.09. The Leverage and Debt/Equity Ratio for 2015 are 1.87 and 0.87 respectively. The corresponding 5 year median ratios are 1.92 and 0.92, respectively.

The Return on Equity Ratios, especially over the past 5 years has been low. The ROE for 2015 is just 7.5% and the 5 year median is 6.4%. However, the ROE using the Comprehensive Income has been better with the ROE for 2015 at 17.3% and the 5 year median at 11.4%. This would suggest that earnings are better than stated.

The have had good revenue growth with Revenue per Share growth at 15% and 9.3% per year over the past 5 and 10 years. Earnings have been all over the place with 2015 being a very good year. EPS is up by 244% and 1.6% per year over the past 5 and 10 years. However, if you look at 5 year running average, over the past 5 years EPS is down by 7.6% per year.

CFPS is more consistent, but 5 years ago was not a good year for CFPS and therefore the 5 year growth is at 21.5%. However, if you look at 5 year running averages, CFPS is down by 18.3% per year. (5 year running averages compare the last 5 years averages to years 6 to 10 averages.)

The 5 year low, median and high median Price/Earnings per Share Ratios are 9.61, 12.43 and 14.95. The corresponding 10 year values are 9.49, 12.71 and 12.78. The historical values are 7.77, 9.80 and 12.63. The current P/E Ratio is 10.64 based on a stock price of $10.75 and 2016 EPS estimate of $1.01. This testing would suggest that the stock price is relatively reasonable and below the median.

I get a Graham Price of $17.10. The 10 year low, median and high median Price/Graham Price Ratios are 0.59, 0.78 and 1.02. The current P/GP Ratio is 0.63 based on a stock price of $10.75. This stock price testing suggests that the stock price is relatively cheap.

I get a 10 years Price/Book Value per Share Ratio 0.99. The current P/B Ratio is 0.84 based on BVPS of $12.87 and a stock price of $10.75. The current P/B Ratio is some 16% lower than the 10 year ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median. The current ratio would have to be 20% lower than the 10 years ratio for the stock to be considered relatively cheap.

I get an historical median dividend yield of 1.30%. The current dividend yield of 1.49% is some 14.5% higher based on dividends of $0.16 and a stock price of $10.75. This stock price testing suggests that the stock price is relatively reasonable and below the median.

When I look at analysts' recommendations I find Buy and Hold recommendations. Most recommendations are a Buy and the consensus is a Buy. The 12 month consensus stock price is 15.79. This implies a total return of 48.37% with 1.49% from dividends and 46.88% from capital gains. This would basically take this stock back to the highs of 2014 and 2015.

In a press report on News Wire Canam Group announced that an in-depth assessment will lead to the recording of an after-tax reserve of $32M in the second quarter of 2016 to take into account the revised cost estimates for a significant project. Scott Moore on The Certa Gem talks about recent analysts' reports. Damon van der Linde on Financial Post does a rather favorable report on this company. It points out both positive and negative aspects of this company.

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 that report here.

The last stock I wrote about was about was Penn West Petroleum Ltd. (TSX-PWT, NYSE-PWE)... learn more . The next stock I will write about will be Dorel Industries Inc. (TSX-DII.B, OTC-DIIBF)... learn more on Friday, July 29, 2016 around 5 pm. Tomorrow on my other blog I will write about Dividend Growth... learn more on Thursday, July 28, 2016 around 5 pm.

Canam Group specializes in the design and fabrication of construction products and solutions for the commercial, industrial, institutional, multi-unit residential, and bridge and highway infrastructure markets. This company has offices in Canada, US, Saudi Arabia, United Arab Emirates, India, Romania France and China. Its web site is here Canam Group 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. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits.