Monday, November 7, 2016

TransForce Inc.

Sound bite for Twitter and StockTwits is: Price reasonable to high. It cannot be surprising that that the current stock price is testing as high on some tests. Shares are up by some 30% so far this year. There are a number of stock price tests that suggest the price is relatively high and some suggests it is reasonable but above the median. 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.

When we look at the growth of dividends, we must take into consideration that fact that this company was an income trust. When the new tax laws were announced it reduced its dividend by almost 75%. After a year of flat dividends, it started to increase the dividend again. They is why the dividend growth over the past 10 years is a negative 6.1% per year and the dividend growth over the past 5 years is a positive 11.2% per year.

The dividends are moderate as it the dividend increases. The current dividend is 2.22% based on a stock price of $30.60 and dividends of $0.68. The 5 year median is 2.58%. The historical median dividend yield is high at 7.07%. It is high because this stock used to be an Income Trust and Income Trust companies had high dividend yields comparatively to other companies. You cannot judge current yields by the historical yields for old Income Trust companies as they will probably never get such high dividend yields again.

Dividend increases have been inconsistent. It is an industrial stock which implies that it will be affected by economic cycles. The last dividend increase was in 2015 and it was for 17.2%. There has been no increase this year. Analysts do not really expect one until perhaps 2018.

Outstanding shares have increased by 2.5% over the past 10 years and are basically flat over the past 5 years. If looking at 10 year growth, if would be best to look at per share growth. Revenue and Cash Flow growth is good, but earnings have just increased over the past 5 years, not over the past 10 years. This is because earnings were very good 10 years ago. For example Revenue per Share has grown by 14.5% and 7.6% per year over the past 5 and 10 years. Earnings are down by 2.2% and up by 8% per year over the past 5 and 10 years.

EPS is expected to be quite high in 2016 and this is because net income from discontinued operations is mainly attributable to income tax adjustments to the rig moving services' earnings.

The 5 year low, median and high median Price/Earnings per Share Ratios are 13.58, 16.49 and 19.41. The corresponding 10 year values are 11.55, 14.34 and 17.12. The Historical values are 8.45, 11.23 and 12.45. They have been increasing as this company has grown.

Because the 2016 EPS estimate is very high as mentioned above, I will use the EPS estimate for 2017 which is $2.41 and gives a P/E of 12.70 based on a stock price of $30.60. If you use the EPS for the 12 month period ending at the end of the third quarter of 2016 of $1.56, the P/E Ratio would be 19.62 based on a stock price of $30.60. This stock price testing suggests that the stock price might be relatively reasonable.

I get a Graham Price of $19.46 for 2015, one of 34.71 for 2016 (because of the high EPS) and one of 23.89 for 2017. The low, median and high median Price/Graham Price Ratios are 0.80, 1.18 and 1.40. The current Price/Graham Price Ratio is 1.57, 0.88 and 1.28 based on the above 3 scenarios using a stock price of $30.60. This stock price testing suggests that the stock price is relatively high, cheap and reasonable, but above the median in these three scenarios. I would think the stock price is on the expensive side.

The 10 year median Price/Book Value per Share Ratio is 2.13. The current P/B Ratio is 2.91 a value some 36% higher. The current P/B Ratio is based on BVPS of $10.52 and a stock price of $30.60. This stock price testing suggests that the stock price if relatively high.

If you look at the 5 year median Dividend Yield for testing, I see a 5 year median Dividend Yield of 2.58%. The current Dividend Yield of 2.22% based on dividend of $0.68 and a stock price of $30.60. The current Dividend Yield is some 14% lower than the 5 year median. This stock price testing suggests that the stock price is reasonable, but above the median.

The 10 year median P/S Ratio is 0.52. The current P/S Ratio is 0.74 a value some 43% higher. The current P/S Ratio is based on 2015 Revenue estimate of $4,021M and stock price of $30.60 and shares of 97.633M and therefore Revenue per Share of $41.19. This stock price testing suggests that the stock price if relatively high

When I look at analysts' recommendations, I find Buy, Hold and Underperform. Most of the recommendations are a Buy and the consensus is a Buy. The 12 month stock price consensus is $32.33. This implies a total return of 7.88% with 2.22% from dividends and 5.65% from capital gains based on a current price of $30.60.

This article by Jonathan Ratner in the Financial Post talks about the company's purchase of XPO Logistics Inc.'s truckload shipping business. This article by Winifred Garcia in the What's on Thorold talks about recent analysts ratings for this company. See what analysts are saying about this company on Stock Chase.

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 about was Molson Coors Canada (TSX-TPX.B, NYSE-TAP)... learn more . The next stock I will write about will be Brookfield Asset Management Inc. (TSX-BAM.A, NYSE-BAM)... learn more on Wednesday, November 9, 2016 around 5 pm. Tomorrow on my other blog I will write about Dividend Stocks November 2016... learn more on Tuesday, November 8, 2016 around 5 pm.

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.

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.

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