Stella-Jones Inc.

Sound bite for Twitter and StockTwits is: Expensive, no momentum. This stock has been going almost since the beginning of the year. All my stock testing does points to the stock being expensive. This is a great stock, but it may not be the time to buy. See my spreadsheet on Stella-Jones Inc.

I do not own this stock of Stella-Jones Inc. (TSX-SJ, OTC-STLJF). I started a spreadsheet on this stock in mid-2009 because of a favorable report I read on this stock. It was considered to be a dividend growth stock and I am always on the lookout for dividend growth stocks.

Dividend yield is low, Dividend Payout Ratio is low and dividend growth is good. The current dividend yield is 0.94% based on dividends of $0.40 and a stock price of $42.59. The Dividend Payout Ratio for EPS for 2015 is 15.7% and over the past 5 years payout is 23%. The DPR for CFPS is 8.8% and the 5 year value is 13.3%. (Note I used Cash Flow less Working Capital for my Cash Flow. See my blog for further information on Cash Flow.)

The dividend growth is at 27.5% and 29% per year over the past 5 and 10 years. If you bought this stock 5, 10 or 15 years ago at a median price, you would be earning 4.3%, 8.6% and 73.6% dividend yield on your original stock purchase price. If you bought the stock today and dividend growth is 15% per year, then in 5, 10 and 15 years’ time you could be earning 2.33%, 7.13% and 21.75% on current stock price of $52.28.

The 5 year low, median and high median Price/Earnings per Share Ratios are 13.62, 17.62 and 21.63. The corresponding 10 year values are 10.12, 13.14 and 17.56. The historical values are 7.96, 10.58 and 13.23. It would seem that some of the run up in this stock’s shares is due to increases in P/E Ratios. The current P/E Ratio is 17.60 based on a stock price of $42.59 and 2016 EPS estimate of $2.42. The P/E for 2017 is 16.57 based on a stock price of $42.59 and 2017 EPS estimate of $2.57. This stock price testing suggests that the stock price is relatively reasonable to expensive.

I get a Graham Price of $27.89. The 10 year low, median and high median Price/Graham Price Ratios are 0.81, 1.11 and 1.53. The current P/GP Ratio is $1.53 based on a stock price of $42.59. I get a Graham Price of $28.74 for 2017 and a P/GP Ratio of 1.48 based on a stock price of $42.59. This stock price testing suggests that the stock price is relatively expensive.

I get a 10 year Price/Book Value per Share Ratio of $2.19. The current P/B Ratio is 2.98 based on a stock price of $42.59 and BVPS of $14.28. The current P/B Ratio is some 35.9% higher than the 10 year median value. This stock price testing suggests that the stock price is relatively expensive.

The current dividend yield is 0.94%. This is based on dividends of $0.40 and a stock price of $42.59. The historical median dividend yield is 1.26%. The current dividend yield is some 25.5% lower. This stock price testing suggests that the stock price is relatively expensive.

When I look at analysts’ recommendations, I find Buy and Hold recommendations. Most of the recommendations are a Buy and the consensus recommendation is a buy. The 12 month stock price consensus is $52.94. This implies a total return of 25.24% with 0.94% from dividends and 24.30% from capital gains.

The site of Highland Digest shows some interesting values for this company. Stella-Jones Inc. has a Gross Margin score of 9. The Gross Margin metric uses a scale from 1 to 100 where a 1 would be seen as positive and a 100 would be viewed as negative. Kay Ng of Motley Fool asks the question “Can Sideways Stella-Jones Inc. Soar Again?” He seems to think so. A number of analysts on Stock Chase like 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 and here.

The last stock I wrote about was about was First Capital Realty (TSX-FCR, OTC-FCRGF)... learn more . The next stock I will write about will be The Keg Royalties Income Fund (TSX-KEG.UN, OTC-KRIUF)... learn more on Monday, December 19, 2016 around 5 pm.

Stella-Jones Inc. is a leading North American producer and marketer of industrial pressure treated wood products, specializing in the production of railway ties and timbers as well as wood poles supplied to electrical utilities and telecommunications companies. The Company also provides treated consumer lumber products and customized services to lumber retailers and wholesalers for outdoor applications. Other products include marine and foundation pilings, construction timbers, highway guardrail posts and treated wood for bridges. It has sales in Canada and US. Its web site is here Stella-Jones 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.