Friday, April 7, 2017

Leon's Furniture Ltd

Sound bite for Twitter and StockTwits is: Dividend growth Consumer stock. This stock is current at a rather attractive price. The Leon family control this company and not everyone is fond of such companies. I do not mind if they are well run. See my spreadsheet on Leon's Furniture Ltd.

I own this stock of Leon's Furniture Ltd (TSX-LNF, OTC-LEFUF). I had some money in 2006 and this stock has been on MPL Communication's Investor Reporter list for some time. It was also on Mike Higgs' Dividend Growth Stock list. I bought some in 2006 and then some more in 2008, 2009, 2010 and 2013.

This dividend growth stock has not been a big winner. I have made a total return of 7.19% per year with 2.92% from dividends and 4.27% from capital gain. The dividends paid of $3.37 per share have paid 28.8% of the cost of my stock. I have had this stock for just less than 11 years. It should also be noted that this current long slow recovery has not be good for a number of stocks.

The dividend yield is low to moderate. The current dividend yield is moderate at 2.8% based on dividends of $0.48 and a stock price of $16.98. The historical median dividend yield is low at 1.9%. The 5 and 10 year median dividend yields are moderate at 2.5% and 2.6% respectively.

The dividend growth is low with growth at 2.1% and 4.8% per year over the past 5 and 10 years. I should point out that dividends were flat from 2012 to 2017. This year the dividends were increased by 20%. Dividend increases has always been inconsistent for this stock. After owning this stock for just less than11 years I am earning a good dividend of 4.3% on the stock I bought in 2006.

Dividend Payout Ratio has been moderate. The DPR for EPS for 2016 was 37% with a 5 year value of 47%. DPR in 2012 reached unusually high for this stock at 85%. Generally speaking DPR for EPS was previous in the 20% and 30% ranges. The DPR for 2017 is expected to be around 38%.

For this stock the Debt/Market Cap Ratio is 0.25. This ratio is a good one. The Debt Ratio at 1.69 is also a good ratio. The Liquidity Ratio is low at 1.28 and a 5 year median of 1.15. I prefer this to be 1.50 or higher. However, if you add in cash flow after dividends it is an acceptable 1.60. The Leverage and Debt/Equity Ratios are not great, but not unusual for a Consumer Discretionary stock.

The 5 year low, median and high median Price/Earnings per Share Ratios are 13.45, 16.40 and 18.65. The corresponding 10 year values are 13.43, 15.79 and 17.89. The corresponding historical ones are 12.37, 14.68 and 16.90. The current P/E Ratio is 14.03 based on a stock price of $16.98 and 2017 EPS estimate of $1.21. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a Graham Price of $15.72. The 10 year low, median and high median Price/Graham Price Ratios are 0.99, 1.19 and 1.38. The current P/GP Ratio is 1.08 based on a stock price of $16.98. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a 10 year median Price/Book Value per Share Ratio of 2.03. The current P/B Ratio is 1.87 based on BVPS of $9.08 and a stock price of $16.98. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get an historical dividend yield of 1.91%. The current dividend yield is 2.83% based on dividends of $0.48 and a stock price of $16.98. The current dividend yield is some 48% above the historical dividend yield. This stock price testing suggests that the stock price is relatively cheap. It is still below the historical high of 3.50%.

There seems to be only one analyst following this stock and the recommendation given is a Hold. The 12 months stock price given is $19.00. This implies a total return of 14.72% with 11.9% from capital gains and 2.83% from dividends.

This site of Sherwood Daily is looking at more technical valuations. One is the Piotroski F-Score. They give this stock a 7 where a score of 8 or 9 is vied as a strong stock and a score of 0-2 would be viewed as a weak stock. Ashwin Virk at Simply Wall Street looks at the company's balance sheet and debt and questions its debt load. I think that while the debt ratios are not the best, they are also not a present concern. A recent article in Buckeye Business Review looks at Leon's Gross Margins and other factors. They give it a Gross Margin score of 7 where 1 is good and 100 is considered bad. There is not much in the way of comments on this stock at Stock Chase. However, the comments made are generally positive.

Leon's Furniture Limited is a Canada-based company and is a retailer of home furnishings, electronics and appliances across Canada from Alberta to Newfoundland and Labrador. Leon's sells under several banners including Leon's, The Brick, Appliance Canada and United Furniture Warehouse. Its web site is here Leon's Furniture Ltd .

The last stock I wrote about was about was Russel Metals Inc. (TSX-RUS, OTC- RUSMF)... learn more . The next stock I will write about will Barrick Gold Corp. (TSX-ABX, NYSE-ABX)... learn more on Monday, April 10, 2017 around 5 pm.

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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