Friday, July 28, 2017

Dorel Industries Inc.

Sound bite for Twitter and StockTwits is: Dividend Growth Consumer. The current price seems reasonable, but I do wonder if the company can make money for shareholders over the longer term. You can see how dividends count as for most periods dividends are a big part of total return. See my spreadsheet on Dorel Industries Inc.

I do not own this stock of Dorel Industries Inc. (TSX-DII.B, OTC-DIIBF) but I used to. I am always curious about what happens to stocks after I no longer hold them. I bought it in 1999 and sold in 2006 because I had not made any money on it. At that time it did not pay dividends. If I had continued to hold it I would have had it for 18 years and would have made 1.2% per year on capital gains.

This is a Canadian company that reports in US$, and it pays its dividends in US$. On their web site that talk about what dividends are paid, but do not mention that they are in US$. When they do a press release on dividends declared they state that they are in US$. I find this annoying. When dividends are paid in other than CDN$, you never really know what you are going to get. They will vary with each payment because of the currency exchange rate.

Initially the dividend looks good. The dividend yield is 4.55% and the dividends have grown at 14.8% and 10% per year over the past 5 and 9 years in US$. The problem is they cannot afford the dividends. The 5 year coverage is at 115% US$. This is, of course, too high. They also have had no increased the dividends since 2013. The dividend growth comes from only two dividend increases in 2012 and 2013.

Analysts keep expecting the company to have good earnings. Estimates for 2014 to 2016 were $3.17, $1.94 and $2.23 US$. They came in a loss of $0.66, earnings of $0.79 and a loss of $0.36. The expectation is earnings of $2.05 in 2017. If you look at earnings over the past 12 months to the first quarter and earnings for 2016, EPS s down by 67% to a loss of $0.60.

Getting back to how this stock has done, if you look at a chart you can see that the stock had a big rise in 1996 to 1999, but since then it has gone up and down, but hasn't gotten anywhere. The current highs are making it to past highs, but really no higher. The last peak was in 2013.

The people who have had this stock for 5 years did fine with a total return of 13.15%. It had 8.71% from capital gains and 4.44% from dividends. 5 year ago was 2011 and was the last low for this company. For the shareholders of 10 years, the total return would be just 4.70% with 2.09% from capital gains and 2.60% from dividends.

The 5 year low, median and high median Price/Earnings per Share Ratios are 7.35, 9.36 and 11.38. The 10 year values are 7.00, 8.77 and 10.41. The historical values are 8.91, 11.32 and 14.52. The current P/E Ratio is 12.88 based on a stock price of $33.01CDN$ and 2017 EPS estimate of $2.56 CDN$ ($2.05 US$). This stock price testing suggests that the stock price is relatively expensive.

I get a Graham Price of $48.66 CDN$. The 10 year low, median and high median Price/Graham Price Ratios are 0.63, 0.68 and 0.74. The current P/GP Ratio is 0.68 based on a stock price of $33.01. This stock price testing suggests that the stock price is reasonable and at the median.

The 10 year Price/Book Value per Share Ratio is CDN$ 0.76. The current P/B Ratio is 0.80 CDN$ based on a stock price of $33.01 CDN$ and Book Value of $1330.1M CDN$ and BVPS of $41.05 CDN$. The current P/B Ratio is 5.2% higher than the 10 year median ratio. This stock price testing suggests that the stock price is reasonable but above the median.

In US$ terms the current P/B Ratio of 0.80 and the 10 year median is $0.79. This makes the current one only 1.3% higher than the 10 year ratio. This stock price testing suggests that the stock price is reasonable and at the median (or very close).

The historical dividend yield is 2.56% US$. The problem with the historical yield is that the dividends started very low at 19.01% EPS Payout and are now very high. Dividends have been increasing strongly with a current negative payout because of no earnings in 2016 and with 5 year coverage of 115% US$. The 5 year dividend yield is 3.57% US$. I just wonder how good this test is because of the dividend increases that cannot be covered by EPS.

The current dividend yield is 4.55% based on Dividends of $1.20 US$. The current dividend is some 78% higher than the historical one and 27% higher than the 5 year one. This stock price testing suggests that the stock price is relatively cheap.

When I look at the analysts' recommendations I find one Strong Buy and 6 Hold recommendations. The consensus recommendation would be a Hold. The 12 month stock price is $27.51 US$ or $34.40 CDN$. This implies a total return of 8.76% with 4.21% from capital gains and 4.55% from dividends based on a current price of $33.01 CDN$.

Staff Writer on Hayden Business Journal gives some technical indicators for this company. Kurt Siggers on Key Gazette says of 4 analysts all give Holds on this stock.

Dorel Industries Inc. is a world class juvenile products and bicycle company. Dorel's Home Furnishings segment markets a wide assortment of both domestically produced and imported furniture products, principally within North America. Dorel has facilities in seventeen countries, and sales worldwide. Its web site is here Dorel Industries Inc.

The last stock I wrote about was about was Obsidian Energy Ltd TSX-OBE, NYSE-OBE)... learn more. The next stock I will write about will be Pulse Seismic Inc. (TSX-PSD, OTC- PLSDF)... learn more on Monday, July 31, 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. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

No comments:

Post a Comment