Friday, September 22, 2017

Wajax Corp

Sound bite for Twitter and StockTwits is: Dividend paying industrial. Since they are quite inconsistent in dividend payments this stock maybe more suitable for people growing their portfolio or people not dependent on dividend income. This stock is coming out as relatively cheap on a number of good stock price testing of Dividend Yield, P/S Ratio and P/B Ratio. See my spreadsheet on Wajax Corp.

I do not own this stock of Wajax Corp. (TSX-WJX, OTC-WJXFF). TD Waterhouse put out a report on good dividend paying stocks to own in November 2011. This was a stock they named. I had not heard of it before, so I decided to investigate it.

This company used to be an income trust and it changed to a corporation in 2011. In 2008 and 2009 it decreased its dividends some 58% to get its Dividend Payout Ratio down. In 2011 and 2012 they increased their dividends. However, EPS fell off in 2013 and they have been decreasing their dividends ever since.

In 2014 they were paying monthly dividends. In 2015 they changed the dividends to quarterly. Dividends since 2014 are down by almost 70%. So far in 2017 dividends are flat. They have made not announcement of any dividend changes and the third dividend of 2017 will be the same as for the first two quarters. Note that this company paid dividends from 1986 to 1991 and then paid no more dividends until 2004.

Even though dividends have decreased, the dividend yield is still in the good range so still quite high. The current dividend yield is 5.27%. The Dividend Payout Ratio is high at 185% in 2016 and 5 year coverage of 114%. However, analysts expect the DPR to be lower in 2017 at around 71%. The DPR for CFPS (less WC) is 36% in 2016 and has 5 year coverage of 43%. (It is best when this DPR is at 40% or lower.)

This stock has some very good debt ratios. The Liquidity Ratio is 2.07 for 2016 with a 5 year median of 2.07. The Debt Ratio is 1.71 for 2016 with a 5 year median of 1.58. The Leverage and Debt/Equity Ratios are ok at 2.40 and 1.40 for 2016with 5 year median of 2.57 and 1.57. The Long Term Debt/Market Cap Ratio for 2016 is 0.27 and this is also good. Good debt ratios mean that a company has a good chance of surviving bad times.

The 5 year low, median and high median Price/Earnings per Share Ratios are 10.71, 13.57 and 16.23. The 10 year corresponding ratios are 7.14, 9.43 and 11.71. The historical ratios are 8.74, 11.01 and 13.52. The current P/E Ratio is 13.45 based on a stock price $18.96 and 2017 EPS estimate of $1.41. This stock price testing suggests that the stock price maybe on the high side or relatively expensive.

I get a Graham Price of $20.93. The 10 year low, median and high median Price/Graham Price Ratios are 0.91, 1.14 and 1.34. The current P/GP Ratio is 0.91 based on a stock price of $18.96. This stock price testing suggests that the stock price maybe relatively reasonable and below the median. It is very close to relatively cheap.

The 10 year median Price/Book Value per Share Ratio is 2.41. The current P/B Ratio is 1.37 based on Book Value of $274M, BVPS of $13.81 and a stock price of $18.96. The current P/B Ratio is some 43% below the 10 year median. This stock price testing suggests that the stock price is relatively cheap.

The current dividend yield is 5.27% based on dividends of $1.00 and a stock price of $18.96. The historical median dividend yield is 4.23%. The current dividend yield is some 25% higher. This stock price testing suggests that the stock price is relatively cheap.

The 10 year median Price/Sales (Revenue) Ratio is 0.40. The current P/S Ratio is 0.30 based on 2017 Revenue estimate of $1,252M, Revenue per Share of $63.01 and a stock price of $18.96. The current P/S Ratio is some 25% lower than the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

What I see is that there are only 3 analysts following this stock. The recommendations give are Buy (1) and Hold (2). The 12 month stock price target is $25.00. This implies a total return of 37.13% with 31.86% from capital gain and 5.27% from dividends.

There is a new release on Cision with Wajax Corp saying they are redeeming all it their outstanding 6.125% Senior Notes. Becky Mayes on Simply Wall Street thinks that it is a good time to buy this stock. See what analysts are saying about this stock on Stock Chase. Few follow it, but comments are mixed.

Wajax is a leading Canadian distributor and service support provider of mobile equipment, industrial components and power systems. Reflecting a diversified exposure to the Canadian economy, Wajax has three distinct business divisions. The organization's customer base covers core sectors of the Canadian economy - mining, oil and gas, forestry, construction, manufacturing, industrial processing, transportation and utilities. Its web site is here Wajax Corp.

The last stock I wrote about was about was Telus Corp. (TSX-T, NYSE-TU)... learn more. The next stock I will write about will be Trican Well Service Ltd (TSX-TCS, OTC-TOLWF)... learn more on Monday, September 25, 2017 before 8 am.

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.

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