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 and 2010.
There is a big difference between the EPS Basic and EPS Diluted. The difference is 12%. The company says this is due to potential effects of the convertible debentures and Management share purchase plan.
The company stopped raising their dividends after 2012. A lot of consumer companies have had a hard time with the long slow recover from 2008. After 2012 the first increase came in 2017 with a very good 20% increase in dividends. This is why in the chart below the growth in dividends over the past 5 and 10 years is lower than for other durations.
The company has not had a policy of increasing dividends every year but do increase them most years. This company's dividend policy is also interesting as every once in a while they do a special dividend when they can afford to do so. The last 5 special dividends were paid in 2002, 2006, 2008, 2009 and 2012.
Dividends yields are low to moderate with current, 5, 10, and historical dividend yields at 2.89%, 2.54%, 2.63% and 1.94. The dividend increases are also low to moderate with the lowest as discussed above for years 5 and 10. The other durations had dividend growth above 8% and less than 15%.
They can afford their dividends. In 2017 the Dividend Payout Ratio for EPS was 38% with 5 year coverage at 41%. The DPR for CFPS for 2017 is 24% with 5 year coverage at 25%.
The Total Return is show below for years of 5 to 27. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends.
| Years | Div Gth | Tot Ret | Cap Gain | Div |
|---|---|---|---|---|
| 5 | 2.83% | 10.11% | 7.27% | 2.84% |
| 10 | 5.39% | 6.53% | 3.64% | 2.89% |
| 15 | 9.37% | 9.06% | 6.01% | 3.05% |
| 20 | 11.20% | 9.42% | 6.31% | 3.11% |
| 25 | 10.55% | 11.41% | 8.01% | 3.40% |
| 27 | 10.12% | 12.74% | 9.05% | 3.70% |
The 5 year low, median and high median Price/Earnings per Share Ratios are 13.45, 15.17 and 16.90. The 10 year corresponding ratios are 13.43, 14.95 and 17.01. The corresponding historical ratios are 12.37, 14.74 and 16.90. The current P/E Ratio is 12.23 based on a stock price of $16.63 and 2018 EPS estimate of $1.36. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $16.63. The 10 year low, median and high median Price/Graham Price Ratios are 0.98, 1.16 and 1.35. The current P/GP Ratio is 0.95 based on a stock price of 16.63. This stock price testing suggests that the stock price is relatively cheap.
The 10 year median Price/Book Value per Share Ratio is 1.92. The current P/B Ratio is 1.65 based on Book Value of $769M, Book Value per Share of $10.10 and a stock price of $16.63. The current P/B Ratio is some 14% lower than the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The historical median dividend yield is 1.94%. The current dividend is 2.89% based on dividends of $0.48 and a stock price of $16.63. The current yield is some 49% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median Price/Sales (Revenue) Ratio of 0.77. The current P/S Ratio is 0.56 based on 2018 Revenue estimate of $2,279M, Revenue per Share of $29.91 and a stock price of $16.63. The current ratio is some 28% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
When I look at analysts' recommendations I find Buy (1) and Hold (2). The consensus would be a Hold. The 12 month stock price is $20.67. This implies a total return of 27.18% with 24.29% from capital gains and 2.89% from dividends based on a current price of $16.63.
Ambrose O'Callaghan of Motley Fool thinks Leon's is currently a good buy. Paula Ricardo on The Lincolnian New and Analysis talks about insider buying at Leon's. This company was charged with Deceptive Sales practices and agreed to make $750,000 donation to Charity by The Competition Bureau. An article on the Huffington Post talks about this. This is not good for a company I have invested in. See what analysts are saying about this stock on Stock Chase. They mostly like the company.
Leon's Furniture Ltd is a retailer of home furnishings, mattresses, appliances and electronics in Canada. Its retail banners include Leon's, The Brick, The Brick Outlet and The Brick Mattress Store. 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 be Barrick Gold Corp (TSX-ABX, NYSE-ABX)... learn more on Wednesday, April 11, 2018 around 5 pm. Tomorrow on my other blog I will write about Montreal Gazette Portfolio.... learn more on Tuesday, April 10, 2018 around 5 pm.
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