I do not own this stock of Hardwoods Distribution Inc. (TSX-HDI, OTC-HDIUF). In April 2017, I asked for suggestions on what stocks I should now follow because of a number that I had followed and had are being bought out. This was one of the suggestions.
The recession and the long slow recovery have been hard on a lot of companies and this company is no different. After an earnings loss in 2008 they cut their dividends after a few years of decreasing their dividends. The company also changed from an income trust to a corporation. This is another reason to cut dividends.
Because of the change from an income trust and the earnings loss and cancelled dividends in 2009, the 10 and 13 year growth in dividends are negative. However, dividends have been growing since they restarted them in 2012 and the growth over the past 5 year is at 27% per year. This is mainly due to the big increase in 2013. Dividends have been growing a lot slower lately and the last increase was in 2017 at 16%. This maybe more typical for the future.
The can afford their dividends. The Dividend Payout Ratio for 2017 was 19% with 5 year coverage at 18%. The DPR for CFPS for 2017 was 9% with 5 year coverage at 10%.
The Total Return is show below for years of 5 to 13. 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. See charts below.
The past 5 years have been good for shareholders. However, this is a materials stock and so there are going to lots of ups and downs over the years.
| Years | Div Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|
| 5 | 26.58% | 33.65% | 31.43% | 2.21% |
| 10 | -11.25% | 15.31% | 13.39% | 1.92% |
| 13 | -7.62% | 7.03% | 4.19% | 2.85% |
The 5 year low, median and high median Price/Earnings per Share Ratios are 11.26, 12.94 and 15.38. The corresponding 10 year ratios are 9.46, 12.26 and 14.68. The corresponding historical ratios are 9.46, 11.37 and 14.30. The current P/E Ratio is 11.15 based on 2018 EPS estimate of $1.70 and a stock price of $18.95. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $21.18. The 10 year low, median and high median Price/Graham Price Ratios are 0.63, 0.81 and 1.00. The current P/GP Ratio is 0.89 based on a stock price of $18.95. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10 year median Price/Book Value per Share of 1.15. The current P/B Ratio is 1.62 based on a Book Value of $252M, Book Value per Share of $11.73 and a stock price of $18.95. The 10 year P/B Ratio is low because any P/B Ratio below 1.50 is considered a low ratios. The current P/B Ratio is some 41% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 1.72%. The current dividend yield is 1.53% based on dividends of $0.29 and a stock price of $18.95. This test is not particularly good because of the past ups and downs in dividends. The current dividend yield is some 11% below the historical one. This stock price testing suggests that the stock price is relatively reasonable but above the median.
The 10 year median Price/Sales (Revenue) Ratio is 0.28. The current P/S Ratio is 0.37 based on 2018 Revenue estimate of $1,102M, Revenue per Share of $51.54 and a stock price $18.95. The current P/S Ratio is some 31% above the 10 year median. This stock price testing suggests that the stock price is relatively expensive.
When I look at analysts’ recommendations I find Strong Buy (1) and Buy (5). The consensus would be a Buy. The 12 month stock price is $26.30. This implies a total return of 40.32% with 38.79% from capital gains and 1.53% from dividends.
The company reported on Cision results of the annual meeting. For the directors being voted on they got almost 100% of the vote. I think that this is typical unless there are some real problems with a director or someone is trying to take over and reform a company. Ambrose O'Callaghan on Motley Fool thinks this stock is an attractive buy. Terence Moore on STMV News says this stock has Value Composite Score of 18 which points to it being undervalued. The company posted first quarterly results for 2018 on Cision. They also talked about the US Trade Case. See what analysts are saying about this company on Stock Chase. Most entries are from last year, but gives you a sense about this company.
Hardwoods Distribution Inc. is a Canadian company which operates a network of distribution centers in Canada and the US engaged in the wholesale distribution of hardwood lumber and related sheet goods and specialty products. Its web site is here Hardwoods Distribution Inc.
The last stock I wrote about was about was Industrial Alliance Ins. & Fin. Srv. Inc. (TSX-IAG, OTC-IDLLF)... learn more. The next stock I will write about will be Ensign Energy Services (TSX-ESI, OTC-ESVIF)... learn more on Monday, May 28, 2018 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
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