I do not own this stock of Finning International Inc. (TSX-FTT, OTC-FINGF). When I was in the market to buy an industrial stock in this area in 2007, I look at this stock was well as Toromont Industries (TSX-TIH). At the time I liked Toromont better, so that is what I bought.
When I was updating my spreadsheet, I noticed that this company has some very good debt ratios. The Liquidity Ratio for 2017 is 2.28 with 5 year median at 2.53. The Debt Ratio is 1.63 with 5 year median of also 1.63. This company has had a hard time after 2008 bear market and recession. Dividend growth has slowed since 2012. There is lots of insider selling with NIS at 0.09% of Market Cap. Generally, this is at 0.1 to 0.2%.
I have 30 years of data on dividends. So, they have a long history of paying dividends, but they did not increase dividends every year. They did increase dividends every year since 2002 except for 2009 and 2016. After 2009 the dividend increases were lower. You can see that in the table below. The last increase was in 2018 and it was for 5.3%. This is higher than the last 2 years with 2016 at zero, and 2017 at 4.1%.
The dividend yields are in the moderate range (2 to 3%). The current dividend is 2.97%, with the 5, and 10 historical dividend yields at 2.65%, 2.44%. The historical median yield is low at just 1.67%. Dividend yields were in the low range until 2009.
They can afford their dividends. The 2017 Dividend Payout Ratio for EPS is 57% with 5 year coverage at 77%. The DPR for CFPS is good at 16% for 2017 and 5 year coverage at 15%.
Debt ratios are very good except for the Leverage and Debt/Equity Ratios which are normal for this sort of company. The Long Term Debt/Market Cap Ratio is 0.24. As mentions above both the Liquidity and Debt Ratios are very good. The Liquidity Ratio for 2017 is 2.28 with 5 year median at 2.53. The Debt Ratio for 2017 is 1.63 with 5 year median also at 1.63. The Leverage and Debt/Equity Ratios are 2.59 and 1.59 for 2017 with 5 year medians at 2.60 and 1.60.
The Total Return per year is shown below for years of 5 to 30. 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.
Shareholders did well until the 2008 bear market and recession. This company, as have others, have had a hard time since then. The last 5 year growth is just under what I consider the start of good total return at 8%.
| Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|
| 5 | 6.26% | 7.79% | 5.24% | 2.55% |
| 10 | 7.54% | 2.95% | 1.02% | 1.93% |
| 15 | 11.28% | 8.46% | 6.25% | 2.22% |
| 20 | 10.56% | 8.42% | 6.50% | 1.92% |
| 25 | 12.41% | 12.28% | 9.81% | 2.47% |
| 30 | 8.76% | 11.68% | 9.22% | 2.46% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 12.66, 15.54 and 18.42. The corresponding 10 year ratios are 12.47, 15.85 and 19.23. The corresponding historical ratios are 12.39. 16.00 and 19.76. These P/E Ratios are pretty consistent. The current P/E Ratio is 16.65 based on a stock price of $26.98 and 2018 EPS estimate of $1.62. This stock price testing suggests that the stock price is relatively reasonable but above the median.
Since we are near the end of the year, I like to look at 2019 also. The 2019 EPS estimate for EPS is 2.20 with a P/E Ratio of 12.26 and stock price of $26.98. On this basis the stock price is reasonable and below the median.
I get a Graham Price of $21.40. The 10 year low median and high median Price/Graham Price Ratios are 1.15, 1.50 and 1.80. The current P/GP Ratio is 1.26 based on a stock price of $26.98. This the stock price testing suggests that the stock price is reasonable and below the median.
I get a 10 year median Price/Book Value per Share Ratio of 2.34. The current P/B Ratio is 2.15 based on Book Value per Share of $2,114, Book Value per Share of $12.57 and a stock price of $26.98. The current ratio is some 8.2% below the 10 year median ratio. This the stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 1.67%. The current dividend yield is 2.97% based on dividends of $0.80 and a stock price of $26.98. The current dividend yield is 78% above the historical median. This the stock price testing suggests that the stock price is relatively cheap.
The 10 year median Price/Sales (Revenue) Ratio is 0.67. The current P/S Ratio is 0.64 based on 2018 Revenue estimate of $7,053, Revenue per Share of $41.91 and a stock price of $26.98. the current P/S Ratio is 3.3% below the 10 year median ratio. This the stock price testing suggests that the stock price is reasonable and below the median.
Most of my testing suggests that the stock price is relatively reasonable and below the median. This is a good result. The dividend yield, on of my favourites is show stock as cheap. However, the dividend yield has not been at the historical median for some years with 5 and 10 year median yields at 2.65% and 2.44% and therefore current yield being 11.8% and 21.3% higher. It is the historical and 10 year median yield testing that shows the stock as relatively cheap.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (7) and Underperform (1) recommendations. The consensus recommendation would be a Buy. The 12 month stock price consensus is $36.44. This implies a total return of 38.03% with 2.97% from dividends and 35.06% from capital gains.
Shawn Clark on Simply Wall Street talks about the CEO compensation. Lisa Kingston on Marea Information talks about some recent analysts calls. Staff Writer on Canton Caller talks about some of the ratios for this stock. Ambrose O'Callaghan on Motley Fool thinks this stock is in oversold territory. See what analysts are saying about this stock on Stock Chase. They think the company will continue to do better in the future.
Finning International Inc is engaged in the sale of equipment, power & energy systems, rental of equipment & providing product support including sales of parts & servicing of equipment in three continents including Canada, South America, and UK & Ireland. Its web site is here Finning International Inc.
The last stock I wrote about was about was Crescent Point Energy Corp. (TSX-CPG, NYSE-CPG) ... learn more. The next stock I will write about will be Quarterhill Inc. (TSX-QTRH, NASDAQ-QTRH) ... learn more on Friday, November 30, 2018 around 5 pm. Tomorrow on my other blog I will write about Money Show 2018 - Kanwal Sarai.... learn more on Thursday, November 29, 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.
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