I do not own this stock of PFB Corp (TSX-PFB, OTC-PFBOF). I am following this stock as I read a positive article on this stock in November 2009 and thought I would do a spreadsheet on it. This stock is a dividend paying small cap stock. The article said that this stock would be good for long-term gains and rising dividends. This is the thing with small cap stock; you can get a blend of capital gains and rising dividends in the long term only if the company is successful.
When I was updating my spreadsheet, I noticed it has done well over the past 5 year, but the past 10 years for earnings and cash flow. Earnings are volatile so looking at 5 year running average is better. The EPS for the 5 year running average to 2017 compared to the 5 year running average to 6 years ago (2012) is up by 15.50% per year. If you compare the 5 year running average to 2017 to the one 10 years ago (2007), EPS is flat. I also noticed over the stock price since mid-2015 has gone up and down but has gone nowhere.
There is insider buying this year. There was no insider buying last year, but there was in 2016.
The dividend yield on this stock are moderate with low growth in dividends. The current dividend yield is 3.53% with 5, 10 and historical median yields at 3.29%,3.94% and 2.95%. The dividend growth is low, especially for the past 10 years at just 1.91%. the growth for the past 5 years is higher at 3.86%. The last dividend increase was at the end of last year and it was for 14.3%. Note that there were no dividend increases for years of 2005 to 2015 inclusive.
The current Dividend Payout Ratio for EPS is 85% with 5 year coverage at 77%. However, the DPR was over 100% as recently as 2014. It has been a long slow recovery for stocks since the 2008 bear market and following recession. They have a better track records for covering dividends with CFPS under 40% in most years. The DPR for CFPS for 2017 is 27% with 5 year coverage at 37%.
They have a history of good debt ratios. The Long Term Debt/Market Cap Ratio is low at just 0.14. The Liquidity Ratio is good in 2017 at 2.30 with 5 year median at 2.60. The Debt Ratio is good at 2.82 with 5 year median at 2.61. The Leverage and Debt/Equity Ratios for 2017 are 1.55 and 0.55 with 5 year medians of 1.51 and 0.51. The company has a strong balance sheet and this is important for small companies and it gets them through the bad times.
The Total Return per year is shown below for years of 5 to 23. 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.
Exactly 10 years ago, the company was just coming down after hitting a stock price high the year before. Stock price does not seem that high 10 years ago relatively with a P/E Ratio of 15.32 and Yield of 2.61 (11% below the historical median).
|Years||Div. Gth||Tot Ret||Cap Gain||Div.|
The 5 year low, median, and high median Price/Earnings per Share Ratios are 11.13, 13.06 and 15.00. The Corresponding 10 year P/E Ratios are 15.06, 17.31 and 19.55. The corresponding historical P/E Ratios are 9.59, 12.51 and 15.00. The current P/E Ratio is 10.79 based on a stock price of $9.06 and 2018 EPS estimate of $0.84. This stock price testing suggests that the stock price is relatively cheap to relatively reasonable and below the median.
I get a Graham Price of $12.34. The 10 year low, median, and high median Price/Graham Price Ratios are 0.70, 0.88 and 0.99. The current P/GP Ratios is 0.73 based on a stock price of $9.06. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median Price/Book Value per Share Ratio of 0.93. The current P/B Ratio is 1.13 based on a stock price of $9.06, Book Value of $54M and Book Value per Share of $8.05. The current P/B Ratio is some 21% above the 10 year median. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 2.95%. The current dividend yield is 3.53% based on a stock price of $9.06 and Dividends of $0.32. The current dividend yield is 19.7% above the historical median yield. This stock price testing suggests that the stock price is relatively reasonable and below the median and getting near cheap.
The 10 year median Price/Sales (Revenue) Ratio is 0.51. The current P/S Ratio is 0.50 based on 2018 Revenue estimate of $122M, Revenue per Share of $18.17 and a stock price of $9.06. the current ratio is 1.4% below the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and around the median.
As in many cases, my stock price testing of different ratios puts up different results. My favourite tests, when there are no problems with the data, is P/S Ratio and Dividend yield. This testing would suggest that the stock price is reasonable and below the median. The P/GP Ratio also says that the stock price is reasonable and below the median. The P/B Ratio testing shows the stock price expensive, but the P/B Ratio is quite low, but then the P/B Ratio seems to have been low since 2008.
When I look at analysts’ recommendations, I find Buy (3) recommendations. The consensus would be a buy. The 12 month stock price consensus is $12.08. This implies a total return of 36.87% with 33.33% from capital gains and 3.53% from dividends based on a current price of $9.06.
Yahoo Finance reprints an Simply Wall Street article saying the Free cash Flow is unattractive. Ruchi Gupta on What’s on Thorold before third quarter reporting said analysts expected $ .30 EPS. However, company beat this number with $0.48 EPS for that quarter.
PFB Corp through its wholly-owned subsidiaries is engaged in manufacturing insulating building products made from expanded polystyrene materials and marketing those products in North America. Its web site is here PFB Corp.
The last stock I wrote about was about was IBI Group Inc. (TSX-IBG, OTC-IBIBF) ... learn more. The next stock I will write about will be Innergex Renewable Energy (TSX-INE, OTC-INGXF) ... learn more on Friday, November 23, 2018 around 5 pm. Tomorrow on my other blog I will write about Money Show 2018 – Landon Whaley.... learn more on Thursday, November 22, 2018 around 5 pm.
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