Sound bite for Twitter and StockTwits is: Dividend Growth Materials. Stock price testing suggests that the stock price is cheap to reasonable. Stella-Jones has done very well over the years, but they do seem to have slowed down recently. See my spreadsheet on Stella-Jones Inc.
I do not own this stock of Stella-Jones Inc (TSX-SJ, OTC-STLJF). I started a spreadsheet on this stock in mid-2009 because of a favorable report I read on this stock. It was considered to be a dividend growth stock and I am always on the lookout for dividend growth stocks.
When I was updating my spreadsheet, I noticed the company has great debt ratios. The first thing you notice is that all the ink is green. This company has done very well for its shareholders. Dividends have been growing faster than EPS and that maybe why the dividend growth has slowed. Over the past 5 year dividends have grown at 23.20% per year but the EPS has only grown at 16.40% per year.
For 2017 the Long Term Debt/Market Cap is just 0.13. The Liquidity Ratio is really high and great at 7.04 with 5 year median at 8.46. The Debt Ratio is high and good at 2.66 with 5 year median at 2.14. Leverage and Debt/Equity Ratios are low and good at 1.60 and 0.60 with 5 year median at 1.91 and 0.91. Good debt ratios help company get through bad times.
The yield is low and has always been low and has often been below 1%. The current dividend yield is 1.25%. The 5, 10 and historical median dividend yields are 0.89%, 0.83% and 1.02%. Dividend have increased by 23% and 22% per year over the past 5 and 10 years. However, the increases have slowed in the last two years with the increase for 2017 at 10% and the one for 2018 at 9.1%. See the chart below for dividend growth over the past 5 to 16 years.
I do not think that there is any question about the company being able to afford their dividends. The Dividend Payout ratio for 2017 for EPS is 20% with 5 year coverage at 18%. The DPR for CFPS for 2017 is 12% with 5 year coverage at 10%.
The Total Return per year is shown below for years of 5 to 23 to the end of 2017. 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.
If you redo the Total Return to the current price, the most significant change is for the total return for the last 5 years, which would be 8.26% with capital gain at 7.05%. For other time periods the returns are similar. The stock price has fallen some 24% year to date.
| Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|
| 5 | 23.20% | 22.51% | 21.39% | 1.12% |
| 10 | 22.05% | 18.17% | 17.29% | 0.88% |
| 15 | 23.98% | 35.21% | 33.17% | 2.04% |
| 16-20 | 22.33% | 27.05% | 25.96% | 1.09% |
| 23 | 33.37% | 18.46% | 14.91% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 16.95, 20.24 and 23.16. The 10 year corresponding Ratios are 12.31, 15.52 and 19.71. The corresponding historical ratios are 8.60, 11.30 and 14.04. The current P/E Ratio is 18.53 based on a stock price of $38.30 and 2018 EPS estimate of $2.09. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a Graham Price of $28.97. The 10 year low, median, and high median Price/Graham Price Ratios are 0.99, 1.32 and 1.67. The current P/GP Ratio is 1.32 based on a stock price of $38.30. This stock price testing suggests that the stock price is relatively reasonable and around the median.
I get a 10 year median Price/Book Value per Share Ratio of 2.51. The current P/B ratio is 2.15 based on a Book Value of $1,238M, Book Value per Share of $17.85 and stock price of $38.30. The current P/B Ratio is some 145 below the 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 1.02%. The current dividend yield is 1.25% based on dividends of $0.48 and a stock price of $38.30. The current yield is some 23% above the historical median yield. This stock price testing suggests that the stock price is relatively cheap.
The 10 year median Price/Sales (Revenue) Ratio is 1.55. The current P/S Ratio is 1.25 based on Revenue estimate for 2018 of $2,123M, revenue per share of $30.61 and a stock price of $38.30. The current ratio is some 19% below the 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median and very close to cheap.
When I look at analysts’ recommendations, I find Buy (8) and Hold (1). The consensus would be a Buy. The 12 month stock price is $51.72. This implies a total return of 36.29% with 35.04% from capital gains and 1.25% from dividends based on a current price of $38.30.
LNR Staff at Lake Norman Review says the stock has a Williams Percent Range of -82.76. This means that the stock is oversold. Pam Parks on Simply Wall Street looks at ROE and debt. Kay Ng on Motley Fool likes this stock. See what analysts are saying about this company on Stock Chase. It is interesting that a couple of analysts recently give the stock a sell rating.
Stella-Jones Inc produces and sells lumber and wood products. The company sells products in five main customer categories. The railway ties category, which generates the most revenue of any category, sells pressure-treated lumber to the railway industry. The utility poles category, which contributes the next largest amount of revenue, sells utility poles for electrical transmission and communications infrastructure use. The other three categories are residential lumber for use in housing construction, industrial products for use in marine and building industries, and logs and lumber, which sells wood products to homebuilding markets. Its web site is here Stella-Jones Inc.
The last stock I wrote about was about was First Capital Realty (TSX-FCR, OTC-FCRGF) ... learn more. The next stock I will write about will be Keg Royalties Income Fund (TSX-KEG.UN, OTC-KRIUF) ... learn more on Friday, December 14, 2018 around 5 pm. Tomorrow on my other blog I will write about Markets Down, Dividends Up.... learn more on Thursday, December 13, 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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