Wednesday, March 13, 2019

Goodfellow Inc

Sound bite for Twitter and StockTwits is: Dividend Paying Consumer. This small cap seems to be cheap. It has very good debt ratios. However, it is also relatively risky. Reinstating their divided is a good sign. See my spreadsheet on Goodfellow Inc.

I own this stock of Goodfellow Inc. (TSX-GDL, OTC-GFELF). I started to look at this stock when I was searching for small cap stocks that paid dividends. It looked like an interesting stock. Goodfellow is a small cap stock that the Investor Reporter has written about a number of times.

When I was updating my spreadsheet, I noticed that they have reinstated their dividend. This is a good sign that the company is optimistic about the future. After two years of earnings losses, they made a profit again in 2018. Sales were down in 2017 and 2018, but analysts expect an increase in sales for 2019.

The company cancelled dividends in 2017 and paid none in 2018. However, they were reinstated for this year with a dividend of $0.10 in March. They do not say how often dividends will not be paid, but they were paid semi-annually before in August and November in past years. I am assuming that this will be a semi-annual dividend. I could be wrong.

Even assuming that dividends will be paid semi-annually, dividends growth is a negative 8% over the past 5 years. The last dividend paid was for $0.15, and in 2016 the total dividends paid was $0.30.

They probably stopped paying a dividend because of the EPS losses in 2016 and 2017. They made $0.30 EPS in 2018. If they end up paying out $0.20 in dividends, the Dividend Payment Ratio might be 67%.

Debt Ratios are generally very good. They do not have much in Long Term Debt, so Long Term Debt/Market Cap is very low at 0.03. On the other hand, they do have a lot of short term bank loans and in a ratio re Market Cap, it would be 0.84. The Liquidity Ratio for 2018 is very good at 2.04 with 5 year median also at 2.04.

The Debt Ratio is also very good at 2.43 for 2018 with5 year median at 2.45 also. Leverage and Debt/Equity Ratios are also very good at 1.69 and 0.69, respectively. The 5 year medians are 1.62 and 0.62 respectively.

The Total Return per year is shown below for years of 5 to 22 to the end of 2018. 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.

Only very long term investors have made money currently on this stock. Recent investors have not done well and I also have a loss of 6.32% with capital loss of 8.61% and dividends of 2.29%.

From Years Div. Gth Tot Ret Cap Gain Div.
2013 5 0.00% -8.00% -10.21% 2.21%
2008 10 0.00% 2.09% -3.28% 5.38%
2003 15 0.00% 5.13% -2.07% 7.19%
1998 20 0.00% 9.10% 1.11% 7.99%
1996 22 0.00% 10.56% 2.25% 8.32%

The 5 year low, median, and high median Price/Earnings per Share Ratios are 9.26, 10.02 and 10.78. The corresponding 10 year ratios are 9.81, 10.65 and 11.49. The corresponding historical ratios are 7.05, 8.40 and 9.33. The current P/E Ratio is 21.40 based on a stock price of $6.42 and latest 12 month’s EPS of $0.30. This stock price testing suggests that the stock price is relatively expensive.

I get a Graham Price of $9.48. The 10 year low, median, and high median Price/Graham Price Ratios are 0.53, 0.59 and 0.65. The current P/GP Ratio is 0.68 based on a stock price of $6.42. This stock price testing suggests that the stock price is relatively expensive.

I get a 10 year median Price/Book Value per Share Ratio of 0.66. The current P/B Ratio is 0.48 based on Book Value of $112.86, Book Value per Share of $13.27 and a stock price of $6.42. the current ratio is 26% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

I get an historical median dividend yield of 3.55%. The current dividend yield is 3.12% based on dividends of $0.20 and a stock price of $6.42. The current dividend is 12% below the historical median yield. 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 0.16. The current P/S Ratio is 0.09 based on last 12 month Revenue, Revenue per Share of $61.76 and a stock price of $6.42. The current ratio is 34% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

Results of stock price testing should probably focus on the P/S Ratio test. It is sales that push all other values in the longer term. The P/E Ratio is unreliable when you have earnings losses. On an absolute level, a Price/Graham Price Ratio of less than 1.00 points to a cheap price. A P/B Ratio under 1.00 also points to a cheap price.

When I look at analysts’ recommendations, I find that no analysts follow this stock.

Benjamin Sinclair on Motley Fool wrote about this stock in 2014. The stock was a bargain, but he said we should be careful about bargains. John Newcomb on Stock Digest wrote about this stock this month. He said that investors have shown an interest in this stock. Saundra Reilly via Simply Wall Street says the company’s Return on Capital Employed is low. The company reported its fourth quarterly results on Globe News Wire.

Goodfellow Inc is engaged in remanufacturers and distributors of lumber products and hardwood flooring products. It is engaged in the wholesale distribution of wood products, and remanufacturing, distribution, and brokerage of lumber. Its web site is here Goodfellow Inc.

The last stock I wrote about was about was Canadian Tire Corp (TSX-CTC.A, OTC-CDNAF) ... learn more. The next stock I will write about will be Richelieu Hardware Ltd (TSX-RCH, OTC-RHUHF) ... learn more on Friday, March 15, 2019 around 5 pm. Tomorrow on my other blog I will write about A Portfolio.... learn more on Thursday, March 14, 2019 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.

1 comment:

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