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 had been bought out. This was one of the suggestions.
When I was updating my spreadsheet, I noticed that the shareholders who bought at the right time have done very well. Shareholders who bought 10 years ago have a total return of 30.85% per year and good increases in dividends lately.
This company used to be an income trust but changed to a corporation in 2011. Dividends started out high as was usual with income trust. Dividends were cut in 2009, but they knew at that time they had to change to a corporation. Dividends were restarted in 2012. Dividends went from a median of 14.21% to one of 1.72% when the change to a corporation was made.
Dividend yields are currently low to moderate with the current dividend yield at 2.69% and 5, 10 and historical yields at 1.36%, 1.46% and 1.90%. The dividend growth is currently good with dividend growth over the past 5 years are 17.12% per year. The last increase occurred in 2018 and it was for 10.3%.
The Dividend Payout Ratios are fine. The DPR for EPS for 2018 is 20% with 5 year coverage at 19%. The DPR for CFPS is $12% with 5 year coverage at 10%.
Debt Ratios are fine, but current ones have turned lower. The Long Term Debt/Market Cap Ratio for 2018 is 0.01, but it rises to 0.34 in 2019. The rise in Long Term Debt is due to accounting changes. The Liquidity Ratios are good with the ratio for 2018 at 2.20 and 5 year median at 2.20 also. The Debt Ratio for 2018 is 2.80 with 5 year median also at 2.80. Leverage and Debt/Equity Ratios for 2018 are good at 1.56 and 0.56 respectively with 5 year ratios at 1.56 and 0.56.
The ratios for the first quarter of 2019 are lower with Liquidity at 1.94 and Debt Ratio at 2.04. These are still good. Leverage and Debt/Equity Ratios for the first quarter of 2019 are still good but higher at 1.96 and 0.96 respectively.
The Total Return per year is shown below for years of 5 to 14 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.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 17.12% | 4.43% | 2.18% | 2.25% |
| 2008 | 10 | -6.77% | 30.85% | 27.58% | 3.27% |
| 2004 | 14 | -6.20% | 2.63% | -0.63% | 3.26% |
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 9.18, 10.78 and 14.21. The current P/E Ratio is 8.57 based on a stock price of $11.91 and 2019 EPS Ratio of $1.39. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $19.99. The 10 year low, median, and high median Price/Graham Price Ratios are 0.63, 0.82 and 1.04. The current P/GP Ratio is 0.60 based on a stock price of $11.91. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median Price/Book Value per Share Ratio of 1.25. The current P/B Ratio is 0.93 based on a Book Value of $275M, Book Value per Share of $12.77 and a stock price of $11.91. The current ratio is 25% below the 10 year ratio. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 1.90%. The current dividend yield is 2.69% based on dividends of $0.32 and a stock price of $11.91. The current dividend is some 41% above the historical dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10 year median Price/Sales (Revenue) Ratio is 0.31. The current P/S Ratio is 0.21 based on 2019 Revenue estimate of $1,191M, Revenue per Share of $55.40 and a stock price of $91.11. The current ratio is 31% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
Results of stock price testing is that the stock price is relatively cheap. Generally, I excluding dividend yield testing on old income trusts, however, this has the same results as the other tests. The P/B Ratio is below 1.00 at 0.93. When a stock sells below the book value, it also denotes a cheap price.
When I look at analysts’ recommendations, I find Strong Buy (1) and Buy (4). The consensus would be a Buy. The 12 month stock price is $17.20. This implies a total return of 47.10% with 44.42% from Capital Gains and 2.69% from dividends based on a current stock price of $11.91.
See what analysts are saying on Stock Chase. The latest analyst says to watch the price. Susan Portelance on Motley Fool in an older report says it is a solid company. A writer on Simply Wall Street talks about this stock’s beta. A writer at Simply Wall Street on Yahoo Financial says it is a stock worth watching.
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, June 3, 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.
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