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 estimates for Revenue for 2018 was given as $2,123M, and it came in as $2,123.9. However, analysts have lowered Revenue estimates for 2019 and 2020 from $2,201M and $2,306M to $2,170M and $2,257M. The estimate for EPS for 2018 was $1.44 and it came in as $1.98. The estimates last year for 2019 and 2020 were $1.95 and $3.02, this year the estimates for 2019 and 2020 are $2.35 and $2.62.
The dividends are in the low range (under 2%). The current dividend is 1.53% and the 5, 10 and historical median dividend yields are 0.91%, 1.00% and 1.05%. The dividend has seldom gotten into the 2% range. The dividend growth is good range (15% and over). See the chart below. The most recent increase was in 2019 and it was for 16.7%. They have been paying dividends for the last 17 years.
The Dividend Payout Ratios are all fine. The DPR for EPS for 2018 is 24% with 5 year coverage at 18.9%. The DPR for CFPS for 2018 is 13% with 5 year coverage at 11%. The DPR for FCF for 2018 is 44% with 5 year coverage at 29%.
Debt Ratios are quite good. The Long Term Debt/Market Cap Ratio for 2018 is 0.18. The 5 year median is also 0.18. The Liquidity Ratio for 2018 is very good at 6.70 with 5 year median at 7.04. The Debt Ratio for 2018 is also very good at 2.64 with 5 year median at 2.16. The Leverage and Debt/Equity Ratios for 1.61 and 0.61 with 5 year median ratios at 1.86 and 0.86.
The Total Return per year is shown below for years of 5 to 24 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 chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 19.14% | 8.96% | 7.77% | 1.19% |
| 2008 | 10 | 18.90% | 27.40% | 25.46% | 1.94% |
| 2003 | 15 | 23.60% | 30.96% | 28.58% | 2.38% |
| 1998 | 20 | 21.51% | 27.00% | 25.27% | 1.73% |
| 1994 | 24 | 17.20% | 16.45% | 0.75% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 16.95, 20.48 and 24.00. The corresponding 10 year ratios are 14.69, 18.08 and 21.44. The corresponding historical ratios are 9.05, 12.00 and 14.73. The current P/E Ratio is 15.61 based on a stock price of $36.68 and 2019 EPS estimate of $2.35. This stock price testing suggests that the stock price is relatively reasonable and below the median.
Because we are very close to the end of the year, we should also look at the P/E Ratio for 2020. It is 14.00 based on a stock price of $36.68 and 2020 EPS estimate of $2.62. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $30.94. The 10 year low, median, and high median Price/Graham Price Ratios are 1.22, 1.50 and 1.77. The current P/GP Ratio is 1.19 based on a stock price of $36.68. The Graham Price for 2020 is $32.67. The P/GPR for 2020 is 1.12. 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 2.60. The current P/B Ratio is 2.03 based on a stock price of $36.68, Book Value of $1,238M, and Book Value per Share of $18.11. The current P/B Ratio is some 22% 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 1.05%. The current dividend yield is 1.53% based on dividends of $0.56 and a stock price of $36.68. The current dividend yield is 45% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 1.00%. The current dividend yield at 1.53% is some 53% above the 10 year median dividend 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 1.16 based on 2019 Revenue estimate of $2,170M, Revenue per share of $31.73 and a stock price of $36.68. This stock price testing suggests that the stock price is relatively cheap.
Results of stock price testing is that the stock price is probably relatively cheap. Most of my stock price testing is showing this result. I do especially like the P/S Ratio testing and the dividend yield testing, but there was no problem with any of the testing.
Is it a good company at a reasonable price? The stock price is certainly reasonable. Shareholders have generally done quite well with this stock. I happen to like stocks with low yields and high dividend growth. These are especially good if you are growing a portfolio. They are also good for people who are living off their dividends as they help the dividends to grow. This stock belongs to the Materials Sector and because of this you have to accept volatility in earnings, cash flow and stock price.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (4) and Hold (2). The consensus would be a Buy. The 12 month stock price consensus is $48.06. This implies a total return of 32.56% with 31.03% f rom capital gains and 1.53% from dividends.
See what analysts are saying on Stock Chase. Some love it, some hate it. Nikhil Kumar onMotley Fool Thinks it has a solid financial position and is attractively valued. A writer on Simply Wall Street says there has been a clear decline in sentiment. A writer on Simply Wall Street likes the nice growth rate and the low payout rate of this company.
Stella-Jones Inc produces and sells lumber and wood products. The company sells products in five main customer categories. The five categories are railway ties, utility poles, 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. Their markets are in Canada and US. 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 Wednesday, December 11, 2019 around 5 pm. Tomorrow on my other blog I will write about Money Show 2019 - Kanwal Sarai.... learn more on Tuesday, December10, 2019 around 5 pm.
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