I own this stock of Russel Metals Inc (TSX-RUS, OTC-RUSMF). This was a stock on Mike Higgs' Canadian Dividend Growth List. Mike Higgs was the first blogger I followed. In 2007 I needed to reduce my holdings of Loblaws and buy something to help replace the dividends I had been earning. With Russel Metals, both Mike and TD recommend buying at this time. However, I should keep a watch on this stock as it has had some troubles in the past.
When I was updating my spreadsheet, I noticed that it has not done well lately. Revenue is down. As usual the EPS are volatile. Cash Flow is up, but this is volatile too. The main thing is that the dividends have been flat since 2014 and it does not appear that they will be increased anytime soon.
The dividend yield is good (5% and 6% ranges) to High (7% and over). I am cautious about dividends over 6%. The current dividend is good at 6.87%. The 5, 10 and historical dividend yields are 5.87%, 5.47% and 5.03%. The dividend growth below may not accurately reflect dividend growth. There were no dividends given between 1993 and 1999. They have a mixed record of growth as dividends have gone down as well as up and they have been flat as well as suspended.
The Dividend Payout Ratios are currently too high. The DPR for EPS for 2019 is 124% with 5 year coverage ag 120%. However, analysts expect the DPR for 2020 to drop to 80%. The DPR for CFPS for 2019 is 46% with 5 year coverage at 49%. Over 40% is considered to be high. The DPR for Free Cash Flow is 44% with 5 year coverage at 73%. The Dividend Coverage Ratio for 2019 is 2.25 with 5 year ratio at 1.36.
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio is good at 0.32. The Liquidity Ratio is very good at 2.16. The Debt Ratio is good at 1.96. The Leverage and Debt/Equity Ratios are fine at 2.04 and 1.04.
The Total Return per year is shown below for years of 5 to 29 to the end of 2019. 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. |
|---|---|---|---|---|---|
| 2014 | 5 | 0.81% | 3.17% | -3.06% | 6.23% |
| 2009 | 10 | 4.28% | 9.28% | 2.26% | 7.02% |
| 2004 | 15 | 5.31% | 10.30% | 2.41% | 7.89% |
| 1999 | 20 | 11.93% | 20.59% | 9.16% | 11.43% |
| 1994 | 25 | 11.93% | 10.93% | 5.45% | 5.48% |
| 1990 | 29 | 5.19% | 8.86% | 4.51% | 4.35% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 12.00, 13.35 and 14.71. The corresponding 10 year ratios are 13.39, 15.90 and 18.41. The corresponding historical ratios are 10.22, 9.93 and 14.38. The current P/E Ratio is 11.65 based on a stock price of $22.14 and 2020 EPS estimate $1.90. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $25.49. The 10 year low, median, and high median Price/Graham Price Ratios are 0.92, 1.10 and 1.29. The current P/GP Ratio is 0.87 based on a stock price of $22.14. 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 1.83. The current P/B Ratio is 1.46 based on Book Value of $944M, Book Value to Share of $15.19 and a stock price of $22.14. The current ratio is 20% 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 5.03%. The current dividend yield is 6.87% based on dividends of $1.32 and a stock price of $22.14. The current yield is 33% 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 5.47%. The current dividend yield is 6.87% based on dividends of $1.32 and a stock price of $22.14. The current yield is 26% 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 0.52. The current P/S Ratio is 0.39. The current ratio is 26% below the 10 year 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. There is no problem with any of the tests and they are all showing that the stock price is relatively cheap.
Is it a good company at a reasonable price? This is a risky stock. It pays a nice dividend. Analysts do not expect the dividend to be cut, but they also do not expect any dividend increase in the short term. It has produced long term profits and dividends for investors. It is current relatively cheap.
When I look at analysts’ recommendations, I find Buy (3), and Hold (2). The consensus would be a Buy. The 12 month stock price consensus is $25.00. This implies a total return of 19.78% with 12.92% from capital gains and 6.87% from dividends.
See what analysts are saying on Stock Chase. Some say it is cheap, but it is cyclical. Stephanie Bedard-Chateauneuf, on Motley Fool likes this for a TFSA because of its high yield. A writer on Simply Wall Street says ROE is higher than other companies in this industry. A writer on Simply Wall Street has some worries about its debt. Joseph McCarthy on The Enterprise Leader talks about a recent Raymond James report.
Russel Metals Inc is a Canada-based metal distribution company. The company conducts business primarily through three metals distribution segments: metals service centers; energy products; and steel distributors. Its web site is here Russel Metals Inc.
The last stock I wrote about was about was Choice Properties REIT (TSX-CHP.UN, OTC-PPRQF) ... learn more. The next stock I will write about will be Atrium Mortgage Investment Corp (TSX-AI, OTC-AMIVF) ... learn more on Monday, February 24, 2020 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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