I own this stock of Toromont Industries Ltd (TSX-TIH, OTC-TMTNF). This is a dividend growth industrial stock. TD bank see Toromont as a relatively low-risk, high-quality industrial stock. This is one of the stocks I bought after selling Loblaws in 2008. This was a stock on Mike Higgs' Canadian Dividend Growth Stock list. I bought more in 2008 after selling Onex and AGF Management.
When I was updating my spreadsheet, I noticed that this stock was down just 15% year to date. I have well with this stock. To the end of February, my total return is 12.42% with 10.60% from capital gains and 1.82% from dividends. I first bought this stock in 2007, and on my original purchase, I am making a yield of 6.17%. This is after just over 12 years.
The dividend yields are low with dividend growth moderate. The current yield is still low (under2%) at 1.79%. The 5, 10 and historical median yields are low (under 2%) to moderate (2% to 4% ranges). These yields are 1.68%, 2.08% and 1.84%. Dividend growth is moderate (8% to 14% ranges). See chart below.
The Dividend Payout Ratios are fine. The DPR for EPS for 2019 is 30% with 5 year coverage at 32%. The DPR for CFPS for 2019 is 19% with 5 year coverage at 20%. The DPR for Free Cash Flow for 2019 is 95% with 5 year coverage at 34%. The Dividend Coverage Ratio for 2019 is 1.05 with the 5 year ratio at 2.92. The FCF is unusually low in 2019. Also, WSJ and Morningstar do not agree on what the FCF is.
Debt Ratios are fine. The Long Term Debt/Market Cap for 2019 is 0.11 which is low and good. Even the current one is still good at 0.13. The Liquidity Ratio for 2019 is 1.83 with 5 year median at 2.16. The Debt Ratio for 2019 is 1.83 with 5 year median at 2.08. Both these later ratios are good as they are over 1.50. The Leverage and Debt/Equity Ratios are fine at 2.20 and 1.20 respectively.
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 | 12.39% | 21.84% | 19.88% | 1.96% |
| 2009 | 10 | 11.15% | 17.18% | 15.29% | 1.90% |
| 2004 | 15 | 13.33% | 13.79% | 12.12% | 1.67% |
| 1999 | 20 | 13.29% | 16.09% | 14.18% | 1.92% |
| 1994 | 25 | 16.18% | 17.37% | 15.21% | 2.16% |
| 1990 | 29 | 14.93% | 23.26% | 19.30% | 3.96% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 15.25, 18.11 and 21.84. The corresponding 10 year ratios are 14.46, 17.47 and 20.10. The corresponding historical ratios are 12.91, 15.02 and 18.56. The current P/E Ratio is 17.38 based on a stock price of $60.30 and 2020 EPS estimate of $3.47. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $38.21. The 10 year low, median, and high median Price/Graham Price Ratios are 1.32, 1.53 and 1.76. The current P/GP ratio is 1.58 based on a stock price of $60.30. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10 year median Price/Book Value per Share Ratio of 3.27. The current P/B Ratio is 3.22 based on a Book Value of $1534M, Book Value per Share of $18.70 and a stock price of $60.30. The current ratio is 1.5% 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 1.87%. The current dividend yield is 1.79% based on dividends of $1.08 and a stock price of $60.30. The current yield is 2.7% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median dividend yield of 2.08%. The current dividend yield is 1.79% based on dividends of $1.08 and a stock price of $60.30. The current yield is 14% below the 10 year median dividend 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 1.31. The current P/S Ratio is 1.35 based on 2020 Revenue estimate of $3,655M and a stock price of $60.30. The current ratio is 2.9% above the 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
Results of stock price testing is that the stock price is probably reasonable. The testing is show that the stock price is reasonable and above or below the median. Also, most of these test shows the stock price very close to the median. This bear market has not made this stock cheap by any means.
Is it a good company at a reasonable price? I do like this company and I will continue to own shares. This bear market has not made this stock cheap. It was relatively cheap between 2008 and 2014 using the dividend yield measure but it has not been cheap recently. The stock price seems close to the median. This is a low dividend but good growth dividend growth stock.
When I look at analysts’ recommendations, I find Buy (1), Outperform (4) and Hold (2). The consensus is a Buy. The 12 month stock price is $73.57. This implies a total return of $23.80% with 22.01% from capital gains and 1.79% from dividends.
See what analysts are saying on Stock Chase. They like this company and one suggests to hold for the long term. Adam Othman on Motley Fool likes this stock for its stability and capital gains. A writer on Simply Wall Street thought this company had a intrinsic value of $44.89 in October 2019. A writer on Simply Wall Street said in October 2019 that this company had a P/E of 19.78 when the industry average was 13.3.. Joseph McCarthy on The Enterprise Leader says in March 2020 that Canaccord Genuity raised their rating from Hold to Buy.
Toromont Industries Ltd is a Canadian industrial company. The company operates two business segments: Equipment Group and CIMCO. The larger segment by revenue, Equipment Group includes a Caterpillar dealership and rental operation of construction equipment. CIMCO offers solutions for the design, engineering, fabrication, and installation of industrial and recreational refrigeration systems. The company operates primarily in Canada and derives a smaller portion of sales from the United States of America. Its web site is here Toromont Industries Ltd.
The last stock I wrote about was about was Alaris Royalty Corp (TSX-AD, OTC-ALARF) ... learn more. The next stock I will write about will be Supremex Inc (TSX-SXP, OTC-SUMXF) ... learn more on Wednesday, April 08, 2020 around 5 pm. Tomorrow on my other blog I will write about Dividend Stocks April 2020.... learn more on Tuesday, April 07, 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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