I do not own this stock of Dorel Industries Inc (TSX-DII.B, OTC-DIIBF). I am following this stock because I used to own it. I am always curious about what happens to stocks after I no longer hold them. I held this stock for 7 years between 1999 and 2006 and had a total loss of 1.21% with a capital loss of 1.22% and dividends of 0.01%. If I still had this stock today, I would have broken even.
When I was updating my spreadsheet, I noticed that Stock Price has gone almost straight south since 2018. Earnings peaked in 2012. Sales are not growing much. They have too much debt. Also, the Goodwill and Intangible assets are too high. In 4 of the past 6 years they had earning losses. On a positive note, insiders are buying.
This stock used to be a dividend growth stock, but it is that no longer. Dividends used to be in the moderate range (2% to 4% ranges). The 5 10 and historical median dividend yields are 4.84%, 3.92% and 3.00%. However, it recently cut the dividends because they could no longer afford them. There were no dividend increases between 2014 and 2018 inclusive.
The Dividend Payout Ratios (DPR) for EPS was not good, so dividend has been cut. Other coverages were fine. The DPR for EPS for 2019 was a negative as was the 5 year coverage. The DPR for CFPS for 2019 was 9.62% with 5 year coverage at 22.66%. The DPR for Free Cash Flow for 2019 was 30.56% with 5 year coverage at 64.12%.
Debt Ratios need to be improved. The Long Term Debt/Market Cap Ratio for 2019 was 2.78 with the current one at 2.80. For 2019 it was the drop in stock price that caused the high ratio. For the current one, they have increased debt by 26%. The Liquidity Ratio for 2019 is 1.61 and this is good. The Debt Ratio for 2019 is 1.40. I prefer to see this at 1.50 or above. The Leverage and Debt/Equity Ratios for 2019 are 3.48 and 2.48, moving up to 4.03 and 3.03 currently. These are too high. I prefer them to be under 3.00 and under 2.00, respectively.
The Total Return per year is shown below for years of 5 to 27 to the end of 2019 in CDN$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
|From||Years||Div. Gth||Tot Ret||Cap Gain||Div.|
The Total Return per year is shown below for years of 5 to 27 to the end of 2019 in US$. 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.|
The 5 year low, median, and high median Price/Earnings per Share Ratios are negative. The corresponding 10 year ratios are 7.00, 8.77 and 10.27. The corresponding historical ratios are 8.77, 11.31 and 14.45. The current P/E Ratio is negative, so I cannot test with that. The P/E Ratio for 2021 is 13.96 based on a stock price of $7.77. This would imply that the stock price is relatively expensive. This is in CDN$.
I get a Graham Price of $15.39, but this is a guess because the number of earning losses. The 10 year low, median, and high median Price/Graham Price Ratios are 0.69, 0.87 and 1.06. The current P/GP Ratio is 0.50 based on a stock price of $7.77. This stock price testing suggests that the stock price is relatively cheap. This is in CDN$.
I get a 10 year median Price/Book Value per Share Ratio of 0.80. The current P/B Ratio is 0.35 based on a Book Value of $452.5M, Book Value per Share of $13.93 and a stock price of $5.79. The current ratio is 48% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This is in US$ and you will get similar results in CDN$.
I get a 10 year median Price/Cash Flow per Share Ratio of 8.86. The current P/CF Ratio is 1.34 based on 2020 CFPS estimate of $4.31, cash flow of $140M and a stock price of $5.79. The current ratio is 85% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This is in US$ and you will get similar results in CDN$.
I cannot do any dividend yield tests as dividends have been suspended.
The 10 year median Price/Sales (Revenue) Ratio is 0.36. The current P/S Ratio is 0.07 based on 2020 Revenue estimate of $2,524, Revenue per Share of $77.71 and a stock price of $5.79. The current ratio is 79% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This is in US$ and you will get similar results in CDN$.
Results of stock price testing is that the stock price is relatively cheap. The results of the P/S Ratio testing say this and it is confirmed by the P/B Ratio testing. The other testing says the same thing except for the P/E Ratio test. The problem with the P/E Ratio test is that there are earnings losses and so negative P/E Ratios.
Is it a good company at a reasonable price? First the price is cheap. This might be a turn-around situation. Insider are buying. However, the track record for this company has not been good lately.
When I look at analysts’ recommendations, I find only Hold (3) recommendations. The consensus would be a Hold. The 12 month stock price consensus is $3.62 ($3.40 US$). This implies a total loss of 40.60%.
The last entry in 2019 says sell on Stock Chase. Chen Liu on Motley Fool was positive on this stock back in December 2019. The executive overview on Simply Wall Street says the firm is unprofitable and not forecast to become profitable over the next 3 years. A writer on Simply Wall Street says the company is not reinvesting funds back into the business and returns are not growing. A writer on Simply Wall Street says insiders are buying so it might be a turn-around situation..
Dorel Industries Inc. is a Canadian company that sells juvenile products, bicycles, and furniture. The company operates across North America, East and South Asia, Europe, Oceania, Israel, and South America. Its web site is here Dorel Industries Inc.
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