I do not own this stock of Wajax Corp (TSX-WJX, OTC-WJXFF). TD Waterhouse put out a report on good dividend paying stocks to own in November 2011. This was a stock they named. I had not heard of it before, so I decided to investigate it.
When I was updating my spreadsheet, I noticed that the company seemed to have a peak in 2013 and has not done as well since then. This is true for EPS, Dividends and Stock Price. The peak in Revenue seems to have been in 2014. They had dividends 33 years ago, but between 1992 and 2003 there were no dividends.
I have data going back some 33 years and their record is quite mixed. Some periods shareholders have done well and, in some periods, not so much. If you look at the chart for this stock, it was at a low in 1994, 1999 and 2004. It is at a low point currently. See chart below.
The dividend yields are currently high with dividend growth non-existent. The current dividend yield is high (7% and over) at 7.99%. The 5 and historical median dividend yields are moderate (2% to 4% ranges) at 4.49% and 4.40%. The 10 year median dividend yield is good (5% and 6% ranges) at 5.87%. They have been decreasing their dividends since 2013 and changed the dividend payments from monthly to quarterly in 2015. Dividends have been flat since 2016.
They had restated the dividends in 2004. They dividends were increased by 678% and changed to monthly when they became an income trust in 2005. Income Trust had to change to corporations and they did so in 2009 and decreased the dividends. Income trusts could pay a lot more in dividends that corporations can.
The Dividend Payout Ratios (DPR) are fine except for the one for FCF. A lot of companies that changed from Income Trust to corporation had a hard time getting their DPR for EPS down under 100%. This company did so by 2017. The DPR for EPS for 2019 is 52% with 5 year coverage at 99.9%. The DPR for CFPS for 2019 is 16% with 5 year coverage at 24%. The DPR for Free Cash Flow cannot be calculated for 2019 because the FCF is negative. The 5 year coverage is at 403%.
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2019 is 0.76. The Liquidity Ratio for 2019 is good at 2.25. The Debt Ratio is a bit low at 1.44, but the 5 year median is fine at 1.69. The Leverage and Debt/Equity Ratios are fine at 3.30 and 2.30 with 5 year medians at 2.67 and 1.67.
The Total Return per year is shown below for years of 5 to 33 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.|
The 5 year low, median, and high median Price/Earnings per Share Ratios are 8.76, 12.23 and 15.69. The corresponding 10 year ratios are 9.38, 11.99 and 14.61. The corresponding historical ratios are 8.74, 11.39 and 13.87. The current P/E Ratio 9.14 based on a stock price of $12.52 and EPS 2020 estimate of $1.37. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $22.09. The 10 year low, median, and high median Price/Graham Price Ratios are 0.92, 1.14 and 1.34. The current P/GP Ratio is 0.57 based on a stock price of $12.52. 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 1.98. The current P/B Ratio is 0.79 based on a stock price of $12.52, Book Value of $317M and Book Value per Share of 15.83. The current ratio is 60% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median Price/Cash Flow per Share Ratio of 6.83. The current P/CF Ratio is 5.84 based on the last 12 months of Cash Flow of $42.9M, Cash Flow per Share of $2.14 and a stock price of $12.52. The current ratio is 15% below the 10 year median 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 4.40%. The current dividend yield is 7.99% based on dividends of $1.00 and a stock price of $12.52. The current dividend yield is 81% above the historical median dividend. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 5.87%. The current dividend yield is 7.99% based on dividends of $1.00 and a stock price of $12.52. The current dividend yield is 36% above the historical median dividend. This stock price testing suggests that the stock price is relatively cheap.
The 10 year median Price/Sales (Revenue) Ratio is 0.37. The current P/S Ratio is 0.18 based on Revenue estimate for 2020 of $1,394, Revenue per Share of $69.58 and a stock price of $12.52. The current P/S Ratio is 52% 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 probably relatively cheap. Bothe the dividend yield tests show this and it is confirmed by the P/S Ratio test. The other tests show the same thing except for the Price/Cash Flow Test which is showing the stock is reasonable and below the median.
Is it a good company at a reasonable price? Certainly, this stock is at a good price. However, it has had a very mixed past as far as results go. If I where inclined to buy this stock, I would keep an eye on it and not be buying for the long term. I cannot see this stock as a buy and hold.
When I look at analysts’ recommendations, I find Buy (1). The consensus would be a Buy. The 12 month stock price target is $13.50. This implies a total return of 15.81% with 7.83% from capital gains and 7.99% from dividends.
There are no recent analysts’ comments on Stock Chase, but old comments are negative.. Christopher Liew on Motley Fool thinks this high dividend stock would be good for your TFSA. The site Simply Wall Street gives this stock 3 stars out of 5 and an executive overview. A writer on Simply Wall Street says they do not like this dividend stock because earnings are declining. Ostrich Investing has a video analyzing this stock on YouTube. He says the stock is underperforming. He also says it is a cyclical stock. The video is just over 9 minutes long. This video was done when the stock hit a low in March 2020.
Wajax Corp is a Canadian distributor of industrial components. Its core business is the sale of parts and service support of equipment, power systems, and industrial components through a network of branches in Canada. Its web site is here Wajax Corp.
The last stock I wrote about was about was Telus Corp (TSX-T, NYSE-TU) ... learn more. The next stock I will write about will be Trican Well Service Ltd (TSX-TCW, OTC-TOLWF) ... learn more on Friday, September 18, 2020 around 5 pm. Tomorrow on my other blog I will write about Pipelines and a Strong Recovery.... learn more on Thursday, September 17, 2020 around 5 pm.
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