I do not own this stock of CCL Industries Inc (TSX-CCL.B, OTC-CCDBF). In 2009 I read a favorable report on this stock of which I had also heard before. This is also a dividend paying stock and in 2009 it was on Dividend Achievers list.
When I was updating my spreadsheet, I noticed that analysts expect declining Revenue and EPS for 2020. However, things are expected to pick up again in 2021. They also expect high dividend increases than for 2020, but not as high as in the past. The dividend growth in 2020 was 5.9% and dividend growth for 2021 and 2022 is expected to be 12.5% and 13.4%, respectively. The 5 year dividend growth has been at 25.32% per year over the past 5 years.
The dividend yields are low with dividend growth good. The current dividend yield is low (under 2%) at 1.38%. The 5 and 10 year median dividend yields are also low at 0.89% and 1.12%. The historical median dividend yield is moderate (2% to 4% ranges) at 2.08%. The dividend yields were in the 1% to 2% ranges mostly until 2013 when some started to drop below 1%. The dividend growth is currently good (14% and above) with the growth at 25.32% per year over the past 5 years. However, the most recent increase in 2020 was for just 5.9%.
The Dividend Payout Ratios (DPR) are good. The DPR for EPS for 2019 was 26% with 5 year coverage at 20%. The DPR for CFPS for 2019 is 11% with 5 year coverage at 10%. The DPR for Free Cash Flow for 2019 is 28% with 5 year coverage at 22%.
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2019 is good at 0.23. The Liquidity Ratio for 2019 is good at 1.83. The Debt Ratio for 2019 is also good at 1.70. The Leverage and Debt/Equity Ratios for 2019 are fine at 2.43 and 1.43 respectively.
The Total Return per year is shown below for years of 5 to 32 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 | 25.32% | 18.37% | 17.05% | 1.32% |
| 2009 | 10 | 18.94% | 27.36% | 25.63% | 1.73% |
| 2004 | 15 | 15.53% | 21.13% | 19.63% | 1.49% |
| 1999 | 20 | 12.72% | 17.88% | 16.47% | 1.40% |
| 1994 | 25 | 10.50% | 15.63% | 14.26% | 1.37% |
| 1989 | 30 | 9.02% | 13.16% | 11.89% | 1.26% |
| 1987 | 32 | 8.93% | 13.42% | 11.99% | 1.43% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 18.39, 22.16 and 25.86. The corresponding 10 year ratios are 14.31, 21.24 and 25.58. The corresponding historical ratios are 11.88, 14.38 and 20.49. The current P/E Ratio 20.38 based on a stock price of $52.18 and EPS estimate for 2020 of $2.56. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $31.43. The 10 year low, median, and high median Price/Graham Price Ratios are 1.19, 1.66 and 2.07. The current P/GP Ratio is 1.66 based on a stock price of $52.18. This stock price testing suggests that the stock price is relatively reasonable and at the median.
I get a 10 year median Price/Book Value per Share Ratio of 3.26. The current P/B Ratio is 3.04 based on a Book Value of $3,063M, Book Value per Share of $17.15 and a stock price of $52.18. The current ratio is 6.8% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median Price/Cash Flow per Share Ratio of 10.79. The current P/CF Ratio is 10.99 based on a stock price of $52.18, Cash Flow per Share estimate for 2020 if $4.75 and Cash Flow of $848M. The current ratio is 1.8% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get an historical median dividend yield of 2.08%. The current dividend yield is 1.38% based on a stock price of $52.18 and Dividends of $0.72. The current dividend yield is 34% below the historical dividend yield. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median dividend yield of 1.12%. The current dividend yield is 1.38% based on a stock price of $52.18 and Dividends of $0.72. The current dividend yield is 23% above the historical dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10 year median Price/Sales (Revenue) Ratio is 1.67. The current P/S Ratio is 1.81, based on Revenue estimate for $5,157M, Revenue per Share of $28.87 and a stock price of $52.18. The current ratio is 8% above the 10 year median 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 might be reasonable. The testing is giving mixed signals. I like the Dividend Yield test and the P/S Ratio test, but they are showing stock price above and below the median. The P/B Ratio test says that the stock price is reasonable and below the median.
Is it a good company at a reasonable price? The stock price seems to be in the reasonable range at this point. This is a dividend growth stock which is what I like. The dividend yield is low, so this might be good for someone building their portfolio.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (7) and Hold (1). The consensus would be a Buy. The 12 month stock price consensus is $57.89. This implies a total return of 12.32%, with 10.94% from capital gains and 1.38% from dividends.
Analysts have various views on this stock on Stock Chase. Jed Lloren on Motley Fool thinks this stock is a hidden gem. A writer on Simply Wall Street says they are happy with the company’s performance and they like it that the company is heavily reinvesting in the company. A writer on Simply Wall Street points out the lack of increasing EPS recently, but a P/E Ratio higher than the industry average. The Blogger Million dollar Journey has this stock on his list of 2020 Best Canadian Dividend Stocks.
CCL Industries Inc manufactures and sells packaging and packaging-related products. The company operates through various segments which include The CCL segment, which generates the majority of revenue, sells pressure sensitive and extruded film materials used for labels on consumer packaging, healthcare, automotive, and consumer durable products. The majority of revenue comes from North America. Its web site is here CCL Industries Inc.
The last stock I wrote about was about was Brookfield Asset Management Inc (TSX-BAM.A, NYSE-BAM) ... learn more. The next stock I will write about will be Ovintiv Inc (TSX-OVV, NYSE-OVV) ... learn more on Friday, October 30, 2020 around 5 pm. Tomorrow on my other blog I will write about Kirkland Lake.... learn more on Thursday, October 29, 2020 around 5 pm.
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