I do not own this stock of PFB Corp (TSX-PFB, OTC-PFBOF). I am following this stock as I read a positive article on this stock in November 2009 and thought I would do a spreadsheet on it. This stock is a dividend paying small cap stock. The article said that this stock would be good for long-term gains and rising dividends. This is the thing with small cap stock; you can get a blend of capital gains and rising dividends in the long term only if the company is successful.
When I was updating my spreadsheet, I noticed there was a lot insider selling in June 2020 at $10 before the stock took off raising to $20.00. Of the 22 years of data on dividends I have, there were only 6 dividend increases and 4 of these happened between 2016 and 2019. Until 2016, the dividends were flat most years.
The dividend yield is currently low with dividend growth currently moderate. The current dividend yield is low (under 2%) at 1.76%. The 5, 10 and historical dividend yields are is moderate (2% to 4% range) at 3.25%, 3.77% and 3.23%. The current dividend growth is low (below 8% per year) at 7.84% per year over the past 5 years. They just started to increase the dividends in 2016 from a flat dividend. The increases have been really in the moderate range (8% to 14% ranges). The last dividend increase was for 12.5% and it was in 2019. There has been no increase this year. However, the company paid big special dividend in 2019 and in 2020.
The Dividend Payout Ratios (DPR) are good. The DPR for 2019 is 103% with 5 year coverage at 61%. Without the special dividend, the DPR would be 27% for 2019. The DPR for CFPS for 2019 is 48% with 5 year coverage at 27%. The DPR for 62% with 5 year coverage at 69%. I am not concerned about the rather high DPRs because the company has cash. The positive cash flow is from operating activities. I would be more worried if positive cash flow was from investing or financing activities.
Debt Ratios are good. The Long Term Debt/market Cap for 2019 is 0.09 and is currently at 0.06. This is very good and low. The Liquidity Ratio is good and high at 2.30. The Debt Ratio is also good and high at 2.50. The Leverage and Debt/Equity Ratios are good and low at 1.67 and 0.67.
The Total Return per year is shown below for years of 5 to 26 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 | 7.84% | 31.13% | 24.75% | 6.38% |
| 2009 | 10 | 3.85% | 14.41% | 8.79% | 5.62% |
| 2004 | 15 | 5.81% | 11.39% | 6.53% | 4.86% |
| 1999 | 20 | 6.46% | 12.53% | 5.02% | 7.50% |
| 1994 | 25 | 5.86% | 14.16% | 6.99% | 7.18% |
| 1993 | 26 | 13.50% | 6.93% | 6.57% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 8.59, 9.61 and 13.82. The corresponding 10 year ratios are 10.68, 12.79 and 14.89. The corresponding historical ratios are 8.59, 10.36 and 14.79. The current P/E Ratio is 8.76 based on a stock price of $20.40 and EPS estimate for 2020 of $2.33. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $22.75. The 10 year low, median, and high median Price/Graham Price Ratios are 0.65, 0.77 and 0.95. The current P/GP Ratio is 0.90 based on a stock price of $20.40. 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 0.98. The current P/B Ratio is 2.07 based on a stock price of $20.40, Book Value of $66.04 and Book Value per Share of $9.87. The current ratio is 111% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median Price/Cash Flow per Share Ratio of 6.89. The current P/CF Ratio is 5.76 based on Cash Flow per Share estimate for 2020 of $3.54, Cash Flow of $23.69 and a stock price of $20.40. The current ratio is 16% 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 3.23%. The current dividend yield is 1.76% based on dividends of $0.36 and a stock price of $20.40. The current dividend yield is 45% below the historical dividend yield. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 3.77%. The current dividend yield is 1.76% based on dividends of $0.36 and a stock price of $20.40. The current dividend yield is 53% below the historical dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10 year median Price/Sales (Revenue) Ratio is 0.50. The current P/S Ratio is 1.01 based on Revenue estimate for 2020 of $135M, Revenue per Share of $20.18 and a stock price of $20.40. The current P/S Ratio is 102% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive
Results of stock price testing is that the stock price is probably relatively expensive. Both the dividend yield tests show that the stock price is relatively expensive and this is confirmed by the P/S Ratio test. The P/B Ratio test says the same thing and this test does not use any estimates. However, the P/E Ratio, the P/GP Ratio and P/CF tests show that the stock price is reasonable.
Is it a good company at a reasonable price? I do think that it is a good company although it is risky because it is relatively small. It has turned itself into a dividend growth company recently. It has also given out special dividends in 2019 and 2020. The stock price seems to be on the expensive side.
When I look at analysts’ recommendations, I find Strong Buy (2). The consensus would be a Strong buy. There are no many analysts following this stock. The 12 month stock price consensus is $26.75. This implies a total return of a total return of 32.89% with 31.15% from capital gains and 1.76% from dividends.
There is only one entry for this stock on Stock Chase and it is positive. Debra Ray on Motley Fool talks about the fact that building industry firms are doing well and have growing dividends with PFB Corp being mentioned.. A writer on Simply Wall Street thinks the intrinsic value of this stock is $27.87. A write on Simply Wall Street say the CEO is getting a higher proportion of total compensation in salary that other companies of the same size but total compensation is close to the median. James Li on Gurufocus talks about 4 stocks with special dividends including PFB Corp.
PFB Corp is Canadian based firm which is in the business of delivering products and solutions in the areas of manufacturing insulating building products made from expanded polystyrene materials. Most of its revenue is earned through Canadian market, while it has a presence in the USA, and other countries. Its web site is here PFB Corp.
The last stock I wrote about was about IBI Group Inc (TSX-IBG, OTC-IBIBF) ... learn more. The next stock I will write about will be Innergex Renewable Energy (TSX-INE, OTC-INGXF) ... learn more on Wednesday, November 18, 2020 around 5 pm. Tomorrow on my other blog I will write about TD Goal Assist.... learn more on Tuesday, November 17, 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.
See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
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