I own this stock of Russel Metals Inc (TSX-RUS, OTC-RUSMF). This was a stock on Mike Higgs' Canadian Dividend Growth List. In 2007 I needed to reduce my holdings of Loblaws and buy something to help replace the dividends I had been earning. With Russel Metals, both Mike and TD recommend buying at this time.
When I was updating my spreadsheet, I noticed that I have not done very well with this stock earning a total return of 4.71% with a capital loss of 0.97% and dividends of 5.68%. This is after holding this stock for almost 14 years. However, this is not surprising considering the business this company is in. This stock also has very good debt ratios. Good debt ratios help a company survive a long time in adverse conditions.
The dividend yields are good with dividend growth non-existent. The current dividend yield is good (5% and 6% ranges) at 6.13%. The 5, 10 and historical dividend yields are also good at 6.98%, 5.75% and 5.11%. The dividends have been flat since 2015. It has been a very long slow recovery since the last recession of 2008. The company prior to 2015 was a dividend growth stock company, but none consistent. The dividends have gone up 11 times and down 4 times in the past 30 years that I have data.
The Dividend Payout Ratios (DPR) needs to improve. The DPR for EPS for 2020 is 390% with 5 year coverage at 95%. This DPR is expected to go to 86% this year. The DPR for CFPS for 2020 is 61% with 5 year coverage at 43%. The DPR for Free Cash Flow for 2020 is 27% with 5 year coverage at 71%.
Debt Ratios are very good. The Long Term Debt/Market Cap for 2020 is 0.21. The Liquidity Ratio for 2020 is 3.55. The Debt Ratio is 2.18. Leverage and Debt/Equity Ratios for 2020 are 1.85 and 0.85.
The Total Return per year is shown below for years of 5 to 30 to the end of 2020. 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 14.55, 17.70 and 20.17. The corresponding 10 year ratios are 13.39, 15.90 and 18.41. The corresponding historical ratios are 11.92, 10.17 and 14.71. The current P/E Ratio is 14.00 based on a stock price of $24.78 and EPS estimate for 2021 of $1.77. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $23.51. The 10 year low, median, and high median Price/Graham Price Ratios are 0.95, 1.13 and 1.38. The current P/GP Ratio is 1.05 based on a stock price of $24.78. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median Price/Book Value per Share Ratio of 1.83. The current P/B Ratio is 1.79 based on a Book Value of $864M, Book Value per share of $13.88, and a stock price of $24.78. The current ratio is 2% 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 9.68. The current P/CF Ratio is 8.79 based on a stock price of $24.78, Cash Flow per Share estimate for 2021 of $2.82, and Cash Flow of $176M. The current ratio is 9% 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 5.11%. The current dividend yield is 6.13% based on dividends of $1.52 and a stock price of $24.78. The current dividend yield is 20% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 5.75%. The current dividend yield is 6.13% based on dividends of $1.52 and a stock price of $24.78. The current dividend yield is 6.7% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10 year median Price/Sales (Revenue) Ratio is 0.51. The current P/S Ratio is 0.50 based on Revenue estimate for 2021 of $3,110M, Revenue per Share of $49.92 and a stock price of $24.78. The current ratio is 3% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
Results of stock price testing is that the stock price is probably reasonable. All the test are saying this including the dividend yield tests where dividends are not currently increasing. The dividend yield tests showing a reasonable stock price is confirmed by the P/S Ratio test.
Is it a good company at a reasonable price? The stock price is reasonable. I own this stock and I will continue to hold it. It bought it for diversification and that reason has not changed. I still have faith in this company for the long term. It would seem I bought this stock at the wrong time. The 15 year duration for total return is low, as it is for the 10 year duration. Other durations had better total return.
When I look at analysts’ recommendations, I find Buy (5) and Hold (2) recommendations. The consensus would be a Buy. The 12 month stock price consensus is $26.86. this implies a total return of 14.53% with 8.39% from capital gains and 6.13% from dividends.
Analysts are positive about this stock on Stock Chase. Ambrose O'Callaghan on Motley Fool thinks Commodity prices have built momentum in the face of a global recovery. Russel Metals is a stock he recommends. The executive summary at Simply Wall Street lists 4 risks, but stock gets 4 stars out of 5. Hqzuj12 on Stockhouse gives a report on what Vector Vest says about this company. It is undervalued.
Russel Metals Inc is a Canada-based metal distribution company. The company conducts business primarily through three metals distribution segments: metals service centers; energy products; and steel distributors. The company generates all of its revenue from the North American market. Its web site is here Russel Metals Inc.
The last stock I wrote about was about was ARC Resources Ltd (TSX-ARX, OTC-AETUF) ... learn more. The next stock I will write about will be Atrium Mortgage Investment Corp (TSX-AI, OTC-AMIVF) ... learn more on Monday, March 1, 2021 around 5 pm.
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