I do not own this stock of Dorel Industries Inc (TSX-DII.B, OTC-DIIBF), but I used to. This was a stock recommended by Investment Reporter as a conservative investment. I sold the stock in 2006 because I had it for 7 years from 1999 and it was going nowhere. I bought this stock before I stopped working and at that time, I did not mind buying stocks with no dividends. If I had kept it, I would not have made any money on it over the years.
When I was updating my spreadsheet, I noticed they had a loss in 2020 mainly due to an impairment loss on goodwill. Since 2016, Goodwill and Intangibles/Market Cap Ratio was over 1.00 and was 2.15 in 2019. The stock was up 155% in 2020 and is up some 5% to date this year.
There are currently no dividends being paid. They stopped the dividends because they could no longer afford them.
The Dividend Payout Ratios (DPR) were recently too high because of EPS losses. The DPR for EPS cannot be calculated as this company has had earnings losses for the last 3 years. The DPR for CFPS for 2020 is nil because there were no dividends paid in 2020. The 5 year coverage was 17%. The DPR for Free Cash Flow for 2020 was 0% because there were no dividends paid in 2020. The 5 year coverage was 39%.
Debt Ratios need improving. The Long Term Debt/Market Cap Ratio was 0.33 for 2020. The Liquidity Ratio for 2020 was 1.22 and this is low. The Debt Ratio was 1.41 and this is also low. I prefer these ratios be at 1.50 or higher. The Leverage and Debt/Equity Ratios for 2020 was 3.46 and 2.46. These are too high and 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 28 to the end of 2020 in CDN$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. The Dividend Growth column shows the average dividend growth. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2015 | 5 | -33.03% | -9.53% | -13.78% | 4.25% |
| 2010 | 10 | -4.07% | -3.39% | -8.03% | 4.65% |
| 2005 | 15 | -1.70% | 0.20% | -4.02% | 4.22% |
| 2000 | 20 | 2.36% | -1.20% | 3.56% | |
| 1995 | 25 | 8.61% | 4.69% | 3.92% | |
| 1992 | 28 | 6.85% | 3.63% | 3.21% |
The Total Return per year is shown below for years of 5 to 28 to the end of 2020 in US$. 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. The Dividend Growth column shows the average dividend growth. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2015 | 5 | -32.50% | -16.25% | -19.43% | 3.19% |
| 2010 | 10 | -7.48% | -6.20% | -10.36% | 4.15% |
| 2005 | 15 | -4.60% | -0.29% | -4.60% | 4.30% |
| 2000 | 20 | 3.72% | -0.30% | 4.02% | |
| 1995 | 25 | 9.30% | 5.00% | 4.30% | |
| 1990 | 30 | 8.45% | 4.76% | 3.69% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are negative and so cannot be used. The corresponding 10 year ratios are 2.92, 3.67 and 4.43. The corresponding historical ratios are 8.63, 11.29 and 14.37. The current P/E Ratio is 8.80 based on a stock price of $15.73 and EPS estimate for 2021 of $1.79 ($1.42 US$). A P/E Ratio of 8.80 is a very low one. The 10 year ratios are very low because of earning losses. Compared to the historical P/E Ratio, the current ratio is between the low and median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in CDN$.
I get a Graham Price of $28.09. The 10 year low, median, and high median Price/Graham Price Ratios are 0.69, 0.87 and 0.99. The current P/GP Ratio is 0.56 based on a stock price of $15.73. This is below the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap. This testing is in CDN$.
I get a 10 year median Price/Book Value per Share Ratio of 0.77. The current P/B Ratio is 0.80 based on a Book Value of $506M, Book Value per Share of $15.58 and a stock price of $12.44. The current ratio is 5% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$. You will get similar results with CDN$.
I get a 10 year median Price/Cash Flow per Share Ratio of 6.94. The current P/CF Ratio is 2.89 based on Cash Flow for last 12 months of $128.5M, Cash Flow per Share of $3.96 and a stock price of $12.44. The current ratio is 55% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$. You will get similar results with CDN$.
The dividends have been suspended, so I cannot do any dividend yield testing.
The 10 year median Price/Sales (Revenue) Ratio is 0.33. The current P/S Ratio is 0.14 based on Revenue estimate for 2021 of $2,918M, Revenue per Share of $89.87 and a stock price of $12.44. The current ratio is 59% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$. You will get similar results with CDN$.
Results of stock price testing is that the stock price is probably cheap. The P/S Ratio test is saying that the stock price is cheap as is the P/GP Ratio test and the P/CF Ratio test. A P/E Ratio of 8.80 also points to a cheap price as any ratio below 10 does. The P/B Ratio test says it is reasonable, but book value has been going down the last 5 and 10 years because of earning losses.
Is it a good company at a reasonable price? I think the stock price is probably cheap. The Schwartz family no longer wants to take it private. The low analysts’ target price does not point to the company doing well in the short term. However, the company has finally turned a profit in the first quarter of 2021.
When I look at analysts’ recommendations, I find Hold (2) recommendations. The 12 month target price is $16.37 ($13.00 US$). This implies a total return of 4.07% all capital gains.
The last entry was in 2019 and it was a sell on Stock Chase. Nikhil Kumar on Motley Fool says this stock is a good buy. The executive summary on Simply Wall Street gives this company 4 stars out of 5 and list two risks. One advantage is that it has become profitable this year and this is true. A writer on Simply Wall Street is uncomfortable with the company’s debt level. A writer on Simply Wall Street talks about the ownership of this company.
Dorel Industries Inc is a Canadian company that sells juvenile products, bicycles, and furniture. Geographically, it derives a majority of revenue from the United States. Its web site is here Dorel Industries Inc.
The last stock I wrote about was about was Artis REIT (TSX-AX.UN, OTC-ARESF) ... learn more. The next stock I will write about will be Pulse Seismic Inc (TSX-PSD, OTC-PLSDF) ... learn more on Wednesday, July 21, 2021 around 5 pm. Tomorrow on my other blog I will write about U. S. Investing and Taxes.... learn more on Tuesday, July 20 around 5 pm.
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