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 the company did better than expected. Revenue was expected to be down at $5,157M and they were down but better than expected at $5,242.3M. This was a decline of 1.5% rather than a decline of 3%. EPS was expected to be down also at $2.56, but was up at $2.94. This was a 10.5% increase rather than a 3.8% decline.
Last year 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 based on a stock price of $52.18. What happened was in 12 months’ time it has a current price of $67.70 which is a total return of 31.12% with 29.74% from capital gains and 1.38% from dividends. Last year, I thought that the stock price was reasonable.
The dividend yields are low with dividend growth good. The current dividend yield is low (below 2%) at 1.27%. The 5 and 10 year median dividend yields are also low at 0.90% and 1.12%. The historical median dividend yield is moderate (2% to 4%) range at 2.09%. The dividend growth is good (15% and above) at 19.14% per year over the past 5 years. The last dividend increase occurred in 2021 and it was for 16.67%.
The Dividend Payout Ratios (DPR) are good. The DPR for EPS for 2020 was 24% with 5 year coverage at 22%. The DPR for CFPS for 2020 was 12% with 5 year coverage at 10%. The DPR for Free Cash Flow for 2020 is 21% with 5 year coverage at 22%.
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio is good at 0.18 for 2020. The Liquidity Ratio for 2020 is 1.76. The Debt Ratio for 2020 is 1.81. These are both good. The Leverage and Debt/Equity Ratios for 2020 are fine at 2.24 and 1.24.
The Total Return per year is shown below for years of 5 to 33 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. |
|---|---|---|---|---|---|
| 2015 | 5 | 19.14% | 6.29% | 5.19% | 1.10% |
| 2010 | 10 | 18.85% | 27.54% | 25.58% | 1.96% |
| 2005 | 15 | 15.78% | 17.96% | 16.63% | 1.33% |
| 2000 | 20 | 12.86% | 22.47% | 20.23% | 2.23% |
| 1995 | 25 | 10.76% | 15.16% | 13.81% | 1.34% |
| 1990 | 30 | 8.95% | 14.18% | 12.70% | 1.48% |
| 1987 | 33 | 8.83% | 13.22% | 11.75% | 1.46% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 18.39, 22.16 and 25.65. The corresponding 10 year ratios are 14.31, 21.24 and 25.58. The corresponding historical ratios are 11.90, 14.47 and 20.61. The current P/E Ratio is 19.70 based on a stock price of $66.00 and EPS estimate for 2021 of $3.35. This ratio is between the low and median of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $38.17. 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 1.73 based on a stock price of $66.00. The current ratio is between the median and high of the 10 year median ratios. 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 3.26. The current P/B Ratio is 3.41 based on a Book Value of $3,475M, Book Value per Share of $19.33 and a stock price of $66.00. 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.
I get a 10 year median Price/Cash Flow per Share Ratio of 11.24. The current P/CF Ratio is 11.30 based on a stock price of $66.00, Cash Flow per Share estimate for 2021 of $5.84 and Cash Flow of $1,050M. The current ratio is 0.55% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and at the median.
I get a 10 year median dividend yield of 2.07%. The current dividend yield is 1.27% based on a dividend of $0.84 and a stock price of $66.00. The current yield is 14% above 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 1.27% based on a dividend of $0.84 and a stock price of $66.00. The current yield is 14% below the 10 year 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 1.80. The current P/S Ratio is 2.13 based on Revenue estimate for 2021 of $5,575M, Revenue per Share of $31.01 and a stock price of $66.00. The current ratio is 18% 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 is probably reasonable, but it may be on the high side of the reasonable range. The dividend yield has been going down. The stock price has been rising faster than the dividend growth. The dividend growth has been rising inline with EPS. The 10 year dividend yield test shows the stock is reasonable and below the median. The P/S Ratio testing shows that the stock is reasonable but above the median.
I looked at the total return over a number of years. For P/S Ratio and P/E Ratio, the lower the ratio the cheaper the stock. For yield, the higher the yield, the cheaper the stock. In the chart below you can see that the beginning P/E Ratios for good returns are lower than today. This is the same with P/S Ratio. Also, the beginning yield was higher than today.
In the following chart the total return for the 10 years to December 31, 2020 is 27.54%. The beginning yield was high at 2.16%, and the P/E Ratio and the P/S Ratio were relatively low at 19.70 and 2.13. Does this chart change my opinion of the stock price? Not really. The stock price seems reasonable but above the median. The Yield seems to be the best indicator. The P/S Ratio was much lower in the past.
| # Years | Total Ret | Beg P/E | Beg P/S | Beg Yield |
|---|---|---|---|---|
| 5 | 6.29% | 26.77 | 2.59 | 0.67% |
| 10 | 27.54% | 13.91 | 0.83 | 2.16% |
| 15 | 17.96% | 5.78 | 0.84 | 1.39% |
| 20 | 22.47% | 10.36 | 0.16 | 4.41% |
| 25 | 15.16% | 11.61 | 0.40 | 2.46% |
| 30 | 14.18% | 13.56 | 0.55 | 3.44% |
| current | 19.70 | 2.13 | 1.27% |
Is it a good company at a reasonable price? The price seems reasonable, but it is on the high side of reasonable. 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 (3), Buy (6) and Hold (1). The consensus would be a Buy. The 12 month stock price is $81.89. This implies a total return of 25.35% with 24.08% from capital gains and 1.27% from dividends.
Analysts on Stock Chase mostly like this stock, but not all do. Chris MacDonald on Motley Fool thinks long-term investors would be remiss to ignore this company at this current valuation. The executive summary on Simply Wall Street gives this stock 4 stars out of 5 and list two risks. It looks like there is a lot of insider selling but mostly it is officers not picking up their options. There is no selling by CEO, CFO or Chairman. A writer on Simply Wall Street looks at who owns shares in this company. A writer on Simply Wall Street talks about this company’s debt. An article on Yahoo Finance talks about CCL acquisitions.
CCL Industries Inc manufactures and sells packaging and packaging-related 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 22, 2021 around 5 pm. Tomorrow on my other blog I will write about Renting or Buying.... learn more on Thursday, October 8, 2021 around 5 pm.
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