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 for the 2020 financial year, I noticed that EPS was higher because costs went down, especially, the cost of sales (COS). Sales went up 1.17%, but COS went down by 6.42%. The COS/Sales Ratio moved from 0.74 in 2019 to 0.68 in 2020.
However, costs went up this year, especially, the cost of sales, which went up 25.89%. The Sales only went up 16.73%. The COS/Sales Ratio went from 0.69 year to date (YTD) in the first 9 months of 2020 to 0.74 in the first 9 months of 2021. So, it looks like lower costs is not permanent, which is unfortunate. The COS/Sales Ratio is back to 0.74 where it was in 2019. It is the COS/Sales Ratio that gives you the full story. It is the reason you look at ratios.
| Sales Annual | $133.232 | $134.796 |
| Change | 1.17% | |
| COS/Sales R | 0.74 | 0.68 |
| Change | -7.51% | |
| COS Annual | $98.404 | $92.087 |
| Change | -6.42% | |
| Sales YTD | $97.737 | $114.088 |
| Change | 16.73% | |
| COS/Sales R | 0.69 | 0.74 |
| Change | 7.85% | |
| COS YTD | $67.052 | $84.411 |
| Change | 25.89% |
The dividend yields are currently low with dividend growth moderate. The current dividend is low (below 2%) at 1.65%. The 5, 10 and historical dividend yields are moderate (2% to 4% ranges) at 3.23%, 3.36% and 3.09%. The dividends have gone up moderately (8% to 14% ranges) in the last 5 years at 9.04% per year. The last dividend increase was moderate at 10% and it was for 2021.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2020 was 58% with 5 year coverage at 64%. It was high because there was a special $1.00 dividend, otherwise the DPR for 2020 would have been 16%. There has been a special $1.00 dividend in 2019, 2020 and 2021. The DPR for CFPS for 2020 is 34% with 5 year coverage at 31%. The DPR for Free Cash Flow is 36% with 5 year coverage at 59%.
Debt Ratios are good. The Long Term Debt/Market Cap for 2020 is 0.05 and this is low and good. The Liquidity Ratio for 2020 is high and good at 2.46. The Debt Ratio is high and good at 2.57. The Leverage and Debt/Equity Ratios are low and good at 1.64 and 0.64.
The Total Return per year is shown below for years of 5 to 27 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 | 9.04% | 20.84% | 16.47% | 4.38% |
| 2010 | 10 | 4.42% | 19.77% | 14.62% | 5.15% |
| 2005 | 15 | 2.93% | 5.82% | 3.36% | 2.45% |
| 2000 | 20 | 6.76% | 17.68% | 10.69% | 6.99% |
| 1995 | 25 | 5.85% | 15.32% | 8.93% | 6.39% |
| 1993 | 27 | 14.48% | 8.96% | 5.52% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 8.59, 9.59 and 10.60. The corresponding 10 year ratios are 9.41, 11.06 and 14.30. The corresponding historical ratios are 8.39, 10.35 and 14.30. The current P/E Ratio is 12.25 based on a stock price of $26.70 and EPS estimate for 2021 of $2.18. The current ratio is between the median and high ratios 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 Graham Price of $22.60. The 10 year low, median, and high median Price/Graham Price Ratios are 0.59, 0.72 and 0.95. The current P/GP Ratio is 1.18 based on a stock price of $26.70. The current ratio is above the 10 year median high ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median Price/Book Value per Share Ratio of 1.03. The current P/B Ratio is 2.56 based on a stock price of $26.70, Book Value of $70.7M and a Book Value per Share of $10.41. The current P/B Ratio is 150% 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 5.99. The current P/CF Ratio is 9.82 based on Cash Flow per Share estimate for 2021 of $2.72, Cash Flow of $18.5M and a stock price of $26.70. The current ratio is 64% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 3.09%. The current Dividend Yield is 1.65% based on dividends of $0.44 and a stock price of $26.70. The current dividend yield is 47% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median dividend yield of 3.46%. The current Dividend Yield is 1.65% based on dividends of $0.44 and a stock price of $26.70. The current dividend yield is 52% below the 10 year median 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 1.18 based on Revenue estimate for 2021 of $154M, Revenue per Share of $22.66 and a stock price of $26.70. The current ratio is 136% above the 10 year median ratio.
Results of stock price testing is that the stock price is probably expensive. The dividend yield tests are pointing to this and it is confirmed by the P/S Ratio test. The other tests are saying the same thing.
I look 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 good yields have higher dividend yields than today. The lowest dividend yield had the worst Total Return at the 15 year mark. Year 15 also has the highest P/S Ratio.
In the following chart the total return for the 10 years to December 31, 2020 is 19.77% per year. The beginning yield was at 4.17%, and the P/E Ratio and the P/S Ratio were at 20.54 and 0.58. Does this chart change my opinion of the stock price? No, I think it shows low yields and high P/S Ratio equal lower total return.
| # Years | Total Ret | Beg P/E | Beg P/S | Beg Yield |
|---|---|---|---|---|
| 5 | 20.84% | 13.82 | 0.71 | 2.29% |
| 10 | 19.77% | 20.54 | 0.58 | 4.17% |
| 15 | 5.82% | 14.89 | 1.15 | 1.75% |
| 20 | 17.68% | 7.20 | 0.45 | 3.39% |
| 25 | 15.32% | 18.93 | 0.47 | |
| 27 | 14.48% | 14.80 | ||
| current | 12.25 | 1.18 | 1.65% |
Is it a good company at a reasonable price? It would see that the stock price is on the expensive side. Since it is to be bought out by the end of this year, this is not surprising. Shareholders who have bought this stock at reasonable prices have done well. It is a small cap stock and so risky. Since it is to be acquired by Riverside Company in December of this year, there may not be much point in buying this stock.
When I look at analysts’ recommendations, I find one Hold recommendations. The 12 month stock price consensus is $24.10. There is also only one 12 month stock price given. This implies a total loss of 8.09% with a capital loss of 9.74% and dividends of 1.65%. Also note that the company has promised an extra $2.00 dividend in November.
It seems that on Stock Chase 5i Research is the only one reporting on this company. They think it is a Buy. The executive summary on Simply Wall Street gives this company 4 stars out of 5 and list no risks. That means they passed all of Simply Wall Street’s risk checks. A writer on Simply Wall Street says that the company’s ROE is higher than its industry and it is growing its EPS. A writer on Simply Wall Street talks about who owns the shares of this company. An article on Newswire says that PFB will be bought out by The Riverside Company effective December 17, 2021 and a second $2 dividend will be paid to PFB shareholders in November 2021. So, it looks like I will lose another company I have been following.
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. Its web site is here PFB Corp.
The last stock I wrote about was about was 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, November10, 2021 around 5 pm. Tomorrow on my other blog I will write about What are Dividends.... learn more on Tuesday, November 9, 2021 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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