Is it a good company at a reasonable price? The stock price is currently reasonable. Analysts are right about the dividend yield being good. Personally, I think dividend growth companies that have much lower yields. This company has raised it dividends only 11 times in the past 31 years. It has decreased by 4 times over this period. Also, analysts were off by a lot with their estimates for Revenue and EPS for 2021. They estimated Revenue of $3,110M and EPS of $1.77. Revenue was $4,209M and EPS was $6.89. Earnings seems to be high because of higher Revenue and lower relative cost to Revenue of Cost of Materials.
I own this stock of Russel Metals Inc (TSX-RUS, OTC-RUSMF). 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. However, I should keep a watch on this stock as it has had some troubles in the past.
When I was updating my spreadsheet, I noticed that I have had a poor return from this stock. My total return per year over the almost 14 year I have held the stock is 6.56% with 1.70% from capital gains and 4.86% from dividends.
The dividend yields are moderate with dividend growth is currently non-existent. The current dividend yield is moderate (2% to 4% ranges) at 4.81%. The 5, 10 and historical dividend yields are good (5% and 6% ranges) at 5.87%, 5.75% and 5.10%. The dividends have gone up in the past, but they have been 2015 and analysts do not expect to see any raise of dividends in the near future.
I seemed to have invested in this stock at the wrong time. The worse total return for this stock when looked at every five years is year 15 with a total return of 6.44%.
If you had invested in this company in December 2011, $1008.90 you would have bought 45 shares at $22.42 per share. In December 2021, after 10 years you would have received $668.25 in dividends. The stock would be worth $1,513.35. Your total return would have been $2,181.60.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $22.42 | $1,008.90 | 45 | 10 | $668.25 | $1,513.35 | $2,181.60 |
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2021 is 22% with 5 year coverage at 54%. The DPR for EPS is expected to be 48% in 2022. The CPR for Cash Flow per Share for 2021 is 15% with 5 year coverage at 29%. The DPR for 2021 for Free Cash Flow is 34% with 5 year coverage at 61%. The DPR for FCF for 2022 is expected to be 39%.
Debt Ratios are good. The Long Term Debt /Market Cap Ratio for 2021 is low and good at 0.14. The Liquidity Ratio for 2021 is high and good at 2.69. The Debt Ratio is high and good at 2.17. The Leverage and Debt/Equity Ratios are low and good at 1.85 and 0.85.
The Total Return per year is shown below for years of 5 to 31 to the end of 2021. 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. |
|---|---|---|---|---|---|
| 2016 | 5 | 0.00% | 11.00% | 5.62% | 5.37% |
| 2011 | 10 | 2.83% | 9.74% | 4.14% | 5.60% |
| 2006 | 15 | -0.34% | 6.44% | 1.55% | 4.89% |
| 2001 | 20 | 5.87% | 26.18% | 11.82% | 14.36% |
| 1996 | 25 | 9.04% | 17.39% | 9.80% | 7.59% |
| 1991 | 30 | 6.99% | 8.83% | 5.19% | 3.65% |
| 1990 | 31 | 4.85% | 9.41% | 5.62% | 3.79% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 12.00, 13.35 and 14.71. The corresponding 10 year ratios are 13.39, 15.90 and 18.41. The corresponding historical ratios are 11.92, 9.93 and 14.71. The current P/E Ratio is 9.91 based on a stock price of $31.60 and EPS estimate for 2022 of $3.19. The current ratio is below the low of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $37.68. 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 0.84 based on a stock price of $31.60. The current ratio is below the low of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median Price/Book Value per Share Ratio of 1.73. The current P/B Ratio is 1.60 based on a Book Value of $1,248M, Book Value per Share of $19.78 and a stock price of $31.60. The current ratio is 8% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
Analysts are putting out an estimate for the Book Value per Share for 2022. This Book Value per Share estimate for 2022 is $21.70, Book Value is $1,369M and with a stock price of $31.60, the P/B Ratio would be 1.46. This 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 a 10 year median Price/Cash Flow per Share Ratio of 6.89. The current P/CF Ratio is 9.38 based on Cash Flow per Share estimate for 2022 of $3.37, Cash Flow of $213M and a stock price of $31.60. The current ratio is 36% 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 5.10%. The current dividend yield is 4.81% based on a stock price of $31.60 and dividends of $1.52. The current ratio is 6% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10 year median dividend yield of 5.75%. The current dividend yield is 4.81% based on a stock price of $31.60 and dividends of $1.52. The current ratio is 16% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
The 10 year median Price/Sales (Revenue) Ratio is 0.52. The current P/S Ratio is 0.49 based on Revenue estimate for 2022 of $4,043M, Revenue per Share of $64.07 and a stock price of $31.60. The current ratio is 4% 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. The dividend yield tests are pointing to a reasonable price, but above the median. The P/S Ratio test is point to a reasonable price and below the median. Except for the P/CF Ratio test, the other tests are showing a reasonable or cheap price. The problem with the dividend yield tests are the flat dividends. This test works before for dividend growth stock.
When I look at analysts’ recommendations, I find Buy (4), and Hold (3). The consensus would be a Buy. The 12 month stock price consensus is $39.54. This implies a total return of 29.94% with 25.13% from capital gains and 4.81% from dividends based on a current stock price of $31.60.
When I looked at analysts’ recommendations last year, I found Buy (5) and Hold (2) recommendations. The consensus was Buy. The 12 month stock price consensus was $26.86. This implied a total return of 14.53% with 8.39% from capital gains and 6.13% from dividends based on a stock price of $24.78. What happened was a movement in stock price from $24.78 to $31.60. This was a total return of 33.65% with 27.52% from capital gains and 6.13% from dividends.
Last year I said that based on the results of stock price testing is that the stock price is probably reasonable.
Analysts on Stock Chase like this company but note that it is a cyclical business. Christopher Liew on Motley Fool likes the high dividend yield. Andrew Walker on Motley Fool thinks this stock is cheap with a good dividend. The company has published a news release in PDF format about their fourth quarterly results. A Simply Wall Street Report on Yahoo Finance talks about the risk of a declining EPS over the short term.
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 Wednesday, March 2, 2022 around 5 pm. Tomorrow on my other blog I will write about Tyler Cowen Interview.... learn more on Tuesday, March 1, 2022 around 5 pm.
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