Is it a good company at a reasonable price? The stock price seems expensive. However, I have no intentions of getting rid of any of my shares. Stocks can go from underpriced to overpriced and unless the price gets stupid, I do not sell.
I own this stock of Toromont Industries Ltd (TSX-TIH, OTC-TMTNF). This is one of the stocks I bought after selling Loblaws in 2008. This was a stock on Mike Higgs' Canadian Dividend Growth Stock list. I bought more in 2008 after selling Onex and AGF Management.
When I was updating my spreadsheet, I noticed I have done well with this stock, which I have in my Trading, RSP and LIF accounts. My total return is 14.4% per year over the 14 years I have had this stock. It is also I am moving from my RSP and LIF accounts into my trading account. Also, I note that for the stock I bought 15 years ago, I am earning 8.91% on my original investment.
Analysts expected the Revenue to drop 2.3%, but instead it went up 8.1%. They also expected the EPS to drop 5.5%, but EPS also went up 14.5%. It would appear that the company did better than expected.
If you had invested in this company in December 2010, $1,002.04 you would have bought 47 shares at $21.32 per share. In December 2021, after 10 years you would have received $319.60 in dividends. The stock would be worth $4,587.67. Your total return would have been $4,969.31.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $21.32 | $1,002.04 | 47 | 10 | $319.60 | $4,587.67 | $4,969.31 |
The dividend yields are low with dividend growth moderate. The current dividend yield is low (under 2%) at 1.29%. The 5, 10 and historical median dividend yields are also low at 1.50%, 1.83% and 1.76%. The dividends have been increased by 13.2% per year for the past 5 years. The last dividend increase was for 11.4% and it was done in 2022.
The Dividend Payout Ratios (DPR) are good. The DPR for EPS for 2021 is 33% with 5 year coverage at 33% also. The DPR for Cash Flow per Share (CFPS) for 2021 is 23% with 5 year coverage at 22%. The DPR for Free Cash Flow (FCF) is 21% with 5 year coverage at 26%.
Debt Ratios are all good. The Long Term Debt/Market Cap Ratio for 2021 is 0.07 and is low and good. The Liquidity Ratio for 2021 is 2.59. The Debt Ratio for 2021 is 2.20. The Leverage and Debt/Equity Ratios for 2021 are 1.83 and 0.83.
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 | 13.20% | 23.60% | 21.98% | 1.62% |
| 2011 | 10 | 12.51% | 20.01% | 18.29% | 1.72% |
| 2006 | 15 | 11.88% | 16.06% | 14.50% | 1.56% |
| 2001 | 20 | 13.54% | 17.39% | 15.62% | 1.76% |
| 1996 | 25 | 14.08% | 15.79% | 14.24% | 1.54% |
| 1991 | 30 | 15.31% | 23.85% | 20.03% | 3.82% |
| 1990 | 31 | 14.78% | 23.49% | 19.80% | 3.69% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 17.64, 22.65 and 26.52. The corresponding 10 year ratios are 14.86, 17.94 and 21.06. The corresponding historical ratios are 13.07, 15.25 and 18.76. The current P/E Ratio is 26.34 based on a stock price of $120.62 and EPS estimate for 2022 of $4.58. This ratio is above the high of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $49.41. The 10 year low, median, and high median Price/Graham Price Ratios are 1.37, 1.61 and 1.91. The current P/GP Ratio is 2.44 based on a stock price of $120.62. The current ratio is above the high of the 10 year median ratios. 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 3.43. The current P/B Ratio is 5.09 based on a current Book Value of $1,953M, Book Value per Share of $23.69 and a stock price of $120.62. The current ratio is 49% 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 15.30. The current P/CF Ratio is 17.69 based on a stock price of $120.62, Cash Flow per Share estimate for 2022 of $6.82 and Cash Flow of $562M. The current ratio is 16% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get an historical median dividend yield of 1.76%. The current dividend yield is 1.29% based on dividends of $1.56 and a stock price of $120.62. The current yield is 27% 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 1.83%. The current dividend yield is 1.29% based on dividends of $1.56 and a stock price of $120.62. The current yield is 29% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10 year median Price/Sales (Revenue) Ratio is 1.38. The current P/S Ratio is 2.37 based on Revenue estimate for 2022 of $4,203M, Revenue per Share of $50.98 and a stock price of $120.62. The current P/S Ratio is 71% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
Results of stock price testing is that the stock price is probably expensive. This year both the dividend yield tests point to this as does the P/S Ratio test. Most of the other tests say the same thing except for the P/CF Ratio test which says the stock price is reasonable but above the median.
Last year the results of stock price testing were that the stock price was probably expensive. Both the dividend yield tests point to this as does the P/S Ratio test. Most of the other tests say the same thing.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (5) and Hold (2). The consensus is a Buy. The 12 months stock price consensus is $124.22. This implies a total return of 4.28% with 2.98% from capital gains and 1.29% from dividends.
When I looked at analysts’ recommendations last year, I found Strong Buy (2), Buy (4) and Hold (3) recommendations. The consensus recommendation was Buy. The 12 month stock price consensus is $101.22. This implies a total return of 4.97% with 3.70% from capital gains and 1.27% from dividends based on a stock price $97.61. What happened was a move to $120.62 which implies a total return of 24.84% with 23.57% from capital gains and 1.27% from dividends. The stock moved a lot higher than expected.
The 2022 recommendations on Stock Chase is a Top Pick and a Buy. Stock Chase gives this stock 5 stars out of 5. Adam Othman on Motley Fool likes this stock for its consistency. Ambrose O'Callaghan on Motley Fool talks about its good fourth quarter results. The company on a News Release talks about its fourth quarter results. There is a Simply Wall Street Report on Yahoo Finance talking about this company’s dividend. It is low but the payout ratios are low, so the company is reinvesting its earnings in the company.
Simply Wall Street gives a risk warning of significant insider selling over the past 3 months. However, the CEO, and a couple of officers increase their holdings slightly over the past year. The CFO and Chairman shares have not changed. There is showing of insider selling as officers are not taking up options. I think that what the CEO, CFO and Chairman is doing is the most important.
Toromont Industries Ltd is a Canadian industrial company. The company operates two business segments: Equipment Group and CIMCO. The company operates primarily in Canada and derives a smaller portion of sales from the United States of America. Its web site is here Toromont Industries Ltd.
The last stock I wrote about was about was Alaris Equity Partners Income Trust (TSX-AD, OTC-ALARF) ... learn more. The next stock I will write about will be Supremex Inc (TSX-SXP, OTC-SUMXF) ... learn more on Friday, April 15, 2022 around 5 pm. Tomorrow on my other blog I will write about Flexibility is an Advantage.... learn more on Thursday, April 14, 2022 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.
No comments:
Post a Comment