Is it a good company at a reasonable price? The stock price is cheap. However, just because the stock price is cheap, does not make this a good buy. Because they are a family owned business, the management is motivated to make money. However, that does not mean that they will. Covid has caused them problems. A number of businesses have suffered from problems due to Covid. They have not all survived. I suggest that a buy of this company is risky.
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. Dividends were start later, in 2007.
When I was updating my spreadsheet, I noticed this company is publishing data for Adjusted Net Income and Adjusted EPS. I have updated my spreadsheet accordingly. This company has a lot of income for the first quarter, but that is because they sold a business. Because of this, they are also giving a Special Dividend of $12.00.
If you had invested in this company in December 2010, $1022.00 you would have bought 44 shares at $25.55 per share. In December 2021, after 10 years you would have received $422.55 in dividends. The stock would be worth $819.60. Your total return would have been $1,242.15.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $25.55 | $1,022.00 | 40 | 10 | $422.55 | $819.60 | $1,242.15 |
This company suspended dividends in 2019. Because of a sale of assets, but company is giving a special dividend payment of $12.00 per share in 2022.
The Dividend Payout Ratios (DPR) are not currently applicable because dividends were suspended in 2019. However, the DPR for EPS got very high in from 2017 due to earnings losses. This company has had earnings losses in 6 years over the last 10 years. Companies should not pay dividends when they have earnings losses.
The Long Term Debt is too high. The Long Term Debt/Market Cap Ratio for 2022 is 0.82. This is rather high and it is due to an 245% increase in the Long Term Debt. The current ratio is 1.22 and this is due to a drop in the stock price. In the first quarter of 2022, the debt was cut by 53%. If this ratio is over 1.00, it means that the Long Term Debt is higher than the Market Cap of the stock. This is not a good situation.
The Liquidity Ratio is good at 1.83. The Debt Ratio is low at 1.34 and I like to see this at 1.50 or higher. The present Debt Ratio is higher at 1.51. The Leverage and Debt/Equity Ratios for 2022 are too high at 3.95 and 2.95. I prefer them to be below 3.00 and below 2.00. They are better currently at 2.96 and 1.96 and this is due to decrease in debt.
The Total Return per year is shown below for years of 5 to 19 to the end of 2021 in CDN$. 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. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2016 | 5 | 0.00% | -9.80% | -11.99% | 2.19% |
| 2011 | 10 | 0.00% | 2.46% | -2.18% | 4.64% |
| 2006 | 15 | 0.00% | 0.58% | -2.83% | 3.42% |
| 2001 | 20 | 0.00% | 0.33% | -2.20% | 2.53% |
| 1996 | 25 | 0.00% | 6.00% | 3.12% | 2.88% |
| 1992 | 29 | 0.00% | 7.33% | 4.64% | 2.69% |
The Total Return per year is shown below for years of 5 to 19 to the end of 2021 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. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2016 | 5 | 0.00% | -8.75% | -10.96% | 2.22% |
| 2011 | 10 | 0.00% | -0.12% | -4.25% | 4.12% |
| 2006 | 15 | 0.00% | 0.11% | -3.36% | 3.47% |
| 2001 | 20 | 0.00% | 1.87% | -1.06% | 2.93% |
| 1996 | 25 | 0.00% | 6.58% | 3.43% | 3.15% |
| 1991 | 30 | 0.00% | 8.89% | 5.76% | 3.13% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are negative and so useless. The corresponding 10 year ratios are also negative and useless. The corresponding historical ratios are 8.45, 11.25, and 13.62. The current P/E Ratio is 3.42 based on a stock price of $6.43 and EPS for 2022 of $1.88 (1.44 US$). This current P/E Ratio is very low and lower than the low of the historical median ratios. This stock price testing suggests that the stock price is relatively cheap. This testing is in CDN$.
I have Adjusted Earnings per Share (AEPS) data. The 5 year low, median, and high median P/AEPS are 8.53, 13.18 and 15.16. The corresponding 10 year ratios are 9.97, 13.52 and 15.93. The current P/AEPS Ratios are negative. However, the P/AEPS Ratio for 2023 is positive and 4.93 based on a stock price of $6.43 and AEPS estimate for 2023 of $1.30 ($1.00 US$). This ratio is below the low of the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in CDN$.
I get a Graham Price of $25.34. The 10 year low, median, and high median Price/Graham Price Ratios are 0.75, 0.94 and 1.08. The current P/GP Ratio is 0.25 based on a stock price of $6.43. The current P/GP Ratio is below the low the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in CDN$.
I get a 10 year median Price/Book Value per Share Ratio of 0.80. The current P/B Ratio is 0.42 based on a Book Value of 379M, Book Value per Share of $11.66 and a stock price of $6.43. The current ratio is 47% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in CDN$.
I get a 10 year median Price/Cash Flow per Share Ratio of 8.86. The current P/CF Ratio is 2.18 based on a stock price of $4.94, Cash Flow per Share estimate of $2.27 and Cash Flow of $73.7. The current ratio is 75% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$, but you will get a similar result in CDN$.
The dividend has been suspended, so I can do not dividend yield testing on this stock.
The 10 year median Price/Sales (Revenue) Ratio is 0.32. The current P/S Ratio is 0.09 based on Revenue estimate for 2022 of $1,800M, Revenue per Share of $55.42 and a stock price of $4.94. The current ratio is 72% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$, but you will get a similar result in CDN$.
Results of stock price testing is that the stock price is relatively cheap. This is the result from the P/S Ratio test. All the other tests confirm this.
Last year, I said that the results of stock price testing were that the stock price was 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.
When I look at analysts’ recommendations, I find Buy (1) and Hold (1). The consensus would be a Buy. The 12 month stock price consensus is $14.19 ($10.88 US$). This implies a total return of 121% with all the return from capital gains.
When I look at analysts’ recommendations last year, I found Hold (2) recommendations. The consensus would be a Hold. The 12 month target price is $16.37 ($13.00 US$). This implies a total return of 4.07% all capital gains based on a stock price of $12.44. What happened was a stock price decline to $6.43 and a capital loss of 48%. However, the stock price did climb to 27.95 in January 2022, before it fell. However, the stock price did climb to 27.95 in January 2022, before it fell. See the report here.
There are only old recommendations of Sell for this stock on Stock Chase. Stock Chase gives this stock 1 star out of 5. Amy Legate-Wolfe on Motley Fool says this stock fell in February 2022 because of an increase in net losses with no end in sight. Amy Legate-Wolfe on Motley Fool says this stock rose in January 2022 because of the sale, finally of their Bicycle segment. The stock rose strongly in October 2021 because they announced the sale of their bicycle segment. On a News Release this company reported on their fourth quarterly results. On Newswire this company reported on their first quarter of 2022 results. A Canadian Press report on Yahoo Finance talks about a plunge in this stock after another quarterly loss.
Dorel Industries Inc is a Canadian company that sells juvenile products and furniture. Its segments include Dorel Home and Dorel Juvenile. Its geographical segments include Canada, the United States, Europe, Latin America, Asia, and other countries. 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 Friday, July 22, 2022 around 5 pm. Tomorrow on my other blog I will write about How Distribution Can Exceed Earnings.... learn more on Thursday, July 21, 2022 around 5 pm.
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