Is it a good company at a reasonable price? Stock price is reasonable to cheap. Most of the testing says it is cheap except for the P/S Ratio test. With this company, you get a decent dividend yield, currently in the 3% range. They give out the occasional special dividend. Dividends have grown but not consistently. Stock price growth is low. I have had this now for almost 17 years and I intend to hold on to what I have. So, I do think that it is a good company at a reasonable price.
I own this stock of Leon's Furniture Ltd (TSX-LNF, OTC-LEFUF). I intend to keep the stock I have. It is not a great earner, but dividends are stable. In the last 34 years, dividends have increase in 20 of those years. Sometime the company gives out special dividends.
When I was updating my spreadsheet, I noticed that I have had this stock for almost 17 years and have made a total return to date of 6.65% with 2.75% from capital gains and 3.90% from dividends. This is one of my core stocks and generally I have been making over 8% total return on this stock. However, price, as far as I can see, is currently depressed. Last year to the end of March 2022, my total return was 8.38% with 4.24% from capital gain and 4.14% from dividends.
If you had invested in this company in December 2012, for $1,000.23 you would have bought 77 shares at $12.99 per share. In December 2022, after 10 years you would have received $501.27 in dividends. The stock would be worth $1,323.63. Your total return would have been $1,824.90.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $12.99 | $1,000.23 | 77 | 10 | $501.27 | $1,323.63 | $1,824.90 |
The current dividend yield is moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 3.53%. The 5, 10 and historical median dividend yields are also moderate at 3.19%, 2.85%, 2.26%. The dividends are currently increasing at a low rate (below 8%) at 6.8% per year over the past 5 years. The last dividend increase was for 14.29% and it occurred in 2021. This company does not raise its dividend each year. For example, there were no increases in 2020 or 2022. Occasionally, the company gives out a special dividend as they did in 2021.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2022 is 24% with 5 year coverage at 45%. The DPR for Adjusted Earnings per Share (AEPS) for 2022 is 25% with 5 year coverage a5 32%. The DPR for Cash Flow per Share (CFPS) is 15% with 5 year coverage at 29%. The DPR for Free Cash Flow (FCF) for 2022 is negative and so not calculable. The FCF is negative in 2022. The 5 year coverage at 31%.
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio is good and low at 0.19. The Liquidity Ratio is fine at 1.40, but I prefer this to be at 1.50 or higher. The Debt Ratio is good and high at 1.73. The Leverage Debt/Equity Ratios are fine at 2.36 and 1.36.
The Total Return per year is shown below for years of 5 to 34 to the end of 2022. 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. |
|---|---|---|---|---|---|
| 2017 | 5 | 6.83% | 3.64% | -1.40% | 5.04% |
| 2012 | 10 | 4.81% | 6.96% | 2.84% | 4.12% |
| 2007 | 15 | 5.87% | 5.56% | 1.93% | 3.63% |
| 2002 | 20 | 8.73% | 7.88% | 4.11% | 3.77% |
| 1997 | 25 | 10.31% | 8.45% | 4.72% | 3.73% |
| 1992 | 30 | 9.92% | 10.40% | 6.38% | 4.02% |
| 1988 | 34 | 8.70% | 11.74% | 7.48% | 4.26% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 7.67, 8.85 and 10.04. The corresponding 10 year ratios are 11.69, 13.62 and 15.15. The corresponding historical ratios are 12.15, 14.56 and 16.28. The current P/E Ratio for 2023 is 7.17 based on a current stock price of $18.14 and EPS estimate for 2023 of $2.53. 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 also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 7.73, 8.92 and 10.12. The corresponding 10 year ratios are 11.82, 13.67 and 15.12. The current P/AEPS Ratio is 7.17 based on a stock price of $18.14 and AEPS estimate for 2023 of $2.53. The current ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $27.91. The 10-year low, median, and high median Price/Graham Price Ratios are 0.86, 1.00 and 1.11. The current P/GP Ratio is 0.65 based on a stock price of $18.14. The current ratio is below the low ratio 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 1.74. The current P/B Ratio is 1.33 based on a Book Value of $929M, Book Value per Share of $13.69 and a stock price of $18.14. The current ratio is 24% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a 10-year median Price/Cash Flow per Share Ratio of 7.29. The current P/CF Ratio is 2.59 based on Cash Flow per Share estimate for 2023 of $7.00, Cash Flow of $475M and a stock of $18.14. The current P/CF Ratio is 64% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 2.26%. The current dividend yield is 3.53% based on dividends of $0.64 and a stock price of $18.14. The current dividend yield is 56% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 2.85%. The current dividend yield is 3.53% based on dividends of $0.64 and a stock price of $18.14. The current dividend yield is 24% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10-year median Price/Sales (Revenue) Ratio is 0.56. The current P/S Ratio is 0.49 based on Revenue estimate for 2023 of $5,525M, Revenue per Share of $37.21 and a stock price of $18.14. The current P/S Ratio is 13% 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 reasonable and probably cheap. The dividend yield tests are showing the stock price as relatively cheap. The P/S Ratio test is showing the stock price as reasonable and below the median. All the other tests are showing the stock price as cheap.
When I look at analysts’ recommendations, I find one Hold (1) recommendation. The consensus would be a Hold. The 12 months stock price consensus is $22.00. This implies a total return of 24.81% with 21.28% from capital gains and 3.53% from dividends. There appears to be only one analyst reporting on this stock.
When I look at analysts’ recommendations last year, I found a Hold (1) recommendation. The consensus was a Hold. The 12 month stock price consensus was $28.00. That implies a total return of 36.06% with 33.02% from capital gains and 3.04% from dividends based on a stock price of $21.05. Then I felt that this made no sense to have a capital gain of 36% and a recommendation of Hold. However, a number of sites are saying the same thing. What happened was a decline in the stock price to $18.14 meaning a loss of 10.78% with a capital loss of 13.82% and dividends of 3.04% based on a starting price of $21.05
There are two entries on Stock Chase for 2023, one a hold and one a Buy. The Hold recommendation comment thinks there is an issue with long term growth. Ambrose O'Callaghan on Motley Fool reviews this stock and thinks it is a screaming buy. Joey Frenette on Motley Fool thinks this consumer stock will recover as consumer spending recovers. The company put out a press release on Newsfile for their 2022 results.
Simply Wall Street via Yahoo Finance reviews this stock. Maybe it is because the dividend is paid in CDN$ they think that the company has decrease the dividends in the past 10 years. I have 34 years of data and no dividend decrease. Simply Wall Street has two warnings of high level of non-cash earnings; and dividend of 3.61% is not well covered. Simply Wall Street gives this stock 3 stars out of 5.
Leon's Furniture Ltd is a Canada-based retailer which is involved in the sale of home furnishing, mattresses, appliances, and electronics. The firm is also the country's commercial retailer of appliances to builders, developers, hotels, and property management companies. It generates maximum revenue from sales of goods by corporate stores. Its web site is here Leon's Furniture Ltd.
The last stock I wrote about was about was Supremex Inc (TSX-SXP, OTC-SUMXF) ... learn more. The next stock I will write about will be Barrick Gold Corp (TSX-ABX, NYSE-GOLD) ... learn more on Friday, April 21, 2023 around 5 pm. Tomorrow on my other blog I will write about Line of Credit.... learn more on Thursday, April 20, 2023 around 5 pm.
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