Is it a good company at a reasonable price? This company certainly has its problems. It has too high of a debt. When companies suspend dividends, it shows the company management has a negative view, especially of the near future. The stock price is quite cheap, for the testing I can do. However, it would be a risky buy.
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.
When I was updating my spreadsheet, I noticed that there is insider buying but only by one officer. He is of the Segel family and the Segel and Schwartz family are insiders who own this business.
This company is not growing. The only reason Net Income grew is because of an asset sale. That is why companies use Adjusted Earnings per Share (AEPS). That is to exclude large unusual items from Earnings per Share (EPS). Analysts had expected positive earnings in 2023, but now they expect positive earnings in 2024. The company paid a special dividend of $12.00 US$ per share in 2022 because of an asset sale.
| Year | Item | Tot. Growth | Per Year |
|---|---|---|---|
| 5 | Revenue Growth US$ | -39.08% | -9.44% |
| 5 | AEPS Growth | -266.34% | N/C |
| 5 | Net Income Growth | 395.47% | 37.72% |
| 5 | Cash Flow Growth | -331.75% | N/C |
| 5 | Dividend Growth | -100.00% | N/C |
| 5 | Stock Price Growth | -84.48% | -31.10% |
| 10 | Revenue Growth US$ | -39.08% | -4.84% |
| 10 | AEPS Growth | -266.34% | N/C |
| 10 | Net Income Growth | 395.47% | 17.36% |
| 10 | Cash Flow Growth | -331.75% | N/C |
| 10 | Dividend Growth | -100.00% | N/C |
| 10 | Stock Price Growth | -84.48% | -17.00% |
If you had invested in this company in December 2012, for $1,006.60 you would have bought 28 shares at $35.95 per share. In December 2022, after 10 years you would have received $725.79 in dividends. The stock would be worth $145.60. Your total return would have been $871.39. This is a total return would be loss of 1.75% per year with a capital loss of 17.58% and dividends of 15.83%. The reason for the high dividend amount is a special dividend in 2022 distributing from the sale of an asset.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $35.95 | $1,006.60 | 28 | 10 | $725.79 | $145.60 | $871.39 |
The dividend has been suspended, so I cannot calculate a dividend yield nor Dividend Payout Ratios.
Most Debt Ratios are not good, but the good Liquidity Ratio is a bright spot. The Long Term Debt/Market Cap Ratio for 2022 is 2.03. When this is over 1.00, it means that the Long Term Debt is greater than the Market Cap of the stock. The reason for this is that the stock price has fallen a lot because the company is not doing well. The Intangible and Goodwill/Market Cap Ratio is also high at 0.91 for the same reason.
The Liquidity Ratio for 2022 is good at 1.82. The Debt Ratio for 2022 is acceptable at 1.34. The Leverage and Debt/Equity Ratios for 2022 are too high at 3.77 and 2.77. I prefer these to be below 3.00 and 2.00, respectively.
| Type | Ratio '22 | Ratio Curr |
|---|---|---|
| Lg Term R | 2.03 | 1.97 |
| Intang/GW | 0.91 | 0.95 |
| Liquidity | 1.82 | 1.68 |
| Liq. + CF | 1.46 | 1.78 |
| Debt Ratio | 1.36 | 1.34 |
| Leverage | 3.77 | 3.96 |
| D/E Ratio | 2.77 | 2.96 |
The Total Return per year is shown below for years of 5 to 30 to the end of 2022 in CDN$. 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% | -5.85% | -30.20% | 24.36% |
| 2011 | 10 | 0.00% | -1.75% | -17.58% | 15.83% |
| 2006 | 15 | 0.00% | 1.13% | -11.02% | 12.15% |
| 2001 | 20 | 0.00% | -0.07% | -9.13% | 9.05% |
| 1996 | 25 | 0.00% | 3.23% | -4.74% | 7.96% |
| 1991 | 30 | 0.00% | 7.28% | -0.19% | 7.47% |
The Total Return per year is shown below for years of 5 to 30 to the end of 2022 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% | -6.97% | -31.10% | 24.14% |
| 2011 | 10 | 0.00% | -4.98% | -20.05% | 15.07% |
| 2006 | 15 | 0.00% | -1.12% | -12.94% | 11.81% |
| 2001 | 20 | 0.00% | 0.94% | -8.64% | 9.58% |
| 1996 | 25 | 0.00% | 3.80% | -4.58% | 8.38% |
| 1991 | 30 | 0.00% | 8.68% | 0.58% | 8.10% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are negative and useless. The corresponding 10 year ratios are negative and useless. The corresponding historical ratios are 8.28, 11.21 and 12.87. The current P/E Ratio is negative, so I cannot do any P/E Ratio testing.
I have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are negative and useless. The corresponding 10 year ratios are 9.72, 12.92 and 15.81. However, the current P/AEPS Ratio is negative, so I cannot do any P/AEPS testing.
I get a Graham Price of $13.92. The 10-year low, median, and high median Price/Graham Price Ratios are 0.55, 0.69 and 0.97. The current P/GP Ratio is 0.37 based on a stock price of $5.13. This ratio is below the 10 year median low ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in CDN$.
I get a 10-year median Price/Book Value per Share Ratio of 0.85. The current P/B Ratio is 0.50 based on a Book Value of $251M, Book Value per Share of $7.74 and a stock price of $3.90. The current ratio is 40% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$, but you will get a similar result in CDN$.
I get a 10-year median Price/Cash Flow per Share Ratio of 6.65. The current P/CF Ratio is 3.58 based on a stock price of $3.90, Cash Flow per Share of $1.09 and Cash Flow of $35.4M. The current ratio is 45% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$, but you will get a similar result in CDN$.
I cannot do any dividend yield testing because the dividend has been suspended. A suspended dividend is a negative.
The 10-year median Price/Sales (Revenue) Ratio is 0.29. The current P/S Ratio is 0.08 based on Revenue estimate for 2023 of $1,520M, Revenue per Share of $46.80 and a stock price of $3.90. The current ratio is 71% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$, but you will get a similar result in CDN$.
Results of stock price testing is that the stock price is probably cheap. What testing I can do points to a cheap test. It is always a problem when you cannot do some the stock price testing.
When I look at analysts’ recommendations, I find Buy (1) and Hold (1). The consensus would be a Buy. The 12 month consensus stock price of $7.82 ($5.93 US). This implies a total return of 52.39% with all from a capital gain.
The last entry on Stock Chase is in 2019 and it was a sell. Stock Chase gives this stock 1 star out of 5. Amy Legate-Wolfe on Motley Fool thinks this stock is undervalued. Amy Legate-Wolfe on Motley Fool in 2022 talks about why the stock price on this stock is falling. The company put out a press release on Global Newswire about their 2022 year end results. The company put out a press release on Global Newswire about their first quarter of 2023.
Simply Wall Street via Yahoo Finance talk about who owns this company. Simply Wall Street gives this stock 2 and one half stars out of 5. They do not list any risks.
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 Wednesday, July 19, 2023 around 5 pm. Tomorrow on my other blog I will write about Transportation Stocks.... learn more on Tuesday, July 18, 2023 around 5 pm.
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