Is it a good company at a reasonable price? I tend to like dividend growth companies and this company has been really inconsistent in regards to dividends. They have only had 6 years of dividend increases in the last 36 years and 9 years of decreases. However, there were no dividends for some 12 years from 1992 to 2003. But even before 1992, there were dividend decreases not increases. Those are the negatives.
A positive is that they increased dividends in 2023 by some 32%, so it would seem that management is optimistic about the future. A positive is that they have done well over the past couple of years in raising Revenue and Earnings. Results of stock price testing is that the stock price is probably reasonable.
I do not own this stock of Wajax Corp (TSX-WJX, OTC-WJXFF). TD Waterhouse put out a report on good dividend paying stocks to own in November 2011. This was a stock they named. I had not heard of it before, so I decided to investigate it.
When I was updating my spreadsheet, I noticed that the company had a good year in 2022. Revenue estimate was $1,854M and came in at $1,962.8M for 2022. Estimates are up for 2023 from $1,871M to $2,208M and for 2024 from $1,903M to $2.286M. AEPS was expected to be $2.93 and came in at $3.15. The AEPS for 2023 was moved from $2.79 to $3.78, and for 2024 was moved from $2.44 to $3.75.
When you look at 5 and 10 year growth, you can see that it is growing better lately.
| Year | Item | Tot. Growth | Per Year |
|---|---|---|---|
| 5 | Revenue Growth | 48.78% | 8.27% |
| 5 | AEPS Growth | 105.88% | 15.54% |
| 5 | Net Income Growth | 134.34% | 18.57% |
| 5 | Cash Flow Growth | 867.83% | 57.46% |
| 5 | Dividend Growth | 0.00% | 0.00% |
| 5 | Stock Price Growth | -20.02% | -4.37% |
| 10 | Revenue Growth | 33.89% | 2.96% |
| 10 | AEPS Growth | -19.04% | -2.09% |
| 10 | Net Income Growth | 9.81% | 0.94% |
| 10 | Cash Flow Growth | 276.77% | 14.18% |
| 10 | Dividend Growth | -67.00% | -10.49% |
| 10 | Stock Price Growth | -51.57% | -6.99% |
After keeping the dividend flat since 2016, the company raised it 33% in 2023. The stock price is up some 47% year to date.
If you had invested in this company in December 2012, for $1,018.50 you would have bought 25 shares at $40.74 per share. In December 2022, after 10 years you would have received $399.45 in dividends. The stock would be worth $493.25. Your total return would have been $826.58. This is a total return would be a loss of 2.60% per year with 6.99% from capital loss and 4.39% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $40.74 | $1,018.50 | 25 | 10 | $399.45 | $493.25 | $826.58 |
The current dividend yield is moderate with dividend growth restarting. The current dividend yield is moderate (2% to 4% ranges) at 4.55%. The 5 year and historical median dividend yields are moderate at 4.77% and 4.50%. The 10 year median dividend yield is good (5% to 6% ranges) at 5.05%. The 5 year dividend growth per year is at 0%. Dividends were flat from 2016 to 2022. In 2023 dividends were increased by 32%. I have 36 years of data on dividends and dividends have increase 6 of these years and have decreased 9 of those years and have been flat the rest of the time.
The Dividend Payout Ratios (DPR) are good. The DPR for Earnings per Share (EPS) the DPR for 2022 is 31% with 5 year coverage at 46%. The DPR for 2023 is expected to be 33%. The DPR for Adjusted Earnings per Share (AEPS) the DPR for 2022 is 32% with 5 year coverage at 46%. The DPR for 2023 is expected to be 33%. The DPR for Cash Flow per Share (CFPS) the DPR for 2022 is 13% with 5 year coverage at 16%. The DPR for 2023 is expected to be 24%. The DPR for Free Cash Flow (FCF) the DPR for 2022 is 36% with 5 year coverage at 32%. The DPR for 2023 is expected to be negative.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 30.67% | 45.58% |
| AEPS | 31.75% | 46.45% |
| CFPS | 13.15% | 16.49% |
| FCF | 36.21% | 32.05% |
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 022 is 0.33 with current one at 0.40. Both a good. The Liquidity Ratio for 2022 is 1.67 with current ratio at 1.85. These are good. The Debt Ratio for 2022 is 1.56 with current one at 1.49. I like these to be at 1.50 or higher, but 1.49 is fine. The Leverage and Debt/Equity Ratios for 2022 are 2.78 and 1.78 with current ones at 3.02, and 2.02. I prefer these ratios to be less than 3.00 and 2.00. However, the ones for the full year of 2022 are more important and the current ones are close to what I like.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.33 | 0.40 |
| Intang/GW | 0.40 | 0.27 |
| Liquidity | 1.67 | 1.85 |
| Liq. + CF | 1.77 | 1.77 |
| Debt Ratio | 1.56 | 1.49 |
| Leverage | 2.78 | 3.02 |
| D/E Ratio | 1.78 | 2.02 |
The Total Return per year is shown below for years of 5 to 36 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 | 0.00% | 0.05% | -4.37% | 4.42% |
| 2012 | 10 | -10.49% | -2.60% | -6.99% | 4.39% |
| 2007 | 15 | -8.64% | 4.88% | -3.18% | 8.06% |
| 2002 | 20 | 0.00% | 40.28% | 8.44% | 31.84% |
| 1997 | 25 | 0.00% | 7.50% | 0.37% | 7.13% |
| 1992 | 30 | 0.00% | 11.18% | 3.77% | 7.41% |
| 1987 | 35 | 1.67% | 7.67% | 1.96% | 5.71% |
| 1986 | 36 | 1.62% | 5.79% | 0.86% | 4.93% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 6.97, 8.58 and 11.85. The corresponding 10 year ratios are 8.08, 11.00 and 13.92. The corresponding historical ratios are 7.73, 10.50 and 13.52. The current P/E Ratio is 7.68 based on a stock price of $29.03 and EPS estimate for 2023 of $3.78. 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 also have Adjusted Earnings per Share (AEPS) Ratios. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 6.56, 8.08 and 10.95. The corresponding 10 year ratios are 9.61, 12.27 and 14.79. The current ratio is 7.68 based on a stock price of $29.03 and AEPS estimate for 2023 of $3.78. 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 $43.42. The 10-year low, median, and high median Price/Graham Price Ratios are 0.68, 0.93 and 1.15. The current P/GP Ratio is 0.67 based on a stock price of $29.03. This ratio is below the low ratios 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 1.43. The current P/B Ratio is 1.31 based on a stock price of $29.03, Book Value of $475.9M and Book Value per Share of $22.16. The current ratio is 8.5% 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 6.59, but the 12 month Cash Flow is negative, so I cannot test this. However, I do have Cash Flow excluding WC with a 10 year median P/CF Ratio of 5.07. The current CF excluding WC is 5.68 based on a Cash Flow for the last 12 months of 109.8M, Cash Flow per Share of $5.11 and a stock price of $29.03. The current ratio is 12% 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 5.05%. The current dividend yield is 4.55% based on a stock price of $29.03 and a dividend of $1.32. The current dividend yield is 10% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median dividend yield of 4.50%. The current dividend yield is 4.55% based on a stock price of $29.03 and a dividend of $1.32. The current dividend yield is 1% above the historical 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 0.29. The current ratio is 0.28 based on Revenue estimate for 2023 of $2,208M, Revenue per Share of $105.84 and a stock price of $29.03. The current ratio is 2.8% 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 showing dividend yields just above or below the median. Basically, this is because dividends were flat for a long time and just recently increase. However, flat dividends shows that a company not growing well. So, this is important. The company looks cheap from an earnings perspective, but I think that Dividend Yield tests and P/S Ratio tests are more important.
When I look at analysts’ recommendations, I find Buy (2), Hold (1). The consensus is a Buy. The 12 month stock price consensus is $33.67 with a high of $37.00 and low of $30.00. The consensus price implies a total return of 20.53% with a capital gain of 15.98 and dividends of 4.55%.
There is only one analyst on Stock Chase for 2023 and the recommendation is a Buy. It is not on any of the dividend lists I follow. Stock Chase gives this stock 4 stars out of 5. Christopher Liew on Motley Fool thinks this stock has upside potential. Adam Othman on Motley Fool thinks this stock is a bet on Canadian economy’s growth. The company put out a press release on Newswire about it results for 2022. The company put out a press release on Newswire about it results for the second quarter of 2023.
Simply Wall Street on Yahoo Finance reviews this stock. Simply Wall Street has 3 warnings of debt is not well covered by operating cash flow; high level of non-cash earnings, and dividend of 4.53% is not well covered by cash flows. Simply Wall Street gives this stock 3 and one half stars out of 5.
Wajax Corp operates an integrated distribution system, providing sales, parts, and services to a broad range of customers in diversified sectors of the Canadian economy, including: construction, forestry, mining, industrial and commercial, oil sands, transportation, metal processing, government and utilities, and oil and gas. Its web site is here Wajax Corp.
The last stock I wrote about was about was Telus Corp (TSX-T, NYSE-TU) ... learn more. The next stock I will write about will be Trican Well Service Ltd (TSX-TCW, OTC-TOLWF) ... learn more on Monday, September 18, 2023 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. I am not a licensed professional investment advisor. 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.
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