Is it a good company at a reasonable price? I like a total return of 8%, dividends and capital gains. Mostly this company has not produced this. However, there are a lot of analysts that feel that the company is going to better in the future. Growth over the past 12 months has been good in some cases. See charts below. However, I am still glad I bought Toromont rather than this stock. Results of stock price testing is that the stock price is probably reasonable.
The Growth for the last 12 months up to the end of September 2023.
| Item | Value | Growth |
|---|---|---|
| Revenue Growth | $9,452 | 15.06% |
| AEPS Growth | $3.85 | 18.46% |
| Net Income Growth | $574 | 14.12% |
| Cash Flow Growth | $347 | 34600.00% |
| Dividend Growth | $0.99 | 5.68% |
| Stock Price Growth | $35.37 | 5.08% |
The growth over the past 5 years is better than that over the past 10 years.
| Year | Item | Tot. Growth | Per Year |
|---|---|---|---|
| 5 | Revenue Growth | 31.13% | 5.57% |
| 5 | AEPS Growth | 138.97% | 19.03% |
| 5 | Net Income Growth | 127.60% | 17.88% |
| 5 | Cash Flow Growth | -99.65% | N/C |
| 5 | Dividend Growth | 25.23% | 4.60% |
| 5 | Stock Price Growth | 6.12% | 1.19% |
| 10 | Revenue Growth | 24.05% | 2.18% |
| 10 | AEPS Growth | 65.82% | 5.19% |
| 10 | Net Income Growth | 48.98% | 4.07% |
| 10 | Cash Flow Growth | -99.25% | N/C |
| 10 | Dividend Growth | 69.64% | 5.43% |
| 10 | Stock Price Growth | 37.00% | 3.20% |
I do not own this stock of Finning International Inc (TSX-FTT, OTC-FINGF). When I was in the market to buy an industrial stock in this area in 2007, I look at this stock was well as Toromont Industries (TSX-TIH). At the time I liked Toromont better, so that is what I bought.
When I was updating my spreadsheet, I noticed that I still liked Toromont better than this stock. I will do a blog entry later about this.
If you had invested in this company in December 2012, for $1,007.34 you would have bought 41 shares at $24.57 per share. In December 2022, after 10 years you would have received $315.42 in dividends. The stock would be worth $1,380.06. Your total return would have been $1,695.78. This is a total return would be a total return of 5.90% per year with 3.20% from capital gain and 2.70% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $24.57 | $1,007.37 | 41 | 10 | $315.72 | $1,380.06 | $1,695.78 |
The current dividend yield is moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 2.83%. The 5 and 10 year median dividend yield is 2.82% and 2.79%. The historical median dividend yield is low (below 2%) at 1.98%. The dividend growth is low (below 8%) at 4.6% per year over the past 5 years. The last dividend increase was in 2023 and it was for 5.9%.
The Dividend Payout Ratios (DPR) are fine except for FCF. The DPR for 2022 for Earnings per Share (EPS) is 29% with 5 year coverage at 43%. The DPR for 2022 for Adjusted Earnings per Share (AEPS) is 29% with 5 year coverage at 48%. The DPR for 2022 for Cash Flow per Share (CFPS) is 12% with 5 year coverage at 18%. The DPR for 2022 for Free Cash Flow (FCF) is negative with 5 year coverage at 71%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 28.71% | 43.08% |
| AEPS | 28.71% | 47.47% |
| CFPS | 12.24% | 17.89% |
| FCF | -82.01% | 70.98% |
Debt Ratios are probably fine but could improve. The Long Term Debt/Market Cap Ratio for 2022 is good at 0.16. The Liquidity Ratio for 2022 is a bit low at 1.41 and 1.41 currently. If you add in Cash Flow after dividends does not help much. The Debt Ratio for 2022 is fine at 1.51 and 1.49 currently. The Leverage and Debt/Equity Ratios for 2022 are fine at 2.98 and 1.97. However, the current ratios are too high at 3.07 and 2.07. I prefer them to be below 3.00 and 2.00.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.16 | 0.16 |
| Intang/GW | 0.13 | 0.11 |
| Liquidity | 1.41 | 1.41 |
| Liq. + CF | 1.36 | 1.46 |
| Debt Ratio | 1.51 | 1.49 |
| Leverage | 2.98 | 3.07 |
| D/E Ratio | 1.97 | 2.07 |
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 | 4.60% | 3.79% | 1.19% | 2.59% |
| 2012 | 10 | 5.43% | 5.90% | 3.20% | 2.70% |
| 2007 | 15 | 6.55% | 3.20% | 1.08% | 2.12% |
| 2002 | 20 | 11.81% | 7.48% | 4.96% | 2.52% |
| 1997 | 25 | 9.34% | 7.68% | 5.42% | 2.26% |
| 1992 | 30 | 11.07% | 11.25% | 8.32% | 2.93% |
| 1987 | 34 | 8.16% | 10.90% | 8.04% | 2.87% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 11.87, 14.38 and 17.82. The corresponding 10 year ratios are 12.26, 14.96 and 18.12. The corresponding historical ratios are 12.28, 15.85 and 19.58. The current P/E Ratio is 9.02 based on a stock price of $35.37 and EPS estimate for 2023 of $3.92. 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) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 12.25, 17.23 and 17.44. The corresponding 10 year ratios are 13.14, 17.09 and 19.11. The current P/AEPS Ratio is 9.12 based on a stock price of $35.37 and AEPS estimate for 2023 of $3.88. 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 $38.16. The 10-year low, median, and high median Price/Graham Price Ratios are 1.01, 1.23 and 1.45. The current P/GP Ratio is 0.93 based on a stock price of $35.37. 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 2.21. The current P/B Ratio is 2.12 based on a Book Value of $2,519M, Book Value per Share of $16.68 and a stock price of $35.37. The current ratio is 4% 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 10.86. The current P/CF Ratio is 16.84 based on Cash Flow per Share estimate for 2023 of $2.10, Cash Flow of $317M and a stock price of $35.37. The current ratio is 55% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 1.98%. The current dividend yield is 2.83% based on dividends of $1.00 and a stock price of $35.37. The current dividend yield is 41% 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 2.79%. The current dividend yield is 2.83% based on dividends of $1.00 and a stock price of $35.37. The current dividend yield is 1.4% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10-year median Price/Sales (Revenue) Ratio is 0.65. the current P/S Ratio is 0.55 based on a stock price of $35.37, Revenue estimate for 2023 of $9,659M and Revenue per Share of $63.95. The current ratio is 15% 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 10 year dividend yield test says this and it is confirmed by the P/S Ratio test. Most of the other testing is saying the stock price is cheap except for the P/CF test that says the price is expensive.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (4) and Hold (2). The consensus would be a Strong Buy. The 12 months stock price consensus is $48.67 with a high at $54.00 and a low of $40.00. The consensus price implies a total return of 40.43% with 37.60% from capital gains and 2.83% from dividends.
Analysts earlier this year on Stock Chase said the stock was a buy, but the most recent recommendation is a Partial Sell. Stock Chase gives this stock 4 stars out of 5. It is on all the dividend lists that I follow. Ambrose O'Callaghan on Motley Fool really likes this stock and give 5 things you should know about it. Christopher Liew on Motley Fool thinks this stock will do well with rising interest rates. The company put out a Press Release on their 2022 year-end result. The company put out a Press Release on their third quarter results for 2023.
Simply Wall Street on Yahoo Finance thinks that this company has been doing well. Simply Wall Street gives this stock 4 stars out of 5. They list 3 warnings of debt is not well covered by operating cash flow; dividend of 2.83% is not well covered by cash flows; and significant insider selling over the past 3 months.
Finning International Inc is a dealer and distributor of heavy-duty machinery and parts of the Caterpillar brand. The company sells and rents Caterpillar machinery to the mining, construction, petroleum, forestry, and power system application industries. The company operates in Canada, South America, UK and Ireland, and others. Its web site is here Finning International Inc.
The last stock I wrote about was about was Crescent Point Energy Corp (TSX-CPG, NYSE-CPG) ... learn more. The next stock I will write about will be Quarterhill Inc (TSX-QTRH, OTC-QTRHF) ... learn more on Monday, November 13, 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.
See my site for an index to these blog entries and for stocks followed. 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. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
No comments:
Post a Comment