Is it a good company at a reasonable price? I have always thought of this company as a fine dividend growth company. I do not have it, but I cannot buy everything. I already have enough different stocks. Dividends may have a low yield, but they are growing nicely. A good dividend growth stock to have pre-retirement so you have low dividends and pay less taxes. This stock is at a reasonable price.
I do not own this stock of Stella-Jones Inc (TSX-SJ, OTC-STLJF). I started a spreadsheet on this stock in mid-2009 because of a favorable report I read on this stock. It was considered to be a dividend growth stock and I am always on the lookout for dividend growth stocks.
When I was updating my spreadsheet, I noticed the company had a good year in 2022 with Revenue up 11% and Earnings up 12.6%. This year was good also, with Revenue up for the past 12 months by 7.5% and Revenue is expected to be up by 9.8% by the end of the year. EPS for the last 12 months is up by 33.8% and is expected to be up by 42% by the end of the year. Year to date the stock price is up by 70%.
Even though this stock has a low dividend, it has grown greatly over time for shareholders. If you look at the past, dividends a lot over the years. For example, if a shareholder had this stock for 15 years, the dividend yield on the original stock price would be 13.63% and dividend increase would be 1123.49%.
| Div Yd | Years | Div Inc |
|---|---|---|
| 2.05% | 5 | 84.41% |
| 3.90% | 10 | 249.65% |
| 13.63% | 15 | 1123.49% |
| 117.76% | 20 | 10468.96% |
| 165.39% | 25 | 14744.04% |
Look at this second table below. If dividends continue to grow at the current 5 year rate of 12.70%, then in 15 years, the dividend yield on the current price would be 6.70% and the dividend would have grown by 501.05%.
| Div Yd | Years | At IRR | Div Inc |
|---|---|---|---|
| 2.03% | 5 | 12.70% | 81.82% |
| 3.68% | 10 | 12.70% | 230.58% |
| 6.70% | 15 | 12.70% | 501.05% |
| 12.18% | 20 | 12.70% | 992.82% |
| 22.14% | 25 | 12.70% | 1886.95% |
If you had invested in this company in December 2012, for $1,015.48 you would have bought 53 shares at $19.16 per share. In December 2022, after 10 years you would have received $254.40 in dividends. The stock would be worth $2,571.56. Your total return would have been $2,825.96. This is a total return would be a total return of 11.27% per year with 9.74% from capital gain and 1.53% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $19.16 | $1,015.48 | 53 | 10 | $254.40 | $2,571.56 | $2,825.96 |
The current dividend yield is low with dividend growth moderate. The current dividend yield is low (below 2%) at 1.16%. The 5, 10 and historical dividend yields are also low at 1.56%, 1.03% and 1.28%. The dividends have grown at a moderate rate (between 8 and 14%) at 12.7% per year over the past 5 years. The last dividend increase was good (15% and higher) at 15%.
The Dividend Payout Ratios (DPR) are good. The DPR for 2022 for Earnings per Share (EPS) is 20% with 5 year coverage at 21%. The DPR for 2022 for Cash Flow per Share (CFPS) is 10% with 5 year coverage at 10%. The DPR for 2022 for Free Cash Flow (FCF) is 33% with 5 year coverage at 38%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 20.36% | 21.22% |
| CFPS | 10.35% | 10.42% |
| FCF | 33.33% | 37.71% |
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2022 is good at 0.33 and also currently at 0.23. The Liquidity Ratio for 2022 is good at 6.11 and 8.18 currently. The Debt Ratio for 2022 is fine at 1.51 and 1.49 currently. The Leverage and Debt/Equity Ratios for 2022 are good at 2.03 and 1.90. However, the current ratios are good at 1.97 and 0.97 and fine at 2.11 and 1.11 currently
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.33 | 0.23 |
| Intang/GW | 0.19 | 0.12 |
| Liquidity | 6.11 | 8.18 |
| Liq. + CF | 6.91 | 8.76 |
| Debt Ratio | 2.03 | 1.90 |
| Leverage | 1.97 | 2.11 |
| D/E Ratio | 0.97 | 1.11 |
The Total Return per year is shown below for years of 5 to 28 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 | 12.70% | 0.47% | -0.80% | 1.27% |
| 2012 | 10 | 17.84% | 11.27% | 9.74% | 1.53% |
| 2007 | 15 | 18.85% | 12.27% | 10.92% | 1.35% |
| 2002 | 20 | 21.06% | 26.83% | 23.72% | 3.11% |
| 1997 | 25 | 19.96% | 21.98% | 20.08% | 1.90% |
| 1994 | 28 | 15.83% | 14.77% | 1.06% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 11.10, 1321 and 15.32. The corresponding 10 year ratios are 15.54, 18.17 and 21.44. The corresponding historical ratios are 9.05, 12.00 and 14.99. The current P/E Ratio is 14.25 based on a stock price of $79.49 and EPS estimate for 2023 of $5.58. The current ratio is below the low ratio of the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. The P/E Ratios have gone up rapidly over time.
I get a Graham Price of $59.80. The 10-year low, median, and high median Price/Graham Price Ratios are 1.22, 1.50 and 1.77. The current P/GP Ratio is 1.33 based on a stock price of $79.49. The current P/GP Ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10-year median Price/Book Value per Share Ratio of 2.60. The current P/B Ratio is 2.79 based on a stock price of $79.49, Book Value of $1,684M and Book Value per Share of $28.49. The current P/B Ratio is 7% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I also have Book Value per Share estimate for 2023 of $29.60. This implies a P/B Ratio of 2.69 with a stock price of $79.49 and Book Value of $1,750M. This ratio is 3% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10-year median Price/Cash Flow per Share Ratio of 16.35. The current P/CF Ratio is 15.26 based on Cash Flow per Share estimate for 2023 of $5.21, Cash Flow of $308M and a stock price of $79.49. The current 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.
I get an historical median dividend yield of 1.28%. The current dividend yield is 1.16% based on a stock price of $79.49 and dividends of $0.92. The current yield is 10% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10 year median dividend yield of 1.03%. The current dividend yield is 1.16% based on a stock price of $79.49 and dividends of $0.92. The current yield is 13% above the 10 year median ratio. 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 1.55. The current P/S Ratio is 1.40 based on Revenue estimate for 2023 of $3,366M, Revenue per Share of $56.94 and a stock price of $79.49. The current ratio is 10% 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 and below the median. The 10 year median dividend yield test says this and it is confirmed by the P/S Ratio test. Generally, the 10 year median dividend yield test is considered better than the historical one. Most of the other resting is saying the stock price is reasonable and above or below the median.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (4) and Hold (1). The consensus is a Buy. The 12 months stock price consensus is $91.00, with a high of 96.00 and low of $83.00. The stock price consensus of $91.00 implies a total return of 15.64% with 14.48% from capital gains and 1.16% from dividends.
This stock is liked by the analysts on Stock Chase. Stock Chase gives this company 4 stars out of 5. It is on all 3 dividend lists that I follow. Christopher Liew on Motley Fool says this stock makes an excellent investment. Kay Ng on Motley Fool thinks is stock is a quality growth stock. The company put out a press release on Globe Newswire about their results for 2022. The company put out a press release on Globe Newswire about its results for the third quarter of 2023.
Simply Wall Street via Yahoo Finance put out a recent report on this stock. Simply Wall Street put out one warning on this stock of debt is not well covered by operating cash flow. (I look at Long Term Debt rather than total debt.) Simply Wall Street gives this stock 2 and one half stars out of 5. Usually, I agree with the stars from Simply Wall Street, but for this stock I agree with Stock Chase.
Stella-Jones Inc produces and sells lumber and wood products. Its geographical segments are the United States and Canada, of which the majority of its revenue is derived from the United States. Its web site is here Stella-Jones Inc.
The last stock I wrote about was about was First Capital REIT (TSX-FCR.UN, OTC-FCXXF) ... learn more. The next stock I will write about will be Wild Brain Ltd (TSX-WILD, OTC-WLDBF) ... learn more on Monday, November 27, 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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