Is it a good company at a reasonable price? The company has only put out a press release for 2023. They used to put out unaudited financial statements with the fourth quarter results, but this year, the financial statements were very limited. Analysts are complaining that the did not come close to the expected EPS of $2.71 as EPS came in at $1.98. I still think it is a good company and I will retain what shares I have. I might buy some for by TFSA account, but have not come up with all the money yet for 2024 deposit. The price is certainly reasonable at present and maybe cheap as the dividend yield tests are saying the stock price is cheap.
I own this stock of Richelieu Hardware Ltd (TSX-RCH, OTC-RHUHF). I initially bought this stock in 2007 because it was recommended by the Investment Reporter. It is not on any of the dividend lists, probably because they only started to pay dividends in 2000, they are a rather small company and they did not increase dividends in 2009. This stock would be considered to be a dividend paying growth stock. In 2009, I thought I would add to what I had in this stock. This stock has been much recommended by MPL Communications.
When I was updating my spreadsheet, I noticed I have done well with this stock. I have had it for just over 14 years and my total return per year is 16.88%, with 15.31% from capital gains and 1.57% from dividends.
In the chart below, I am showing 5 and 10 year total growth and per year growth in columns 3 and 4. Column 5 shows growth expected over 12 months to the first quarter in 2024 and expected growth over the next year. This stock has been growing quite well over the past 5 and 10 years. Analysts seem to expect lower growth in the future, but I do not know how reliable the future values are. There are few analysts following this stock and I was looking at a number of sites trying to pick up information.
| Year | Item | Tot. Gwth | Per Year | Gwth | Coverage |
|---|---|---|---|---|---|
| 5 | Revenue Growth | 78.00% | 12.22% | 0.40% | <-12 mths |
| 5 | EPS Growth | 69.23% | 11.10% | -1.52% | <-12 mths |
| 5 | Net Income Growth | 64.36% | 10.45% | 3.54% | <-12 mths |
| 5 | Cash Flow Growth | 540.38% | 44.97% | ||
| 5 | Dividend Growth | 150.00% | 20.11% | 0.00% | <-12 mths |
| 5 | Stock Price Growth | 68.63% | 11.02% | 11.58% | <-12 mths |
| 10 | Revenue Growth | 204.68% | 11.79% | 2.53% | <-this year |
| 10 | EPS Growth | 167.57% | 10.34% | 1.52% | <-this year |
| 10 | Net Income Growth | 140.07% | 9.15% | 1.52% | <-this year |
| 10 | Cash Flow Growth | 459.70% | 18.79% | ||
| 10 | Dividend Growth | 246.15% | 13.22% | 0.00% | <-this year |
| 10 | Stock Price Growth | 188.72% | 11.19% | 11.58% | <-this year |
If you had invested in this company in December 2013, for $1,007.86 you would have bought 69 shares at $14.61 per share. In December 2023, after 10 years you would have received $205.17 in dividends. The stock would be worth $3,310.62. Your total return would have been $3,515.79. This Total Return would be a total return of 13.74% per year with 12.63% from capital gain and 1.12% from dividends. This calculation takes into consideration stock splits, which means that the original cost would be lowered by these splits.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $14.61 | $1,007.86 | 69 | 10 | $205.17 | $3,310.62 | $3,515.79 |
The current dividend yield is low with dividend growth good. The current dividend yield is low (below 2%) at 1.36%. The 5, 10 and historical dividend yields are also low at 1.10%, 0.91% and 1.12%. The dividend growth is good (15% and higher) at 20% per year over the past 5 years. The last dividend increase was in 2023 and it was for 15.4%. Usually, the company increases the dividend for the first dividend of year, but in 2024, they did not do that.
The Dividend Payout Ratios (DPR) are good. The DPR for 2023 for Earnings per Share (EPS) is good at 30% with 5 year coverage at 19%. The DPR for 2023 for Cash Flow per Share (CFPS) is good at 10% with 5 year coverage at 11%. The DPR for 2023 for Free Cash Flow (FCF) is good at 14% with 5 year coverage at 22%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 30.30% | 18.90% |
| CFPS | 9.59% | 11.13% |
| FCF | 14.28% | 22.34% |
Debt Ratios are good. The Long Term Debt/Market Cap Ratio for 2023 is good at 0.00. The Liquidity Ratio for 2023 is good at 3.62. The Debt Ratio for 2023 is good at 3.23. The Leverage and Debt/Equity Ratios for 2023 are good at 1.45 and 0.45.
| Type | Year End |
|---|---|
| Lg Term R | 0.00 |
| Intang/GW | 0.08 |
| Liquidity | 3.62 |
| Liq. + CF | 4.61 |
| Debt Ratio | 3.23 |
| Leverage | 1.45 |
| D/E Ratio | 0.45 |
The Total Return per year is shown below for years of 5 to 30 to the end of 2023. 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. |
|---|---|---|---|---|---|
| 2018 | 5 | 20.11% | 17.34% | 16.16% | 1.18% |
| 2013 | 10 | 13.22% | 13.75% | 12.63% | 1.12% |
| 2008 | 15 | 12.20% | 16.55% | 15.09% | 1.46% |
| 2003 | 20 | 12.20% | 11.68% | 10.65% | 1.03% |
| 1998 | 25 | 14.24% | 17.32% | 15.77% | 1.55% |
| 1993 | 30 | 16.18% | 15.02% | 1.15% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 13.99, 19.45 and 21.81. The corresponding 10 year ratios are 17.49, 20.34 and 23.75. The corresponding historical ratios are 15.10, 15.75 and 19.20. The current P/E Ratio is 21.89 based on a stock price of $43.99 and EPS estimate for 2024 of 2.01. This ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a Graham Price of $27.01. The 10-year low, median, and high median Price/Graham Price Ratios are 1.35, 1.64 and 1.97. The current P/GP Ratio is 1.63 based on a stock price of $43.99. The current 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 3.22. The current P/B Ratio is 2.73 based on a stock price of $43.99 and Book Value of $904.9M and Book Value per Share of $16.13. 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.
I get a 10-year median Price/Cash Flow per Share Ratio of 21.08. The current P/CF Ratio is 9.11 based on Cash Flow for the last 12 months of $270.7M, Cash Flow per Share of $4.83 and a stock price of $43.99. The current ratio is 57% 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 1.12%. The current dividend yield is 1.36% based on a stock price of $43.99 and dividends of $0.60. The current dividend yield is 22% 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 0.91%. The current dividend yield is 1.36% based on a stock price of $43.99 and dividends of $0.60. The current dividend yield is 51% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10-year median Price/Sales (Revenue) Ratio is 1.52. The current P/S Ratio is 1.35 based on Revenue estimate for 2024 of $1,833, Revenue per Share of $32.68 and a stock price of $43.99. The current ratio is 11% 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 may even be cheap. The dividend yield tests both say that the stock price is relatively cheap. The P/S Ratio test says it is reasonable and below the median. The rest of the testing says the stock price is either reasonable or cheap.
When I look at analysts’ recommendations, I find recommendations of Hold (2). The consensus would be a Hold. The 12 month stock price consensus is $45.75 with a high of $46.00 and low of $45.50. The stock price consensus of $45.75 implies a total return of 5.41% with 4.05% from capital gains and 1.36% from dividends.
Analysts in 2024 give this stock on Stock Chase a Top Pick and a Hold. Stock Chase gave this stock 4 stars out of 5. Amy Legate-Wolfe on Motley Fool thinks this under the radar stock is a good buy. Jitendra Parashar on Motley Fool last year talked about this company being downgraded by CIBC. The company put out a press release on Newswire about their year-end 2023 results.
Simply Wall Street via Yahoo Finance talks about this stock and its dividends. Simply Wall Street gives this stock 2 and one half stars out of 5. They list one warning of Profit margins (6.2%) are lower than last year (9.3%).
Richelieu Hardware Ltd is a Canada-based company that imports, manufactures, and distributes specialty hardware and complementary products. Headquartered in Montreal, the company operates across Canada and the eastern and midwestern regions of the United States. The majority of the company's sales are derived from its operations in Canada. Its web site is here Richelieu Hardware Ltd.
The last stock I wrote about was about was Canadian National Railway (TSX-CNR, NYSE-CNI) ... learn more. The next stock I will write about will be AGF Management Ltd (TSX-AGF.B, OTC-AGFMF) ... learn more on Monday, February 5, 2024 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