Is it a good company at a reasonable price? This stock is volatile. They do pay dividends and they have good debt ratios. It will probably never be a star but it is solid and has made shareholders money over the long term. I bought it before I was into dividend growth stocks. It pays a good dividend, but dividends do not grow much. I would probably not buy it today, but I have no intentions of selling this stock either. Currently, it would seem that the stock price is expensive.
I own this stock of Russel Metals Inc (TSX-RUS, OTC-RUSMF). In 2007 I needed to reduce my holdings of Loblaws and buy something to help replace the dividends I had been earning. With Russel Metals, both Mike and TD recommend buying at this time.
When I was updating my spreadsheet, I noticed there has been some volatility in my returns on this stock. To the end of January this year, my total return is 8.03%, with 3.58% from capital gains and 4.45% from dividends. Last year at this time, my total return was 6.61%.
When I was looking at Officers and Directors and insider buying and selling, I found some were buying and some were selling and some kept what stocks they held. This was of the people I was following. Of the officers I was following, the CEO and two officers were buying shares. The CFO and one officer were selling shares. Of the directors I was following the Chairman and one other director was selling shares and two directors kept what they had. The company is currently buying shares. Of course, the thing is that people buy shares because they feel good about a company’s future, but people sell for all sorts of reasons.
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 shows good growth in the past, but analysts do not seem to be expected good growth this year.
| Year | Item | Tot. Grth | Per Yr | Gwth | Coverage |
|---|---|---|---|---|---|
| 5 | Revenue Growth | 8.17% | 1.58% | -1.44% | <-12 mths |
| 5 | EPS Growth | 23.01% | 4.23% | -4.39% | <-12 mths |
| 5 | Net Income Growth | 21.78% | 4.02% | -2.96% | <-12 mths |
| 5 | Cash Flow Growth | 425.26% | 39.34% | ||
| 5 | Dividend Growth | 3.95% | 0.78% | 1.27% | <-12 mths |
| 5 | Stock Price Growth | 111.11% | 16.12% | 4.82% | <-12 mths |
| 10 | Revenue Growth | 41.32% | 3.52% | 5.77% | <-this year |
| 10 | EPS Growth | 216.06% | 12.20% | -8.78% | <-this year |
| 10 | Net Income Growth | 220.94% | 12.37% | -22.01% | <-this year |
| 10 | Cash Flow Growth | 225.83% | 12.54% | -44.54% | <-this year |
| 10 | Dividend Growth | 12.86% | 1.22% | 3.80% | <-this year |
| 10 | Stock Price Growth | 43.45% | 3.67% | 4.82% | <-this year |
If you had invested in this company in December 2013, for $1,004.48 you would have bought 32 shares at $31.39 per share. In December 2023, after 10 years you would have received $486.40 in dividends. The stock would be worth $1,440.96. Your total return would have been $1,927.36. This would be a total return of 7.85% per year with 3.67% from capital gain and 4.18% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $31.39 | $1,004.48 | 32 | 10 | $486.40 | $1,440.96 | $1,927.36 |
The current dividend yield is moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 3.39%. The 5, 10 and historical median dividend yields are good (5% to 6% ranges) at 5.09%, 5.75% and 5.08%. The dividend growth is low (below 8%) at just 0.78% over the past 5 years. That is because dividends were flat between 2015 and 2022. The last dividend increase was in 2023 and it was for 5.3%.
The Dividend Payout Ratios (DPR) are good. The DPR for 2023 for Earnings per Share (EPS) is good at 36% with 5 year coverage at 41%. The DPR for 2023 for Cash Flow per Share (CFPS) is good at 24% with 5 year coverage at 24%. The DPR for 2023 for Free Cash Flow 1 (FCF) from TD WebBroker is good at 24.58% with 5 year coverage at 31%. The DPR for 2023 for Free Cash Flow 2 (FCF) from the company is good at 24.58% with 5 year coverage at 29%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 36.49% | 40.85% |
| CFPS | 23.80% | 24.13% |
| FCF 1 | 24.58% | 30.74% |
| FCF 2 | 24.58% | 29.17% |
Debt Ratios are very good. The Long Term Debt/Market Cap Ratio for 2023 is very good at 0.11. The Liquidity Ratio for 2023 is very good at 4.14 and 4.14. The Debt Ratio for 2023 is very good at 2.76. The Leverage and Debt/Equity Ratios for 2023 are good at 1.57 and 0.57.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.11 | 0.11 |
| Intang/GW | 0.04 | 0.04 |
| Liquidity | 4.14 | 4.14 |
| Liq. + CF | 4.92 | 4.48 |
| Debt Ratio | 2.76 | 2.76 |
| Leverage | 1.57 | 1.57 |
| D/E Ratio | 0.57 | 0.57 |
The Total Return per year is shown below for years of 5 to 33 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 | 0.78% | 21.62% | 16.12% | 5.51% |
| 2013 | 10 | 1.22% | 7.85% | 3.67% | 4.18% |
| 2008 | 15 | -0.87% | 10.99% | 5.92% | 5.07% |
| 2003 | 20 | 0.98% | 17.56% | 8.51% | 9.05% |
| 1998 | 25 | 2.57% | 19.82% | 10.76% | 9.06% |
| 1993 | 30 | 0.00% | 9.42% | 5.82% | 3.60% |
| 1990 | 33 | 4.67% | 9.70% | 6.21% | 3.50% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 6.68, 8.56 and 10.45. The corresponding 10 year ratios are 9.34, 10.96 and 12.58. The corresponding historical ratios are 6.16, 9.13 and 9.99. The current P/E Ratio is 11.95 based on a stock price of $47.20 and EPS estimate for 2024 of $3.95. The current 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 $49.13. The 10-year low, median, and high median Price/Graham Price Ratios are 0.72, 1.06 and 1.20. The current P/GP Ratio is 0.96 based on a stock price of $47.20. 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 1.54. The current P/B Raio is 1.74 based on a stock price of $47.20, Book Value of $1,639M and Book Value per Share of $27.16. The current ratio is 12.5% above the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I have a Book Value per Share estimate for 2024 of $29.70. This implies a ratio of 1.59 with a Book Value of $1,794M and stock price of $47.20. The current ratio is 2.9% 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 5.29. The current P/CF Ratio is 11.13 based on Cash Flow per Share estimate for 2024 of $4.24, Cash Flow of $256M, and stock price of $47.20. The current ratio is 110% 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 5.08%. The current dividend yield is 3.39% based on a stock price of $47.20 and dividends of $1.60. The current dividend yield is 33% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median dividend yield of 5.75%. The current dividend yield is 3.39% based on a stock price of $47.20 and dividends of $1.60. The current dividend yield is 41% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10-year median Price/Sales (Revenue) Ratio is 0.46. The current P/S Ratio is 0.60 based on Revenue estimate for 2024 of $4,765M, Revenue per Share of $78.91 and a stock price of $47.20. The current ratio is 30% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
Results of stock price testing is that the stock price is probably expensive. The dividend yield tests are saying this. They have not been growing their dividends much over the last 10 years, but the dividend yields have big difference. The P/S Ratio test confirms what the dividend yield tests are saying. Other tests are saying that the stock price is reasonable but above the median or expensive.
When I look at analysts’ recommendations, I find Buy (4) and Hold (4). The consensus would be a Buy. The 12 months stock price consensus is $49.88 with a high of $56.00 and low of $46.00. The consensus price of $459.88 implies a total return of 9.07% with 5.68% from capital gains and 3.39% from dividends.
The analysts in 2023 on Stock Chase liked the company. There was a sell recommendation in 2022 because of flat dividends at that time. Stock Chase gives this stock 3 stars out of 5. It is on the Money Sense Dividend List. Ambrose O'Callaghan on Motley Fool likes this stock because it is cheap and has a great dividend. Brian Paradza on Motley Fool says this is a good stock for income-oriented dividend investors. The company put out a press release on Newswire about their fourth quarter of 2023 results.
Simply Wall Street via Yahoo Finance reviews this stock. Simply Wall Street has one warning of earnings are forecast to decline by an average of 5.4% per year for the next 3 years
Russel Metals Inc is a Canada-based metal distribution company. The company conducts business primarily through three metals distribution segments: metals service centers; energy products; and steel distributors. The company generates all of its revenue from the North American market. Its web site is here Russel Metals Inc.
The last stock I wrote about was about was ARC Resources Ltd (TSX-ARX, OTC-AETUF) ... learn more. The next stock I will write about will be First National Financial Corporation (TSX-FN, OTC-FNLIF) ... learn more on Monday, February 19, 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.
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