Is it a good company at a reasonable price? This is a small cap stock and also one that is volatile, so if you like to buy it, you should be careful. You should not be using money you cannot afford to lose. Entry point is important. It has made money for its shareholders at different times. It would seem that the stock price at this point is in a reasonable place.
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 Cash Flow varies a lot and it is often negative. In the last 5 years it has been negative 3 times, including for 2024. Insiders have been buying over the past year.
If you had invested in this company in December 2013, for $1,021.44 you would have bought 28 shares at $36.48 per share. In December 2023, after 10 years you would have received $331.05 in dividends. The stock would be worth $847.56. Your total return would have been $1,178.61. This would be a total return of 1.69% per year with 1.85% from capital loss and 3.45% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $36.48 | $1,021.44 | 28 | 10 | $331.05 | $847.56 | $1,178.61 |
Compare above 10 year return to this 5 year return. If you had invested in this company in December 2018, for $1,011.38 you would have bought 61 shares at $16.58 per share. In December 2023, after 5 years you would have received $186.48 in dividends. The stock would be worth $1,846.47. Your total return would have been $2,166.11. This would be a total return of 17.82% per year with 12.79% from capital gain and 5.02% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $16.58 | $1,011.38 | 61 | 5 | $319.64 | $1,846.47 | $2,166.11 |
The current dividend yield is good with dividend growth low. The current dividend is good (5% to 6% ranges) at 5.65%. The 5, 10 and historical dividend yields are moderate (2% to 4% ranges) at 4.83%, 4.91% and 4.52%. The dividend growth is low (below 8% per year) at 4.4% per year over the past 5 years. However, this comes from a 24% rise in dividends in 2023. There was dividend cutting and flat dividends between 2013 and 2022. There were dividends from 1986 to 1991. There were no dividends from 1992 to 2004.
The Dividend Payout Ratios (DPR) are good. The DPR for 2023 for Earnings per Share (EPS) is good at 34% with 5 year coverage at 41%. The DPR for 2023 for Adjusted Earnings per Share (AEPS) is good at 33% with 5 year coverage at 43%. The DPR for 2023 for Cash Flow per Share (CFPS) is good at 14% with 5 year coverage at 15%. The DPR for 2023 for Free Cash Flow (FCF) is good at 27% with 5 year coverage at 25%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 34.07% | 40.84% |
| AEPS | 33.07% | 42.96% |
| CFPS | 13.96% | 15.12% |
| FCF | 26.66% | 25.44% |
< Debt Ratios are mostly good, but their debt level is high. The Long Term Debt/Market Cap Ratio for 2023 is good at 0.49 and currently at 0.53. The Liquidity Ratio for 2023 is good at 2.16 and 1.91 currently. The Debt Ratio for 2023 is good at 1.51 and 1.49 currently. The Leverage and Debt/Equity Ratios for 2023 are fine at 2.97and 1.97 and currently too high at 3.04 and 2.04.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.49 | 0.53 |
| Intang/GW | 0.29 | 0.35 |
| Liquidity | 2.16 | 1.91 |
| Liq. + CF | 2.05 | 2.03 |
| Debt Ratio | 1.51 | 1.49 |
| Leverage | 2.97 | 3.04 |
| D/E Ratio | 1.97 | 2.04 |
The Total Return per year is shown below for years of 5 to 37 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 | 4.40% | 17.82% | 12.79% | 5.02% |
| 2013 | 10 | -7.66% | 1.69% | -1.85% | 3.54% |
| 2008 | 15 | -7.66% | 10.93% | 2.44% | 8.49% |
| 2003 | 20 | 0.00% | 29.60% | 6.88% | 22.72% |
| 1998 | 25 | 0.00% | 15.48% | 5.52% | 9.96% |
| 1993 | 30 | 0.00% | 10.21% | 4.13% | 6.09% |
| 1988 | 35 | 2.30% | 6.79% | 2.39% | 4.40% |
| 1986 | 37 | 2.17% | 6.17% | 2.01% | 4.16% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 5.36, 7.55 and 10.20. The corresponding 10 year ratios are 7.18, 9.18 and 12.00. The corresponding historical ratios are 7.63, 10.18 and 13.71. The current P/E Ratio is ratio is 6.72 based on a stock price of $24.80 and EPS estimate for 2024 of $3.69. 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/Earnings per Share Ratios are 5.55, 6.98 and 9.60. The corresponding 10 year ratios are 7.76, 10.55 and 13.34. The current ratio is 7.49 based on a stock price of $24.80 and AEPS estimate for 2024 of $3.31. This 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 $42.14. The 10-year low, median, and high median Price/Graham Price Ratios are 0.59, 0.80 and 1.02. The current ratio is 0.59 based on a stock price of $24.80. The current ratio is at 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 1.35. The current ratio is 1.04 based on a stock price of $24.80, Book Value of $517M and Book Value per Share of $23.84. The current ratio is 23% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a 10-year median Price/Cash Flow per Share Ratio of 4.59. The current ratio is 5.37 based on Cash Flow per Share estimate for 2024 of $4.62, Cash Flow of $100.2M and a stock price of $24.80. This ratio is 17% 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 4.52%. The current dividend yield is 5.65% based on dividends of $1.40 and a stock price of $24.80. The current dividend yield is 25% 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 4.91%. The current dividend yield is 5.65% based on dividends of $1.40 and a stock price of $24.80. The current dividend yield is 15% above the historical 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 0.28. The current 0.25 based on Revenue estimate for 2024 of $2,165M, Revenue per Share of $99.78 and a stock price of $24.80. The current ratio is 12% 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. It is confirmed by the P/S Ratio test. Most of the rest of the testing is saying that the stock price is cheap. The exception is the P/CF Ratio test that says the stock price is reasonable but above the median.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (1) and Hold (1). The consensus would be a Buy. The 12 month stock price consensus is $29.00 with a high of $30.00 and low of $28.00. The 12 month stock price consensus implies a total return of 22.58% with 16.94% from capital gains and 5.65% from dividends based on a current stock price of $24.80.
There is one analyst’s opinion on Stock Chase for 2023. He says the next bull will be in cyclicals. Stock Chase gives this stock 1 star out of 5. Christopher Liew on Motley Fool says this beaten down stock could take off in a new bull market. Christopher Liew on Motley Fool seems to be the only one following this stock. In 2023 he said it could rise because of rising interest rates. The company put out a press release via Newswire about their second quarter results for 2024. The company put out a press release via Newswire about their annual results for 2023.
Simply Wall Street via Yahoo Finance reviews this stock. Simply Wall Street has two warnings out of debt is not well covered by operating cash flow; and dividend of 5.7% is not well covered by free cash flows. Simply Wall Street gives this stock 2 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 Trican Well Service Ltd (TSX-TCW, OTC-TOLWF) ... learn more. The next stock I will write about will be Great-West Lifeco Inc (TSX-GWO, OTC-GWLIF) ... learn more on Friday, September 20, 2024 around 5 pm. Tomorrow on my other blog I will write about Dividend Payout Ratios.... learn more on Tuesday, September 17, 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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