Is it a good company at a reasonable price? A lot of analysts seem to like this stock. It has done well in most years for its shareholders. It is a dividend growth stock. It does have a lot of debt. The stock price seems to be relatively reasonable at this time.
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 my Toromont Industries Ltd (TSX-TIH, OTC-TMTNF) has done better than Finning. They are both into moving heavy equipment. When I wanted to buy another industrial (2007) and I looked at both Toromont and Finning and decided to go with Toromont. See Toromont Long Term returns in the chart below and see Finning further down this page. It is not so much that Finning has done badly, but Toromont has done a lot better and I am glad I went with Toromont.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. | check |
|---|---|---|---|---|---|---|
| 2018 | 5 | 13.81% | 18.25% | 16.43% | 1.82% | 18.25% |
| 2013 | 10 | 12.66% | 17.75% | 15.85% | 1.89% | 17.75% |
| 2008 | 15 | 11.17% | 17.08% | 15.10% | 1.98% | 17.08% |
| 2003 | 20 | 13.71% | 14.71% | 12.97% | 1.73% | 14.71% |
| 1998 | 25 | 12.97% | 15.37% | 13.57% | 1.80% | 15.37% |
| 1993 | 30 | 15.65% | 18.80% | 16.20% | 2.59% | 18.80% |
| 1990 | 33 | 14.66% | 22.61% | 18.55% | 4.06% | 22.61% |
If you had invested in this company in December 2013, for $1,004.55 you would have bought 37 shares at $27.15 per share. In December 2023, after 10 years you would have received $299.29 in dividends. The stock would be worth $1,417.84. Your total return would have been $1,717.13. This would be a total return of 6.04% per year with 3.51% from capital gain and 2.54% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $27.15 | $1,004.55 | 37 | 10 | $299.29 | $1,417.84 | $1,717.13 |
The current dividend yield is moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 2.66%. The 5 and 10 year median dividend yields are also moderate at 2.82% and 2.79%. The historical median dividend yield is low (below 2%) at 1.98%.
The Dividend Payout Ratios (DPR) are good. The DPR for 2023 for Earnings per Share (EPS) is good at 28% with 5 year coverage at 37%. The DPR for 2023 for Adjusted Earnings per Share (AEPS) is good at 25% with 5 year coverage at 43%. The DPR for 2023 for Cash Flow per Share (CFPS) is good at 11% with 5 year coverage at 15%. The DPR for 2023 for Free Cash Flow (FCF) is too high at 1825% with 5 year coverage at 65%. However, no site agrees what the FCF is and there are big disparities in what sites say. I am not considering FCF.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 27.85% | 36.94% |
| AEPS | 25.22% | 42.94% |
| CFPS | 11.17% | 14.80% |
| FCF | 1825.00% | 65.24% |
Debt Ratios are probably fine, but the company has a lot of debt. The Long Term Debt/Market Cap Ratio for 2023 is good at 0.17 and currently at 0.23. The Liquidity Ratio for 2023 is fine at 1.41 and 1.55 currently. If you added in Cash Flow after dividends, the ratios are fine at 1.53 and currently at 1.76. The Debt Ratio for 2023 is fine at 1.44 and 1.74 currently. The Leverage and Debt/Equity Ratios for 2023 are too high at 3.01 and 2.00 and currently at 3.12 and 2.11. I prefer these ratios to be under 3.00 and under 2.00
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.17 | 0.23 |
| Intang/GW | 0.12 | 0.10 |
| Liquidity | 1.41 | 1.55 |
| Liq. + CF | 1.44 | 1.74 |
| Debt Ratio | 1.50 | 1.48 |
| Leverage | 3.01 | 3.12 |
| D/E Ratio | 2.00 | 2.11 |
The Total Return per year is shown below for years of 5 to 36 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 | 4.53% | 13.07% | 9.99% | 3.07% |
| 2013 | 10 | 5.14% | 6.04% | 3.51% | 2.54% |
| 2008 | 15 | 5.69% | 9.90% | 6.82% | 3.08% |
| 2003 | 20 | 12.12% | 7.17% | 4.80% | 2.37% |
| 1998 | 25 | 9.59% | 11.04% | 8.09% | 2.95% |
| 1993 | 30 | 10.84% | 9.66% | 7.21% | 2.45% |
| 1988 | 35 | 7.44% | 10.55% | 7.91% | 2.64% |
| 1987 | 36 | 8.09% | 11.00% | 8.19% | 2.81% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 9.16, 13.73 and 16.90. The corresponding 10 year ratios are 12.26, 14.96 and 18.12. The corresponding historical ratios are 12.11, 15.70, and 19.00. The current P/E Ratio is 10.50 based on a stock price of $41.38 and EPS estimate for 2024 of $3.94. 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 9.89, 14.84 and 15.99. The corresponding 10 year ratios are 13.14, 17.09 and 19.11. The current ratio is 10.56 based on AEPS estimate for 2024 of $3.92. This 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 Graham Price of $39.71. 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 1.04 based on a stock price of $41.38. This 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 2.21. The current P/B Ratio is 2.31 based on a stock price of $41.38, Book Value of $2,575M and Book Value per Share of $17.88. The current ratio is 5% 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 14.36. The current ratio is 7.31 based on Cash Flow per Share estimate for 2024 of $5.66, Cash Flow of $816M and a stock price of $41.38. The current ratio is 49% 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 1.98%. The current dividend yield is 2.66% based on dividends of $1.075 and a stock price of $41.38. The current ratio is 31% 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 2.66% based on dividends of $1.075 and a stock price of $41.38. The current ratio is 5% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
The 10-year median Price/Sales (Revenue) Ratio is 0.65. The current P/S Ratio is 0.59 based on Revenue estimate for 2024 of $10,075M, Revenue per Share of $69.96 and a stock price of $41.38. 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 still reasonable. The 10 year dividend yield test says the stock price is relatively reasonable but above median. This historical dividend yield test says the stock price is cheap. The P/S Ratio test says that the stock price is relatively reasonable. Most of the rest of the testing is saying that the stock price is cheap or reasonable except for the P/B Ratio test.
When I look at analysts’ recommendations, I find Strong Buy (4), and Buy (5). The consensus would be a Strong Buy. The 12 months stock price consensus is $49.44 with a high of $53.00 and low of $45.00. The consensus stock price of $49.44 implies a total return of 22.14% with 19.48% from capital gains and 2.66% from dividends based on a current stock price of $41.38.
Most analyst on Stock Chase like this stock and says it is their top pick. There is one Do Not Buy and that analysts said she would rather buy Cat who makes the machinery and the Distributor. Stock Chase gives this stock 4 stars out of 5. Amy Legate-Wolfe on Motley Fool say this stock jumped on strong first quarter and 10% dividend increase. Kay Ng onMotley Fool say Finning is a cyclical dividend stock that offers decent long term returns. The company put out a Press Release about their fourth quarter of 2023. The company put out a Press Release for their second quarter of 2024.
Simply Wall Street via Yahoo Finance reviews this stock. Simply Wall Street thinks this stock is undervalued and its fair value of $62.43. Simply Wall Street gives this stock 4 stars out of 5. It has one warning of debt is not well covered by operating cash flow.
Finning International Inc is a dealer and distributor of heavy-duty machinery and parts of the Caterpillar brand. 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 Veren Inc (TSX-VRN, NYSE-VRN) ... learn more. The next stock I will write about will be Quarterhill Inc (TSX-QTRH, OTC-QTRHF) ... learn more on Monday, November 11, 2024 around 5 pm.
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