Is it a good company at a reasonable price? This is one of the few stocks on my list that I wished that I had bought. However, you cannot buy everything. Shareholders have done quite well over time with this company. See the Total Return chart below. The company has had mainly good growth. See the 5 and 10 year growth chart below. The current price is reasonable and could even be cheap by looking at the dividend yield tests.
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 that I would rather this company do their financial statements using thousands of dollars and not just per million dollars. The CEO, CFO and the two officers I follow all increased their shares in this company over the past year. No director has increased their shares.
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 this year. This company has had some good growth. Cash Flow has varied from year to year.
| Yr | Item | Tot. Gwth | Per Year | Gwth | Coverage |
|---|---|---|---|---|---|
| 5 | Revenue Growth | 56.27% | 9.34% | 3.25% | <-12 mths |
| 5 | EPS Growth | 183.84% | 23.20% | 1.60% | <-12 mths |
| 5 | Net Income Growth | 136.92% | 18.83% | -0.92% | <-12 mths |
| 5 | Cash Flow Growth | -16.45% | -3.53% | 164.49% | <-12 mths |
| 5 | Dividend Growth | 91.67% | 13.90% | 21.74% | <-12 mths |
| 5 | Stock Price Growth | 94.70% | 14.25% | -9.01% | <-12 mths |
| 10 | Revenue Growth | 242.11% | 13.09% | 3.43% | <-this year |
| 10 | EPS Growth | 319.40% | 15.42% | -2.90% | <-this year |
| 10 | Net Income Growth | 252.30% | 13.42% | -6.50% | <-this year |
| 10 | Cash Flow Growth | 2.67% | 0.26% | 295.94% | <-this year |
| 10 | Dividend Growth | 360.00% | 16.49% | 9.78% | <-this year |
| 10 | Stock Price Growth | 183.01% | 10.96% | 14.26% | <-this year |
If you had invested in this company in December 2013, for $1,008.25 you would have bought 37 shares at $27.25 per share. In December 2023, after 10 years you would have received $204.24 in dividends. The stock would be worth $2,853.44.88. Your total return would have been $3,057.68. This would be a total return of 12.15% per year with 10.96% from capital gain and 1.19% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $27.25 | $1,008.25 | 37 | 10 | $204.24 | $2,853.44 | $3,057.68 |
The current dividend yield is low with dividend growth moderate. The current dividend yield is low (below 2%) at 1.60%. The 5, 10 and historical median dividend yields are low at 1.56%, 1.20% and 1.31%. The dividend increases are moderate (8% to 14% ranges) at 13.9% per year over the past 5 years. The last dividend increase was in 2024 and it was for 21.7%.
The Dividend Payout Ratios (DPR) are good. The DPR for 2023 for Earnings per Share (EPS) is good at 16% with 5 year coverage at 19%. The DPR for 2023 for Cash Flow per Share (CFPS) is good at 8% with 5 year coverage at 10%. The DPR for 2023 for Free Cash Flow (FCF) is good at 18% with 5 year coverage at 19%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 16.37% | 19.43% |
| CFPS | 8.45% | 9.61% |
| FCF | 18.28% | 19.12% |
Debt Ratios are mostly good and the company has a strong balance sheet. The Long Term Debt/Market Cap Ratio for 2023 is good at 0.28 and currently at 0.32. The Liquidity Ratio for 2023 is good at 5.07 and 6.85 currently. The Debt Ratio for 2023 is good at 1.80 and 1.89 currently. The Leverage and Debt/Equity Ratios for 2023 are fine at 2.24 and 1.24 and currently at 2.13 and 1.13.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.28 | 0.32 |
| Intang/GW | 0.12 | 0.14 |
| Liquidity | 5.07 | 6.85 |
| Liq. + CF | 5.21 | 8.06 |
| Debt Ratio | 1.80 | 1.89 |
| Leverage | 2.24 | 2.13 |
| D/E Ratio | 1.24 | 1.13 |
The Total Return per year is shown below for years of 5 to 29 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 | 13.90% | 15.62% | 14.25% | 1.37% |
| 2013 | 10 | 16.49% | 12.15% | 10.96% | 1.19% |
| 2008 | 15 | 17.21% | 23.66% | 21.61% | 2.05% |
| 2003 | 20 | 21.10% | 27.49% | 24.84% | 2.65% |
| 1998 | 25 | 19.73% | 25.00% | 22.98% | 2.02% |
| 1994 | 29 | 16.95% | 16.07% | 0.89% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 8.35, 11.71 and 15.06. The corresponding 10 year ratios are 15.54, 18.17 and 20.77. The corresponding historical ratios are 8.70, 11.85 and 15.02. The current P/E Ratio is 12.86 based on a stock price of $70.17 and EPS estimate for 2024 of $5.46. The current ratio is below the low ratio of 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap. Even by the low ratios for 5 years and historical measures, the stock price is still reasonable.
I get a Graham Price of $62.84. The 10-year low, median, and high median Price/Graham Price Ratios are 1.22, 1.42 and 1.62. The current ratio is 1.12 based on a stock price of $70.17. 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 get a 10-year median Price/Book Value per Share Ratio of 2.34. The current P/B Ratio is 2.18 based on a Book Value of $1,829M, Book Value per Share of $32.16 and a stock price of $70.17. The current ratio is 7% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I also have a Book Value per Share estimate for 2024 of $32.71. This implies a ratio of 2.15 based on a stock price of $70.17 and Book Value of $1,860M. This ratio is 8% 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 20.67. The current P/CF Ratio is 9.42 based on Cash Flow per Share estimate for 2024 of $7.45, Cash Flow of $424M and a stock price of 70.17. This ratio is 54% 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 1.31%. The current dividend yield is 1.60% based on Dividends of $1.12 and a stock price of $70.17. 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 1.20%. The current dividend yield is 1.60% based on Dividends of $1.12 and a stock price of $70.17. The current dividend yield is 33% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10-year median Price/Sales (Revenue) Ratio is 1.39. The current P/S Ratio is 1.16 based on Revenue estimate for 2024 of $3,433M, Revenue per Share of $60.37 and a stock price of $70.17. The current ratio is 16% 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, but could be cheap. The dividend yield tests are showing the stock price as relatively cheap. The P/S Ratio test is showing the stock price as relatively reasonable. So, the stock is testing as reasonable. A number of other tests are showing the stock price as cheap and others as reasonable.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (2) and Hold (3). The consensus would be a Buy. The 12 month stock price consensus is $88.12 with a high of $95.00 and low of $81.00. The consensus stock price of $88.12 implies a total return of 27.18% with 25.58% from capital gains and 1.60% from dividends.
There are lots of entries on Stock Chase for this stock. However, entries are from Do Not Buy to Hold to Buy. A lot of Buy on Weakness. Stock Chase gives this stock 4 stars out of 5. Amy Legate-Wolfe on Motley Fool says this is a top buy in November 2024. Aditya Raghunath on Motley Fool says buy because it is cheap. The company put out a press release via Newswire about their fourth quarter of 2023. The company put out a press release via Newswire about their third quarter of 2024.
Simply Wall Street via Yahoo Finance writes about this stock. Simply Wall Street via Yahoo Finance has a second article about this stock. Simply Wall Street has two warnings out on this stock of earnings are forecast to decline by an average of 1.8% per year for the next 3 years; and has a high level of debt. Simply Wall Street gives this stock 3 and one half stars out of 5.
Stella-Jones Inc produces and sells lumber and wood products. The company operates in two segments: Pressure-treated wood and Logs & Lumber. The vast majority of its revenue comes from the Pressure-treated wood segment. 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 25, 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.
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