I am reviewing this stock (TSX-WFI, WFI.U) as it is a stock I follow. I have updated my spreadsheet with the 2008 annual report and the 2nd quarterly report for June 2009. The stock reports in US Dollars, but the stock trades mostly in Canadian funds. However, it can also be traded in US funds under the WFI.U symbol. It probably reports in US Dollars as most of its business is in the US.
When I look at Insider Buying and Insider Selling under this stock, what I see is that this stock has not done much over the last year. There has been slightly more insider selling than insider buying, but nothing much is going on. By the way, the TSX has not done much over the past year.
The current P/E ratio that I get is just over 21. The 5 year average low is 16.7 and the 5 year average high is 28. Others get a current P/E of closer to 18 or 19. When you are looking at current P/E, it greatly depends on what you are using for earnings. Some use the last 12 months earnings and some use, as I do the estimate earnings for the current year. In any case, the P/E is not low, but it is not extraordinarily high either.
The current yield at 3% is not lower than the 5 year average 3.7%. So this does not point to a good current price. When I look at the Price/Book Value figure, I find that the current ratio is 180% of the long term average. There is a problem with the Book Value, as it has not been increasing as rapidly as other values, such as earning, stock price and revenue.
When you look at the Graham Price, I find that it is about 70% below the current price. The Graham Price is lower in 2009 that in 2008 because of lower expected earnings and the lower Book Value for the statements ending in June 2009. However, the Graham Price is not that much lower. The average difference over the last 10 years between the Graham Price and the stock price is some 35%. So, none of this stuff shows a current good entry price for this stock from my perspective.
For all periods, this stock has done better than the TSX and you have the bonus of dividends. Over the past 10 years, this stock’s dividend has added over 4% to the return on this stock. Over the past 5 years, this stock’s dividend has added over 5.6% to the return on this stock. We do have to remember that past results can point to the future, but there is no guarantee that future results will be like the past results.
When I look at recommendations on this stock, I see lots of Strong Buys and Holds. I can also see some Buys issued a few months ago, when the stock was cheaper. The consensus recommendations would seem to be a Buy. (See my site for information on analyst ratings.)
What I can see is that people seem to like to this stock because it is green and it is believed that the people managing this company know how to make money. The dividends are excellent. I am going to keep on tracking this stock, but I will not be buying any, at least not at the present time.
They are a manufacturer and distributor of residential and commercial geothermal and other water source heating and cooling systems. This is an international company with 80% of its revenue from the US. It has revenue from Canada of just over 16% and the rest of the world under 3%. Its web site is www.waterfurnace.com. See my spreadsheet at www.spbrunner.com/stocks/wfi.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets.
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