I do not own this stock (TSX-KBL). I have found this stock interesting ever since I have first heard about it at the 2009 Toronto Money Show. A lot of speakers were talking about the great yields that could still be gotten from Unit Trust companies. This company was a Unit Trust at that time.
When I look at insider trading report, I find a minor amount of insider selling and a minor amount of insider buying, with a net of insider selling. All the insider selling was by one officer and done recently. The buying is by officers and directors and most of the buying was under the company plan. No one has stock options.
Lots of insiders have shares. They do not seem to add up to a big percentage of outstanding shares, but do show that individuals have considerable amounts invested in the company. For example, the CEO has shares worth just over $3M. A director has shares worth $2.1M. This is a positive.
There are 6 institutions have own shares comprising of 27% of the outstanding shares. Over the past 3 months they have increased their shares by 1.7%. This is a positive.
I get 5 year low, median and high Price/Earnings Ratios of 12.12, 15.67 and 18.80. The current P/E Ratio of 18.57 shows a stock price is rather high.
I get a Graham price of $16.69. The 10 year low, median and high Price/Graham price Ratios 0.90, 1.03 and 1.16. The current P/GP Ratio is at 1.51. This current high ratio shows a high stock price.
I get a 10 year Price/Book Value Ratio of 1.50. The current P/B Ratio 2.78. You would expect a higher current P/B Ratio because book value has not risen with the stock price. However, the current one is 85% than the 10 year P/B Ratio and this also suggests a high stock price.
When I look at the dividend yield I find that the 5 year median dividend yield is 8.04% and the current yield of 4.55% is some 43% lower. Because of the change from a unit trust to a corporation, you would expect that the dividend yield would go to a 4% to 5% range. However, the adjustment of the dividend yield is solely due to stock price increase.
You do not get any definite feel from the dividend yield test. Certainly, the stock price has been rising faster than the earnings.
When I look for analysts" recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus would be a Buy. In May of this year a number of analysts upgraded their recommendations or the expected 12 month stock price. Consensus 12 month stock price is $25.40. This is very close to the current stock price.
The implication is that the total return will consist only of dividends and be around 4.6%. The stock has had a good run up since it hit a low in October 2011. This stock is up some 45% since October, however year over year the stock is up about 20%.
One Hold recommendation thought that there would be a better entry point in buying this stock in the future that there is now. They are basically saying that the stock is overpriced. A number of analysts like the company and feel that it is well managed. They mention the low debt.
The one problem I see is when companies have a strong rise in stock price, it tends to go on. A bull market in a stock can go on much longer than you ever think it will. It is a stock that blogger Rise of a Millionaire holds. He talks about it in an March 2012 blog and in another blog dated May 2012.
I think the stock is overpriced, but not grossly so. I have waited to buy a stock because of high relative price only to pay it at a higher price later that was relative good. You do seem to earn more buying stocks at relatively good prices.
K-Bro is the largest owner and operator of laundry and linen processing facilities in Canada. K-Bro provides a comprehensive range of general linen and operating room linen processing, management and distribution services to healthcare institutions, hotels and other commercial accounts. K-Bro currently has seven processing plants in six Canadian cities: Quebec City, Toronto, Edmonton, Calgary, Vancouver and Victoria. Its web site is here K-Bro. See my spreadsheet at kbl.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 for stocks followed and investment notes. Follow me on twitter.
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