Sound bite for Twitter and StockTwits is: Stock price is relatively expensive. I do not believe in buying stocks when they are relatively expensive. Have patience and a stock will come into at least a reasonable range at some point. See my spreadsheet at rch.htm.
I own this stock of Richelieu Hardware Ltd (TSX-RCH, OTC-RHUHF). I initially bought this stock in 2007 because it was recommend by the Investment Reporter. It is not on any of the dividend lists, probably because they only started to pay dividends in 2000, they are a rather small company and they did not increase dividends in 2009.
Over the past year there has been $1M of insider selling and $0.8M of net insider selling with a bit of insider buying. Insider selling is only around 0.07% of the market cap and therefore is relatively low. There is some insider ownership with the CEO owing shares worth around $79.2M and just over 7% of the outstanding shares. Also, the Chairman has shares worth around $4.5M.
In 2014, the outstanding shares were increased by 188,000 shares for stock options. The book value of these shares was $4.6M and this number of shares was worth around $10.6M at the end of 2014. The number of shares is 0.96% of the outstanding shares. This is relatively a little high when a lot of company's stock options are around 0.50% of the outstanding shares.
The 5 year low, median and high median Price/Earnings per Share Ratios are 12.95, 14.80 and 16.71. The corresponding 10 year values are similar at 14.03, 15.47 and 16.94. The current P/E Ratio is 21.02 based on a stock price of $61.18 and 2015 EPS estimate of $2.91. This stock price testing suggests that the stock is relatively expensive.
I get a Graham Price of $32.16. The 10 year low, median and high median Price/Graham Price Ratios are 1.16, 1.29 and 1.43. The current P/GP Ratio is 1.90 based on a stock price of $61.18. This stock price testing suggests that the stock is relatively expensive.
The 10 year median Price/Book Value per Share Ratio is 2.45. The current P/B Ratio at 3.87 is some 58% higher. The current P/B Ratio is based on a BVPS of $15.80 and a stock price of $61.18. This stock price testing suggests that the stock is relatively expensive.
The 5 year median, historical average and historical median Dividend Yields are 1.38%, 1.34% and 1.19%. They are 29%, 26% and 18% higher than the current dividend yield of 0.98%. The current dividend yield is based on Dividends of $0.60 and a stock price of $61.18. Mind you it is still some 30% away from the historical low Dividend Yield of 0.76%. However, this stock price testing still suggests that the stock is relatively expensive.
The analysts' recommendations are a Buy, but there is only two analysts following this stock. The stock price target is $63.50. This implies a total return of just 4.77% with 3.79% from capital gains and 0.98% from dividends. Rather low return for Buy recommendations.
This is the second of two parts. The first part was posted on Wednesday, March 25, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.
This company is a distributor, importer and manufacturer of specialty hardware and complementary products. Its products are kitchen and bathroom cabinets, furniture, and window and door. It is also involved with residential and commercial woodworking industry. It has a large customer base of hardware retailers. Its web site is here Richelieu Hardware.
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. 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 website for stocks followed and investment notes. Follow me on Twitter or StockTwits.
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