Is it a good company at a reasonable price? This is a cyclical stock. I have not gotten a good return, but if you look at total return over the past 5 to 34 years in a paragraph below, shareholders have done quite well. It is just off a recent peak, so I am tending to think it might be on the expensive side as far as the stock price goes.
I own this stock of Russel Metals Inc (TSX-RUS, OTC-RUSMF). In 2007 I needed to reduce my holdings of Loblaws and buy something to help replace the dividends I had been earning. With Russel Metals, both Mike and TD recommend buying at this time. However, I should keep a watch on this stock as it has had some troubles in the past.
When I was updating my spreadsheet, I noticed that this is a cyclical stock. If you look at the return over the past 5 and 10 years, there is a big difference. The total return for 5 years is 19.25% and for 10 years 9.87%. See paragraphs below. I obviously did not time my purchases right as I have a total return of 7.64 with 3.06% from capital gains and 4.58% from dividends. I have had this stock for almost 18 years.
If you had invested in this company in December 2014, for $1010.10 you would have bought 39 shares at $25.90 per share. In December 2024, after 10 years you would have received $600.60. in dividends. The stock would be worth $1,641.90. Your total return would have been $2,242.50. This would be a total return of 9.87% per year with 4.98% from capital gain and 4.89% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $25.90 | $1,010.10 | 39 | 10 | $600.60 | $1,641.90 | $2,242.50 |
If you had invested in this company in December 2019, for $1019.82 you would have bought 46 shares at $22.17 per share. In December 2024, after 10 years you would have received $304.20 in dividends. The stock would be worth $1,936.60. Your total return would have been $2,240.80. This would be a total return of 19.25% per year with 13.69% from capital gain and 5.56% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $22.17 | $1,019.82 | 46 | 5 | $304.20 | $1,936.60 | $2,240.80 |
The current dividend yield is moderate with dividend growth low. The dividend yield is moderate (2% to 4% ranges) at 4.02%. The 5, 10 and historical median dividend yields are also good (5% to 6% ranges) at 5.08%, 5.75% and 5.08%. The dividend increases are low (below 8% per year) at 1.8% per year over the past 5 years. This stock did not raise dividends for 7 years between 2016 and 2022. The last dividend increase was in 2024 and it was for 5%.
The Dividend Payout Ratios (DPR) are fine. The DPR for 2024 for Earnings per Share (EPS) is too high at 61% with 5 year coverage is good at 38%. The expected DPR for 2025 is good 43%. The DPR for 2024 for Cash Flow per Share (CFPS) is good at 32% with 5 year coverage at 23%. The DPR for 2024 for Free Cash Flow 1 (FCF 1) is good at 33% with 5 year coverage at 29%. The DPR for 2024 for Free Cash Flow 2 (FCF 2) is good at 33% with 5 year coverage at 27%. Two sites on FCF have similar values.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 60.81% | 38.52% |
| CFPS | 31.67% | 23.13% |
| FCF 1 | 32.87% | 28.75% |
| FCF 2 | 32.87% | 27.79% |
Debt Ratios are very good. The Long Term Debt/Market Cap Ratio for 2024 is good at 0.00 and currently at 0.00. The Liquidity Ratio for 2024 is good at 3.13 and 3.13 currently. The Debt Ratio for 2024 is good at 1.41 and 1.41 currently. The Leverage and Debt/Equity Ratios for 2024 are good at 1.42 and 0.42 and currently at 1.42 and 0.42.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.00 | 0.00 |
| Intang/GW | 0.06 | 0.06 |
| Liquidity | 3.13 | 3.13 |
| Liq. + CF | 3.65 | 3.67 |
| Debt Ratio | 3.41 | 3.41 |
| Leverage | 1.42 | 1.42 |
| D/E Ratio | 0.42 | 0.42 |
The Total Return per year is shown below for years of 5 to 34 to the end of 2024. 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. |
|---|---|---|---|---|---|
| 2019 | 5 | 1.78% | 19.25% | 13.69% | 5.56% |
| 2014 | 10 | 1.29% | 9.87% | 4.98% | 4.89% |
| 2009 | 15 | 3.44% | 11.60% | 5.93% | 5.67% |
| 2004 | 20 | -1.74% | 11.57% | 5.12% | 6.45% |
| 1999 | 25 | 0.20% | 20.51% | 10.05% | 10.46% |
| 1994 | 30 | 0.00% | 11.51% | 6.78% | 4.73% |
| 1990 | 34 | 4.68% | 9.52% | 5.81% | 3.71% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 6.68, 8.56, 10.45. The corresponding 10 year ratios are 9.34, 10.96, and 12.58. The corresponding historical ratios are 6.68, 9.69 and 9.99. The current P/E Ratio is 10.65 based on a stock price of $41.80 and EPS estimate for 2025 of $3.93. The current 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 $50.65. The 10-year low, median, and high median Price/Graham Price Ratios are 0.72, 1.01 and 1.16. The current ratio is 0.83 based on a stock price of $41.80. The current 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 1.47. The current ratio is 1.44 based on a Book Value of $1,658M, Book Value per Share of $29.05 and a stock price of $41.80. The current ratio is 2% 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 5.29. The current P/CF Ratio is 6.76 based on a stock price of $41.80, Cash Flow per Share estimate for 2025 of $6.18 and Cash Flow of $352.7M. The current ratio is 28% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 5.08%. The current dividend yield is 4.02% based on a stock price of $41.80 and dividends of $1.68. The current dividend yield is 21% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median dividend yield of 5.75%. The current dividend yield is 4.02% based on a stock price of $41.80 and dividends of $1.68. The current dividend yield is 30% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively expensive. A problem is that there were no dividend increases for 7 years from 2016 to 2022. This could be affecting this test.
The 10-year median Price/Sales (Revenue) Ratio is 0.52. The current P/S Ratio is 0.49 based on a stock price of $41.80, Revenue estimate for 2025 of $4,870M and Revenue per Share of $85.32. The current ratio is 5% 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 on the expensive side. The dividend yield tests are saying this. It could be reasonable because the P/S Ratio test is saying this. However, the stock price is just below the last high on this cyclical stock which pushes me to think it is relatively expensive. Most of the other testing is saying that the stock price is relatively reasonable.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (4), and Hold (1). The consensus would be a Buy. The 12 month stock price consensus is $54.33 with a high of $60.00 and low of $50.00. The consensus stock price of $54.33 implies a total return of $34.00% with 29.98% from capital gains and $4.02% from dividends.
The last analyst remarks on this stock on Stock Chase is that they have raised the dividend and the company is in much better shape than in past cycles. Stock Chase gives this stock 5 stars out of 5. Amy Legate-Wolfe on Motley Fool says you need the right mix of steady payouts, solid finance and growth potential and Russel Metals has this. Jitendra Parashar on Motley Fool in June 2024 said that while other mining stocks tanked Russel Metal surged. The company put out a press release via Newswire about their fourth quarter results for 2024.
Simply Wall Street via Yahoo Finance looks at this stock. They have one warning of Profit margins (3.8%) are lower than last year (5.9%). Simply Wall Street gives this stock 3 and one half stars out of 5.
Russel Metals Inc is a Canada-based metal distribution company. The company conducts business primarily through three metals distribution segments: metals service centers; Energy Field Stores; and steel distributors. The company generates all of its revenue from the North American market. Its web site is here Russel Metals Inc.
The last stock I wrote about was about was Toromont Industries Ltd (TSX-TIH, OTC-TMTNF) … learn more. The next stock I will write about will be Intact Financial Corp (TSX-IFC, OTC-IFCZF) … learn more on Monday, February 24, 2025 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.
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