Is it a good company at a reasonable price? There are few analysts following this stock and they all say Hold. Analysts do not expect the stock price to rise much this year and they complain of small increases in the Revenue per year. There is also talk about the company spinning of their real estate holdings via a REIT. I will continue to hold on to my shares. I would expect total return to be around 8% per year, and that is reasonable. Current price is a reasonable one.
I own this stock of Leon's Furniture Ltd (TSX-LNF, OTC-LEFUF). I had some money in 2006 and this stock has been on MPL Communication's Investor Reporter list for some time. It was also on Mike Higgs' Dividend Growth Stock list. I bought some in 2006 and then some more in 2008, 2009, 2010,2013,2019 and 2022.
When I was updating my spreadsheet, I noticed I have had this stock for almost 18 years and I have a total return per year of 8.03% with 4.57% from capital gains and 3.46% from dividends.
This is not a great growth stock like Toromont Industries, but I think to have a good dividend producing portfolio, you need to have a variety of stock types. In every bear market I have been though, some sectors are hit harder than others and some are hardly hit at all. It seems no one knows what sectors are going to be hit in a bear market ahead of time. In all bear markets, some of my stocks cut or suspend dividends, others keep them flat and then others increase dividends.
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 the next year. The analysts that complain about revenue growth are right. You would want Revenue growth of at least 5% per year. Revenue growth is low for the past 5 and 10 years and is still expected to be low for 2024 at 3.47%.
| Yr | Item | Tot. Gwth | Per Year | Gwth | Coverage |
|---|---|---|---|---|---|
| 5 | Revenue Growth | 9.52% | 1.84% | -5.96% | <-12 mths |
| 5 | AEPS Growth | 57.25% | 9.48% | 1.46% | <-12 mths |
| 5 | Net Income Growth | 25.06% | 4.57% | 1.47% | <-12 mths |
| 5 | Cash Flow Growth | 39.13% | 6.83% | ||
| 5 | Dividend Growth | 28.00% | 5.06% | 12.50% | <-12 mths |
| 5 | Stock Price Growth | 20.83% | 3.86% | 21.15% | <-12 mths |
| 10 | Revenue Growth | 44.86% | 3.78% | 3.47% | <-this year |
| 10 | AEPS Growth | 136.78% | 9.00% | 0.00% | <-this year |
| 10 | Net Income Growth | 106.68% | 7.53% | 0.93% | <-this year |
| 10 | Cash Flow Growth | 204.76% | 11.79% | 21.93% | <-this year |
| 10 | Dividend Growth | 60.00% | 4.81% | 12.50% | <-this year |
| 10 | Stock Price Growth | 29.44% | 2.61% | 21.15% | <-this year |
If you had invested in this company in December 2013, for $1,010.16 you would have bought 72 shares at $19.88 per share. In December 2023, after 10 years you would have received $486.00 in dividends. The stock would be worth $1,307.52. Your total return would have been $1,793.52. This would be a total return of 6.67% per year with 2.61% from capital gain and 4.06% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $14.03 | $1,010.16 | 72 | 10 | $486.00 | $1,307.52 | $1,793.52 |
The current dividend yield is moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 3.27%. The 5, 10 and historical median dividend yields are also moderate at 3.19%, 2.78% and 2.28%. The dividend increase is low (below 8% per year) at 5.1% per year over the past 5 years. The last dividend increase occurred in 2024 and it was for 12.5%. Note that there were no dividend increases in 2022 and 2023. This company does not increase the dividend each year. They occasionally give out special dividends. The company is only on the Globe and Mail all Star dividend list.
The Dividend Payout Ratios (DPR) are good. The DPR for 2023 for Earnings per Share (EPS) is good at 32% with 5 year coverage at 43%. The DPR for 2023 for Adjusted Earnings per Share (AEPS) is good at 31% with 5 year coverage at 30%. The DPR for 2023 for Cash Flow per Share (CFPS) is good at 22% with 5 year coverage at 26%. The DPR for 2023 for Free Cash Flow (FCF) is good at 21% with 5 year coverage at 30%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 31.68% | 43.42% |
| AEPS | 31.07% | 30.17% |
| CFPS | 21.67% | 26.46% |
| FCF | 21.37% | 29.95% |
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2023 is good at 0.07 and currently at 0.06. The Liquidity Ratio for 2023 is low at 1.34. If you added in Cash Flow after dividends, the ratios are fine at 1.68 and currently at 1.76. The Debt Ratio for 2023 is good at 1.86. The Leverage and Debt/Equity Ratios for 2023 are fine at 2.16 and 1.16.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.07 | 0.06 |
| Intang/GW | 0.54 | 0.45 |
| Liquidity | 1.34 | 1.34 |
| Liq. + CF | 1.68 | 1.76 |
| Debt Ratio | 1.86 | 1.86 |
| Leverage | 2.16 | 2.16 |
| D/E Ratio | 1.16 | 1.16 |
The Total Return per year is shown below for years of 5 to 35 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 | 5.06% | 9.61% | 3.86% | 5.76% |
| 2013 | 10 | 4.81% | 6.67% | 2.61% | 4.06% |
| 2008 | 15 | 5.67% | 9.21% | 4.79% | 4.42% |
| 2003 | 20 | 8.51% | 9.05% | 4.88% | 4.17% |
| 1998 | 25 | 9.41% | 10.37% | 5.89% | 4.47% |
| 1993 | 30 | 9.92% | 10.14% | 6.12% | 4.02% |
| 1988 | 35 | 8.44% | 11.71% | 7.43% | 4.29% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 7.67, 8.85 and 10.04. The corresponding 10 year ratios are 10.90, 12.34 and 13.78. The corresponding historical ratios are 12.15, 14.56 and 15.98. The P/E Ratio is going down because EPS is rising faster than the stock price. The current ratio is 10.68 based on a stock price of $22.00 and EPS estimate for 2024 of $2.06. This ratio is lower than the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I also have Adjusted Earnings per Share (SEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 7.73, 8.92 and 10.12. The corresponding 10 year ratios are 11.02, 12.48 and 13.94. The current P/AEPS ratio is 10.68 based on a stock price of $22.00 and AEPS estimate for 2024 of $2.06. 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 Graham Price of $26.47. The 10-year low, median, and high median Price/Graham Price Ratios are 0.82, 0.94 and 1.07. The current P/GP Ratio is 0.83 based on a stock price of $22.00. 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 1.64. The current P/B Ratio is 1.46 based on Book Value of $1028.5M, Book Value per Share of $15.12 and a stock price of $22.0. The current ratio is 11% 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 7.04. The current P/CF Ratio is 4.85 based on Cash Flow per Share estimate for 2024 of $4.54, Cash Flow of $309M and a stock price of $22.00. The current ratio is 31% 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 2.28%. The current dividend yield is 3.27% based on dividends of $0.72 and a stock price of $22.00. The current dividend yield is 43% 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 2.85%. The current dividend yield is 3.27% based on dividends of $0.72 and a stock price of $22.00. The current dividend yield is 15% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10-year median Price/Sales (Revenue) Ratio is 0.56. The current P/S Ratio is 0.59 based on Revenue estimate of $2,540M, Revenue per Share of $37.34 and a stock price of $22.00. The current ratio is 4.6% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
Results of stock price testing is that the stock price is probably reasonable. The 10 year dividend yield test suggests this and it is confirmed by the P/S Ratio test. The P/S Ratio test is the only one with reasonable result but above the median. All the other tests are showing the price as cheap or reasonable and below the median.
When I look at analysts’ recommendations, I find only a Hold (1) recommendation. The consensus would be a Hold. The 12 month target price is $23.00 with only one price. The target price of $23.00 implies a total return of 7.82% with 4.55% from capital gains and 3.27% from dividends. This stock is not well followed.
On Yahoo Finance, the recommendation is also a Hold (3). It also has only one 12 month target price of $23.00. The WSJ has only one recommendation of a Hold.
There are only 2023 entries on Stock Chase and 2 are buys, one Hold and one Trade. The Trade expects the company’s Real Estate to go to a REIT. Stock Chase gives this stock 4 stars out of 5. Joey Frenette on Motley Fool says buy well it is cheap and before it takes off. Ambrose O'Callaghan on Motley Fool says to buy before the stock takes off. The company put out a Press Release for its 2023 fourth quarter results.
Simply Wall Street via Yahoo Finance reviews this company. Simply Wall Street has two warnings of significant insider selling over the past 3 months; and unstable dividend track record. There is no significant selling, just insider not taking up options type deals. These show as selling. Also, the dividend track record is stable, they just do not increase their dividends each year. If you are in the US, it might appear dividends are unstable because dividends are paid in CDN$ and you will have to deal with currency exchange. This site often confuses unstable dividends with dividends paid in CDN$. Simply Wall Street gives this stock 3 and one half stars out of 5.
Leon's Furniture Ltd is a Canada-based retailer which is involved in the sale of home furnishing, mattresses, appliances, and electronics. The firm is also the country's commercial retailer of appliances to builders, developers, hotels, and property management companies. It generates maximum revenue from sales of goods by corporate stores. Its web site is here Leon's Furniture Ltd.
The last stock I wrote about was about was Supremex Inc (TSX-SXP, OTC-SUMXF) ... learn more. The next stock I will write about will be Barrick Gold Corp (TSX-ABX, NYSE-GOLD) ... learn more on Friday, April 19, 2024 around 5 pm. Tomorrow on my other blog I will write about Top 5 Stocks.... learn more on Thursday, April 18, 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.
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