Tuesday, 24 September 2013

Sold TransForce


I sold my 100 shares of TransForce (TFI) today @$21.70 because one, the company has held the dividend steady for 6 quarters, and two, my metrics show that it is overvalued. My forward 12-month dividends are thus reduced by $52.00. 

My total return over 23 months is

($1,130.10 capital gain + $88.00 in dividends) / $1,029.95 cost
= 118.3% (net of commission)

I replaced TFI with a “cheaper” but riskier company, which I will write about later.

My analysis of TransForce:

Average Dividend Yield Analysis*

TFI
Year
High Price
Low Price
1Q
div.
2Q
div.
3Q
div.
4Q
div.
Annual Dividend
High Yield
Low Yield
2007
$15.35
$8.92




$1.58
17.71%
10.29%
2008
$9.52
$3.40




$0.74625
21.95%
7.84%
2009
$8.89
$2.78
$0.10
$0.10
$0.10
$0.10
$0.40
14.39%
4.50%
2010
$13.02
$7.64
$0.10
$0.10
$0.10
$0.10
$0.40
5.24%
3.07%
2011
$16.00
$9.76
$0.10
$0.10
$0.115
$0.115
$0.43
4.41%
2.69%
2012
$19.94
$13.00
$0.115
$0.115
$0.13
$0.13
$0.49
3.77%
2.46%
2013


$0.13
$0.13
$0.13
$0.13
$0.52


Dividend reduction; converted to a corporation in May 2008.
6y ave
11.24%
5.14%







5y ave
9.95%
4.11%







3y ave
4.47%
2.74%







5y
$5.23
$12.65







3y
$11.63
$18.98






Super Cheap
$9.93



The table above indicates anything over $18.98 is just too much.

Graham Price

TFI’s 2010, 2011 and 2012 EPS were $1.08, $1.07 and $1.52. 3Y Ave EPS = $1.22.
TFI’s BV is $8.30.
Graham Price = SQRT (3Y Ave EPS * BV * 22.5) = $15.11

Cyclically Adjusted Price to Earnings Ratio

TFI’s 10Y Ave EPS = $1.06
CAPE = Stock Price / 10Y Ave EPS = $22.03 / $1.06 = 20.8
A CAPE below 20 is good.

Conclusion

I really like management, but I like dividend growth more. I would not hesitate to repurchase shares, should they trade at a more reasonable valuation.


*My method is not perfect as the stocks low price may have occurred before the annual dividend increase.

No comments:

Post a Comment