Russel Metals (Symbol-RUS)

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Arby
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Re: Russel Metals (Symbol-RUS)

Post by Arby »

The four analysts I've read are forecasting 2013 EPS around $1.50 - $1.60. All four analysts are forecasting a substantial increase in 2014, to around $2.00 - $2.30. I haven't heard any indications that management is thinking about cutting the dividend.
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Re: Russel Metals (Symbol-RUS)

Post by westcoastfella »

I have not read anything about an impending dividend cut either, from analysts or from the company itself. I'm speculating based on my own (limited) analysis for the last 2-or-so years for EPS and dividend:

Code: Select all

Quarter       EPS        Div
Q2/11         0.52       0.28
Q3/11         0.43       0.30
Q4/11         0.47       0.30
Q1/12         0.55       0.30
Q2/12         0.38       0.35
Q3/12         0.37       0.35
Q4/12         0.34       0.35
Q1/13         0.36       0.35
Q2/13         0.33       0.35
Perhaps I'm being overly simplistic in my assessment, but this is not a good trend. They'll have to increase EPS substantially in Q3/4, issue new debt, or continue to burn through their cash reserves (currently at ~135M, about half of what it was a year ago) to keep the dividend at this level. Or, am I missing something, or not taking something into account?
The four analysts I've read are forecasting 2013 EPS around $1.50 - $1.60. All four analysts are forecasting a substantial increase in 2014, to around $2.00 - $2.30
In RUS's Q2 filing, they said they expect prices and demand to be consistent for the remainder of 2013, but do expect prices to increase in subsequent quarters - perhaps this is where the FY14 projections are coming from. They are also focusing on cost cutting and streamlining inventories, as they don't expect shipments to increase.
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Re: Russel Metals (Symbol-RUS)

Post by Peculiar_Investor »

In their 2013 2nd Quarter Financial Report there are a number of places where the dividend and their ability (and restrictions) to pay dividends are addressed. For example
Russel Metals wrote:We have $300 million of 6.0% Senior Notes due April 19, 2022. The indenture for our Senior Notes has restrictions related to quarterly dividends in excess of $0.35 per share. We currently have a basket of approximately $147 million available for restricted payments, which is adjusted for 50% of our net earnings or losses on a quarterly basis. This basket would be available for increased dividend payments.

Under our syndicated bank facility, the payment of dividends is subject to excess borrowing base availability of not less than four times the declared dividend. We do not believe this requirement will restrict our ability to pay a dividend as our borrowing base, which is based on percentages of accounts receivable and inventories, has traditionally been in excess of borrowings plus four times the current dividend.

<skipping ahead>

LIQUIDITY
At June 30, 2013, we had cash of $161 million compared to $115 million at December 31, 2012. As at June 30, 2013, we had bank indebtedness of $22 million compared to indebtedness of $14 million at December 31, 2012 resulting in an increase in net cash of $38 million.

We generated cash of $31 million from operations in the second quarter of 2013 and generated $24 million from reducing working capital. We utilized $7 million investing in capital expenditures and returned $21 million through dividends to shareholders.
As a long term RUS shareholder, I've felt that management has prudently managed their cash flow and dividend payments through both good times and bad. I'm not expecting a dividend increase any time soon, on the other hand, from my read of their financials and history, the dividend seems safe at current levels.
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Re: Russel Metals (Symbol-RUS)

Post by westcoastfella »

It would seem that the Q2 earnings report was not fully quoted at G&M. Appreciate the clarification p_i - option 3 it is.
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Re: Russel Metals (Symbol-RUS)

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As a long term RUS shareholder, I've felt that management has prudently managed their cash flow and dividend payments through both good times and bad. I'm not expecting a dividend increase any time soon, on the other hand, from my read of their financials and history, the dividend seems safe at current levels.
I remember looking at Russel a long time ago and liked how the company was managed;

http://www.financialwisdomforum.org/for ... el#p345778

Note this is a quick fly through, not in depth analysis and may be inaccurate, it's just a quick observation based on a quick look;

Comparing end of 2010 balance sheet to end of Q2 2013 balance sheet, I used to find the company "OK" back in late 2009 because their cash on hand was similar to their long term debt.

Now they have cash of 161 mil vs long term debt of 455mil. This isn't a very good direction. It means they have piled on debt, while earnings during that time have increased about 10% +/-.

The additional debt looks to have been put into goodwill (up to 190 million from 27 million) and inventory (up to 771 million from 544 million). The substantial change in the balance sheet hasn't produced a proportional increase in profitability.

The development that I'd feel the most uncomfortable with would be the cash/debt ratio, which has gone from close to 1/1 to 0.35/1.

Hmm at that time we were looking at royal host debs, russel metal debs and russel metals common stock. Looks more or less like this;

Royal Host debs went from 70 to 90, 6% div, = 28.5% gain plus dividends of 21% = 49.5%

Russel common stock, about 20.85 to 27.03 plus 1.40/yr div, so 20.85 to 31.93 div included = 53.1%

Russel debentures 103 to 115.72 plus 7.75% div = 39.4% gain

Looks like the russel common stock was the best, plus the dividends were better from a tax perspective point of view.

At this time I wouldn't feel comfortable with Russel because of the slow but steady deterioration of the balance sheet. Management is probably capable and competent but the business they are in probably isn't easy.

Owners of this stock might want to take the time to study the deterioration of the balance sheet over the past several years and extrapolate it into the future to see what the company might look like several years down the road if things do not change.
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Re: Russel Metals (Symbol-RUS)

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Anyone looking at the 6% yield and wondering if it is sustainable?
I don't intend to offend anyone, that part is just a bonus.

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Re: Russel Metals (Symbol-RUS)

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Don't know. I just about bought this stock about year and half ago at circa $18 IIRC,and hesitated given its resource industry ties AND its long term chart. Just looked at a 10 year chart now and this stock has gone nowhere for 10 years. It was over $32 10 years ago. Is it worth it stricly as an income stock. Don't know because it has been a dividend cutter in the past. I no longer have it on my watchlist.
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Re: Russel Metals (Symbol-RUS)

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AltaRed wrote: 17 Jun 2017 20:34 Don't know. I just about bought this stock about year and half ago at circa $18 IIRC,and hesitated given its resource industry ties AND its long term chart. Just looked at a 10 year chart now and this stock has gone nowhere for 10 years. It was over $32 10 years ago. Is it worth it stricly as an income stock. Don't know because it has been a dividend cutter in the past. I no longer have it on my watchlist.
Sold when they cut the dividend a few years back. Same as Manulife. No plans to repurchase either.

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Re: Russel Metals (Symbol-RUS)

Post by Peculiar_Investor »

From another topic,
BRIAN5000 wrote: 24 Feb 2024 01:45 What is the lowest dividend RUS has ever paid?
Actual dividend or are you more interested in the divided yield history?

The actual dividend history can be found on Yahoo Finance at Russel Metals Inc. (RUS.TO) Stock Historical Prices & Data - Yahoo Finance that would indicate that the quarterly $0.05 dividend back in 2000 was the lowest dividend. At that time the price was in the $4.00 range, making the yield around 5%.

You could data mine Russel Metals Inc. (RUS.TO) Monthly Historical Prices & Data - Yahoo Finance for more context of the dividend yield history. It has been bumpy.
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Re: Russel Metals (Symbol-RUS)

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Peculiar_Investor wrote: 24 Feb 2024 09:52 From another topic,
BRIAN5000 wrote: 24 Feb 2024 01:45 What is the lowest dividend RUS has ever paid?
Actual dividend or are you more interested in the divided yield history?

The actual dividend history can be found on Yahoo Finance at Russel Metals Inc. (RUS.TO) Stock Historical Prices & Data - Yahoo Finance that would indicate that the quarterly $0.05 dividend back in 2000 was the lowest dividend. At that time the price was in the $4.00 range, making the yield around 5%.
Using a different data source, I have RUS cutting its dividend in 1992 and then reinstating it in 2000. But I'm doubtful the observation means much to today's investors.
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Re: Russel Metals (Symbol-RUS)

Post by BRIAN5000 »

Sorry it appeared to me the OP was talking about dividend yield to try to value a stock.
For Russel soft buy and sell targets may be 4-6% over a 20 year time frame. Not a one number answer but a piece of the puzzle on valuing a stock.
RUS 2.png
RUS 2.png (256.04 KiB) Viewed 304 times
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Re: Russel Metals (Symbol-RUS)

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BRIAN5000 wrote: 24 Feb 2024 12:35 Not a one number answer but a piece of the puzzle on valuing a stock.
Thanks Brian. Many different ways to value stocks.

I've held Russel Metals for a number of years, at least since adding to holding in 2009.

Dividend yield is NOT one of the metrics that I use when analyzing stocks for purchase/sale.
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Re: Russel Metals (Symbol-RUS)

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Peculiar_Investor wrote: 24 Feb 2024 14:47 Dividend yield is NOT one of the metrics that I use when analyzing stocks for purchase/sale.
As a dividend investor I find dividend yield is definitely something I look at. It at least forces me to look at the payout ratio (dividend compared to the company's earnings per share).
If a company has a high dividend, I want to know why. Are they paying out too much so that they don't have enough capital to maintain profitability. If they're not re-investing enough of their profits over long periods, that's a red flag.

Are you saying that a company with an 8% dividend and one with a 2% dividend makes no difference to your analysis?

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Re: Russel Metals (Symbol-RUS)

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like_to_retire wrote: 24 Feb 2024 15:28 Are you saying that a company with an 8% dividend and one with a 2% dividend makes no difference to your analysis?
A qualified yes. Look at the post I linked above about my 2009 purchase of Russel Metals, in particular the dividend yield at the time,
Peculiar_Investor wrote: 24 Feb 2009 09:36 Added to my position in Russel Metals (RUS) this morning @ $12.90. Yield on new dividend is 7.75%, which is at the top end of their historical range. I'm willing to be paid to wait for an upturn in the economy and I believe in the management expertise.
I'm definitely not a dividend investor and I did try and describe my approach in If you are picking individual stocks what is your strategy? which is based on total return rather than dividend yield or growth metrics.

So why "qualified yes". Let me try and explain a bit further,
like_to_retire wrote: 24 Feb 2024 15:28
Peculiar_Investor wrote: 24 Feb 2024 14:47 Dividend yield is NOT one of the metrics that I use when analyzing stocks for purchase/sale.
As a dividend investor I find dividend yield is definitely something I look at. It at least forces me to look at the payout ratio (dividend compared to the company's earnings per share).
Maybe I should rephase it a bit, dividend yield is NOT one of the key metrics that I use and definitely isn't a screening criteria.
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Re: Russel Metals (Symbol-RUS)

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https://www.aaii.com/latest/article/103 ... easurement

Even greater insight can be gained by looking at the year-by-year dividend yields and calculating the annual high-low range. The low yield for a given year is determined by dividing the dividends paid during the year by the high stock price during the calendar year, while the high yield is calculated using the low price during the year. These high and low yields can be thought of as a valuation trading range that is driven by both dividend and price changes. Yields near or below the five-year average low yield imply the stock is overvalued relative to its historical norm. Yields near or above the five-year average high yield imply that the stock may be undervalued relative to its historical norm.
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