Stock Analysis: Affordable Growth

Fundamental Rating

We assign a fundamental rating of 7 out of 10 to TOU. TOU was compared to 218 industry peers in the Oil, Gas & Consumable Fuels industry. TOU scores excellent on profitability, but there are some minor concerns on its financial health. TOU is showing excellent growth while it is valued at reasonable prices. Keep and eye on this one! This makes TOU very considerable for growth investing!

1. Profitability

1.1 Basic Checks

In the past year TOU was profitable.

TOU had a positive operating cash flow in the past year.

Each year in the past 5 years TOU has been profitable.

Each year in the past 5 years TOU had a positive operating cash flow.

1.2 Ratios

TOU has a better Return On Assets (5.67%) than 86.70% of its industry peers.

Looking at the Return On Equity, with a value of 8.13%, TOU is in the better half of the industry, outperforming 71.10% of the companies in the same industry.

Looking at the Return On Invested Capital, with a value of 5.37%, TOU is in the better half of the industry, outperforming 72.48% of the companies in the same industry.

TOU had an Average Return On Invested Capital over the past 3 years of 13.45%. This is significantly above the industry average of 7.29%.

The last Return On Invested Capital (5.37%) for TOU is well below the 3 year average (13.45%), which needs to be investigated, but indicates that TOU had better years and this may not be a problem.

		Industry Rank	Sector Rank
ROA	5.67%
ROE	8.13%
ROIC	5.37%

ROA(3y)12.68%

ROA(5y)11.23%

ROE(3y)17.77%

ROE(5y)15.56%

ROIC(3y)13.45%

ROIC(5y)10.36%

1.3 Margins

TOU's Profit Margin of 23.54% is amongst the best of the industry. TOU outperforms 88.07% of its industry peers.

TOU's Profit Margin has improved in the last couple of years.

TOU has a better Operating Margin (26.68%) than 79.82% of its industry peers.

TOU's Operating Margin has improved in the last couple of years.

Looking at the Gross Margin, with a value of 98.71%, TOU belongs to the top of the industry, outperforming 99.54% of the companies in the same industry.

In the last couple of years the Gross Margin of TOU has remained more or less at the same level.

		Industry Rank	Sector Rank
OM	26.68%
PM (TTM)	23.54%
GM	98.71%

OM growth 3Y-13.4%

OM growth 5Y8.65%

PM growth 3Y-20.73%

PM growth 5Y8.86%

GM growth 3Y-0.05%

GM growth 5Y0.07%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

The Return on Invested Capital (ROIC) is just above the Cost of Capital (WACC), so TOU is still creating some value.

The number of shares outstanding for TOU has been increased compared to 1 year ago.

The number of shares outstanding for TOU has been increased compared to 5 years ago.

Compared to 1 year ago, TOU has a worse debt to assets ratio.

2.2 Solvency

An Altman-Z score of 2.78 indicates that TOU is not a great score, but indicates only limited risk for bankruptcy at the moment.

TOU's Altman-Z score of 2.78 is amongst the best of the industry. TOU outperforms 81.19% of its industry peers.

TOU has a debt to FCF ratio of 2.77. This is a good value and a sign of high solvency as TOU would need 2.77 years to pay back of all of its debts.

The Debt to FCF ratio of TOU (2.77) is better than 83.94% of its industry peers.

TOU has a Debt/Equity ratio of 0.08. This is a healthy value indicating a solid balance between debt and equity.

TOU's Debt to Equity ratio of 0.08 is fine compared to the rest of the industry. TOU outperforms 70.64% of its industry peers.

		Industry Rank	Sector Rank
Debt/Equity	0.08
Debt/FCF	2.77
Altman-Z	2.78

ROIC/WACC0.59

WACC9.06%

2.3 Liquidity

TOU has a Current Ratio of 0.89. This is a bad value and indicates that TOU is not financially healthy enough and could expect problems in meeting its short term obligations.

TOU has a Current ratio (0.89) which is comparable to the rest of the industry.

A Quick Ratio of 0.89 indicates that TOU may have some problems paying its short term obligations.

The Quick ratio of TOU (0.89) is better than 62.39% of its industry peers.

The current and quick ratio evaluation for TOU is rather negative, while it does have excellent solvency and profitability. These ratios do not necessarly indicate liquidity issues and need to be evaluated against the specifics of the business.

		Industry Rank	Sector Rank
Current Ratio	0.89
Quick Ratio	0.89

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

TOU shows a strong negative growth in Earnings Per Share. In the last year the EPS decreased by -30.56%.

Measured over the past years, TOU shows a very strong growth in Earnings Per Share. The EPS has been growing by 24.29% on average per year.

The Revenue has decreased by -3.01% in the past year.

The Revenue has been growing by 20.93% on average over the past years. This is a very strong growth!

EPS 1Y (TTM)-30.56%

EPS 3Y-17.7%

EPS 5Y24.29%

EPS Q2Q%-46.04%

Revenue 1Y (TTM)-3.01%

Revenue growth 3Y7.8%

Revenue growth 5Y20.93%

Sales Q2Q%-32.02%

3.2 Future

Based on estimates for the next years, TOU will show a very strong growth in Earnings Per Share. The EPS will grow by 30.49% on average per year.

TOU is expected to show quite a strong growth in Revenue. In the coming years, the Revenue will grow by 11.63% yearly.

EPS Next Y73.12%

EPS Next 2Y37.21%

EPS Next 3Y25.44%

EPS Next 5Y30.49%

Revenue Next Year33.89%

Revenue Next 2Y18.18%

Revenue Next 3Y11.63%

Revenue Next 5YN/A

3.3 Evolution

The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.

Although the future Revenue growth is still strong, it is not able to hold up the even more excellent growth rate of the past years.

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4. Valuation

4.1 Price/Earnings Ratio

The Price/Earnings ratio is 17.49, which indicates a rather expensive current valuation of TOU.

Compared to the rest of the industry, the Price/Earnings ratio of TOU indicates a somewhat cheap valuation: TOU is cheaper than 61.01% of the companies listed in the same industry.

When comparing the Price/Earnings ratio of TOU to the average of the S&P500 Index (28.22), we can say TOU is valued slightly cheaper.

With a Price/Forward Earnings ratio of 10.10, the valuation of TOU can be described as very reasonable.

Based on the Price/Forward Earnings ratio, TOU is valued a bit cheaper than the industry average as 61.01% of the companies are valued more expensively.

The average S&P500 Price/Forward Earnings ratio is at 20.86. TOU is valued rather cheaply when compared to this.

		Industry Rank	Sector Rank
PE	17.49
Fwd PE	10.1

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, TOU is valued a bit cheaper than the industry average as 65.60% of the companies are valued more expensively.

TOU's Price/Free Cash Flow ratio is in line with the industry average.

		Industry Rank	Sector Rank
P/FCF	48.71
EV/EBITDA	8.01

4.3 Compensation for Growth

TOU's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.

The excellent profitability rating of TOU may justify a higher PE ratio.

A more expensive valuation may be justified as TOU's earnings are expected to grow with 25.44% in the coming years.

PEG (NY)0.24

PEG (5Y)0.72

EPS Next 2Y37.21%

EPS Next 3Y25.44%

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5. Dividend

5.1 Amount

TOU has a Yearly Dividend Yield of 3.31%.

TOU's Dividend Yield is a higher than the industry average which is at 7.57.

TOU's Dividend Yield is a higher than the S&P500 average which is at 2.44.

		Industry Rank	Sector Rank
Dividend Yield	3.31%

5.2 History

The dividend of TOU is nicely growing with an annual growth rate of 48.02%!

TOU has been paying a dividend for over 5 years, so it has already some track record.

Dividend Growth(5Y)48.02%

Div Incr Years0

Div Non Decr Years0

5.3 Sustainability

93.81% of the earnings are spent on dividend by TOU. This is not a sustainable payout ratio.

The dividend of TOU is growing, but the earnings are growing slower. This means the dividend growth is not sustainable.

DP93.81%

EPS Next 2Y37.21%

EPS Next 3Y25.44%

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Toronto Stock Exchange / Energy / Oil, Gas & Consumable Fuels

1. Profitability

1.1 Basic Checks

1.2 Ratios

1.3 Margins

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2. Health

2.1 Basic Checks

2.2 Solvency

2.3 Liquidity

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3. Growth

3.1 Past

3.2 Future

3.3 Evolution

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4. Valuation

4.1 Price/Earnings Ratio

4.2 Price Multiples

4.3 Compensation for Growth

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5. Dividend

5.1 Amount

5.2 History

5.3 Sustainability

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