# Wajax (WJX.TO)



## dotnet_nerd (Jul 1, 2009)

Wajax showed up on my radar, i have to admit I knew nothing about this 150 year old company.

http://www.wajax.com/index.html

The dividend looks attractive (~6.3%) despite sharp cuts in the past.

Any thoughts on this puppy?


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## Gunstar (Nov 8, 2011)

I can't comment on the stock, but as a company they are pretty solid. Their parnership with Palfinger is strong and they are my companies preffered choice over other large firms for picker (Crane) repairs. We have worked with them for the past 5-6 years, and they own alot of other companies that we work with as well (Such as Waterous Power Systems).


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## rassmy (May 7, 2010)

I did not know about thi company until i read an article in the money saver magazine. I was impressed when i analyzed the company and their financial statement. It is considered a small cap, although it is been around for 150 years. The dividend very stable. Keep in mind this company is economy sounds, it is very sensitive to a recession. I get into the stock at around 32$, it is very good diversification to my dividend portfolio.


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## londoncalling (Sep 17, 2011)

I have added this one to my watchlist as of late... any thoughts?


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## Barwelle (Feb 23, 2011)

Should get cannadian to do a detailed analysis of this company after his review of Automodular!


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## doctrine (Sep 30, 2011)

I have been buying Wajax lately. I was not a buyer at $50 but now the price has come down to $40, the yield is at or above 8%, and the P/E is at or below 10. It's not perfect so I wouldn't bet the farm on them but I do equal weight them. I do not expect to see a dividend increase as large as they made this year, but I'm happy to hold at a 8%+ yield for a couple of years until they can increase again. This is a great category of smaller cap Canadian former trusts that have a P/E of 10 or less and huge dividends but they still do not pay more than earnings - fantastic and my favorite type.


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## Ethan (Aug 8, 2010)

The stock is intriguing to me due to the large dividend that appears sustainable. Couple items I'd like to point out from my cursory review of their financials over the lunch hour.

Cashflows will be down in 2013. Wajax was previously structured as an income trust, upon conversion to a trust they had a significant income tax deferral that resulted in them not making any tax payments in 2011 or 2012. That is coming to an end in 2013, as they mention in their Q3 report they will resume monthly tax installments in 2013. They also have a $44 million tax payment due in January 2013. Wajax is building up their Hitachi mining equipment inventory without committed purchases. They disclosed in their Q3 MD&A that they might have to access debt or equity markets to fund acquisition and growth related working capital and capex. Last week they increased their bank credit facility from $225 million to $300 million, I assume in preparation for the above mentioned cash drains.

Wajax mentions their bank credit facility contains covenants that would restrict their ability to pay dividends if their Debt/EBITDA were to become greater than 3.0. Generally banking agreements define debt and EBITDA to only include certain items. I have calculated 4 quarter trailing EBITDA by taking net income, and adding back taxes, finance costs and earnings, to get EBITDA of $114 million. Total liabilities on the balance sheet are $420 million, implying a ratio of 3.7. Debt must be defined in the agreement as only certain liabilities (perhaps only interest bearing liabilities), I imagine provisions, derivative instruments, employee benefits, payables etc. are not included in the debt calculation. I wish they would say what their EBITDA and debt are considered to be as part of this agreement as that would help me evaluate the sustainability of the dividend.

On a cash basis they do look strong, generating 3 and 9 month free cash flows of $18.3m and $59.4m, against dividend payments of $13.6m and $37.0m.

Future outlook is somewhat murky as they expect slowdowns in the oil and gas and mining sectors to continue into 2013.

I might pick up 100 shares in my TFSA. An 8% dividend yield fully sustainable by free cash flows is difficult to pass up. 3 and 9 month free cash flows could drop 26% and 38%, respectively, and still be greater than the dividend payments. I'm not that pessimistic about the economy going forward and think this might be a nice pickup.


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## liquidfinance (Jan 28, 2011)

I own this. Purchased a little too high. At the time I was reluctant but pulled the trigger anyway. I continue to hold and will add as and when funds permit.


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## blin10 (Jun 27, 2011)

this thing is on fire today


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## daddybigbucks (Jan 30, 2011)

blin10 said:


> this thing is on fire today


Could just be for the very low float of shares ~16M.


interesting stock. I will have to do some research though.


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## blin10 (Jun 27, 2011)

damn, what to do, got in at 40 and this thing is at 44 now, to sell or not


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## BullAllTheWay (Feb 29, 2012)

You never heard about buy and hold?


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## doctrine (Sep 30, 2011)

Where else are you going to find a great 7%+ yield? I'm holding - if it's at this level by the end of the year, it's a 15%+ return with the dividend. If it rises to its 52 week high of >$52, you could be giving up 25% more return by selling now (18%+7% dividend). Or, perhaps you just get the great 7-8% dividend every year. You're certainly not going to get a Canadian bond for 8% (try 1.8%).


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## rivet (Nov 30, 2012)

So still worth to buy at $44? How is the long term picture paint out for this stock?


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## doctrine (Sep 30, 2011)

It's P/E is 11. That's a great value. It's possible it drops again to $40 - it was there only three weeks ago. If I was buying now, I'd have to accept that it could drop to $39 in a week - then what? If you'd buy more, then you should consider getting in. If you're not comfortable, then wait and see what happens. They're on the TSX composite, so they'll be affected in a big market sell-off.


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## doctrine (Sep 30, 2011)

For those who are interested, it's now dropped back to levels where the dividend is 7.6%. Their annual results are out next week, so you could jump in now or wait a few days.


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## liquidfinance (Jan 28, 2011)

Results 

http://www.wajax.com/pdfs/press_releases/2012/News Release - Q4 2012 - FINAL.pdf

Still seems a very cheap company although a play on the economic recovery and any further slow down could really hammer the price and put the dividend at risk.


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## Ethan (Aug 8, 2010)

The results weren't bad. I calculated Q4 free cash flow to be $16.5 million against dividends of $13.6 million, and full year free cash flows to be $72.8 million against dividends of $50.6 million. I interpret this to mean the dividend is sustainable.

2012 total dividends were $50.6 million, and the increase in equity was $14.3 million, for a total increase of $64.9 million. 2012 beginning equity was $227.6 million, meaning WJX returned to shareholders 28.5% of book value in 2012. If performance remains flat, at today's purchase price of 2.8x book value, you are looking at a 10% return on your investment.

I picked up 100 shares this morning at $39.33. I'm excited for the monster dividends to start coming in.


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## leeder (Jan 28, 2012)

^ I picked up some just under $40. Agree with your analysis. A bit worried at the outlook, but I figure I can live on the 7.95% yield


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## doctrine (Sep 30, 2011)

The Q4 payout ratio was 95% of net earnings but over the last 4 quarters it's 82%. That probably rules out a dividend increase, but I'm happy to hold at a 8% yield for a while. I usually don't get the warning bells until the payout ratio drops below 100% of net earnings, especially for a former income trust. I don't really need to add any, since this is where I started buying at back in Dec.


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## cstyles (Nov 14, 2012)

Bumping this up to the top to get some feedback from some of you veterans; WJX is in the low $38's this morning, 52 week low crossed, p/e at very low 9.53x. Stock is oversold, Q4 and 2012 financials certainly were not 'bad' and the divvy is way over 8% at this SP and appears to be sustainable based on recent financials and projections for 2013. 

Other than the fact that Wajax is very sensitive to industrial sector ups & downs, what's the underlying story here? Been on a downward trend all week, who's buying any why? Or not buying and why? 

Thanks!


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## cstyles (Nov 14, 2012)

Down to $37.84 now today! PE 9.3, yield 8.5%+. Do the 2012 financials and 2013 outlook support this drop in any way? Seems like wjx is TOO cheap right now...


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## liquidfinance (Jan 28, 2011)

They didn't give an overly optimistic outlook to the first half. 

I'm holding for the time being and will look at add to my position probably on the next set of results. I was suckered into the yield with this one when I purchased and kind of kicked myself for not being patient at the time.


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## doctrine (Sep 30, 2011)

I'm holding, I definitely like the stock. At $38 I'm considering adding, but I think I might be patient and see if it falls any farther.


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## hystat (Jun 18, 2010)

hope you were patient. down a buck today to 36.34


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## doctrine (Sep 30, 2011)

I haven't done anything. Honestly, I think I'd wait a couple months until the next quarterly report just to be sure their revenue and earnings are holding. They traded at $31 as recently as 18 months ago.


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## liquidfinance (Jan 28, 2011)

doctrine said:


> I haven't done anything. Honestly, I think I'd wait a couple months until the next quarterly report just to be sure their revenue and earnings are holding. They traded at $31 as recently as 18 months ago.


This is my plan. If there are fears in the economy then this could be hit fairly hard. So long as the earnings hold we will have a fantastic buying opportunity. Overall I'm confident in this as a long term play. Just annoyed the I overpaid in the first place.


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## doctrine (Sep 30, 2011)

That is the game unfortunately - on the other hand, other stocks have gone up considerably which is why I stay diversified in the small cap sector. You can never tell, but if you buy on valuation then I find it's not as bad as it could otherwise be. 

If Wajax is holding steady with revenue, which is at most 1/3rd related to oilfield services, then it really could be an outstanding opportunity. These guys aren't a flash in the pan - they've been public since 1950 and had $1.5 billion in sales last year. While oil and mining income declines, construction and forestry income has been increasing. 

As with everything though, they could be a better deal later than they are today. If it traded at $31 in 2011 then it easily could again.


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## Canuck (Mar 13, 2012)

ouch Wajax....do you guys think there is a chance they might cut their dividend?


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## doctrine (Sep 30, 2011)

Looks like a dividend cut from 27 cents to 20 cents a share. I guess there's good and bad news here. At least they're not destroying book value by stubbornly paying a higher dividend. But it's a cut. I'm not going to sell but I may be able to use the capital loss later in the year if they don't recover. OTOH my account is still in the green today despite a $600 loss on Wajax.


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## liquidfinance (Jan 28, 2011)

doctrine said:


> Looks like a dividend cut from 27 cents to 20 cents a share. I guess there's good and bad news here. At least they're not destroying book value by stubbornly paying a higher dividend. But it's a cut. I'm not going to sell but I may be able to use the capital loss later in the year if they don't recover. OTOH my account is still in the green today despite a $600 loss on Wajax.


I'm just going to keep my eye on them. They have cut the divi but I don't see a need to panic sell just yet. Yield is still substantial and the cut was fairly expected considering their 75% payout policy. You could work that out from the last report to see the cut was looming. It's a fairly small holding for me so not too much damage has been caused by the drop today.


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## BlackThursday (Apr 25, 2011)

liquidfinance said:


> I'm just going to keep my eye on them. They have cut the divi but I don't see a need to panic sell just yet. Yield is still substantial and the cut was fairly expected considering their 75% payout policy. You could work that out from the last report to see the cut was looming. It's a fairly small holding for me so not too much damage has been caused by the drop today.


Read again. 
Their objective is to pay out a MINIMUM of 75% of current year expected net earnings. Not a MAXIMUM. 
In fact, quoting an analyst: "management has publicly said that as long as the EBITDA is lower than 1.5-2x, they will use debt to sustain the dividend".

I've never owned this but I did, at least, look at it a little while ago.


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## doctrine (Sep 30, 2011)

There is good news in the report, in that sales in every category except mining, oil and gas did well. 

_Lower mining equipment sales more than offset gains in equipment sales in the construction, forestry and material handling sectors and a 12% increase in parts and service volumes._

I think bringing the dividend back to last year's level is a good idea. As much as seeing a dividend cut is bad, nothing bothers me more than a stubbornly high dividend and a payout ratio more than 100%. I'll hold and watch for now.


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## skiwest (Oct 24, 2011)

now that the shoe has dropped I'm buying , its still a 7% div now well covered


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## hystat (Jun 18, 2010)

bought some more @ 31.20... time to catch a falling star I hope


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## doctrine (Sep 30, 2011)

http://online.wsj.com/article/PR-CO-20130809-908484.html?mod=googlenews_wsj

Earnings of $0.81 a share; this gives them a P/E of about 12 and a payout ratio of 84% over the last six months (74% last quarter). Overall not bad and I think would be supportive of current price levels. Any bounce back in mining, oil and gas industries would be immediately positive. I did buy 65 shares in June at $30.18 to average down, I'm currently about 10% down on my position on this which overall isn't too bad.


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## liquidfinance (Jan 28, 2011)

These results are much better than I expected. Although I did brace for a worst case scenarion of a 100% + divi payout and the thought of another cut.

I added to my holdings on these results and I agree entirely with your outlook.


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## Pano (Oct 16, 2012)

Has come down again quite a bit. Thinking of getting in at this price. 

Anyone else thinking the same?


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## gibor365 (Apr 1, 2011)

Pano said:


> Has come down again quite a bit. Thinking of getting in at this price.
> 
> Anyone else thinking the same?


i was also thinking......but i hate to buy stocks that cut dividends


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## doctrine (Sep 30, 2011)

It looks down on a bad quarter. Management still predicting a decent year. I sold out late last year at $36-37, but if it drops to $30 again like it did last year I might be back in again.


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## MrMatt (Dec 21, 2011)

I looked at this last year, I bought Strad (SDY) instead.

I'm pleased with my choice.


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## hystat (Jun 18, 2010)

Terex has sold their straight frame (mining) truck division to Volvo. I suspect that would move sales/support eventually from Wajax (Terex dealer) to Strongco (Canadian Volvo equipment dealer)
http://www.equipmentworld.com/volvo-terex-finalize-articulated-truck-rigid-frame-truck-sale/

not sure why they show a Terex articulated truck in that article- I don't think Terex articulated trucks are part of the deal. Just a goof on the stock photo i suspect.

edit - better source - :
http://www.volvoce.com/construction...m.aspx?news.itemid=145628&news.language=en-gb
_The deal also sees a further three models of articulated hauler added to the Volvo portfolio, with payloads ranging from 25 to 38 tons_
so articulated trucks too - although Volvo is already well positioned with articulated units.


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## thepitchedlink (Feb 17, 2014)

Been watching this one for a while...nice divi....what's everyone think about them now...seems this thread is old


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## dubmac (Jan 9, 2011)

tied strongly to resource (mining and materials) insdustries. Why not just buy XMA instead. If I'm not mistaken, they sell/lease equipment to mining, O&G companies. If there is a turnaround in mining, then you're likely to see an improvement in WJX - til then, not likely IMO.


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## thepitchedlink (Feb 17, 2014)

I'll look at that...I don't know much about XMA....


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## Andrej (Feb 25, 2010)

Anyone else trying to ignore their itchy trigger finger?


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## Eder (Feb 16, 2011)

I already have shuffled up to the trough...oink oink...and for dessert dont miss RME


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## Spudd (Oct 11, 2011)

Eder said:


> I already have shuffled up to the trough...oink oink...and for dessert dont miss RME


Are you me? I bought both of these this week as well.


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## hollyhunter (Mar 10, 2016)

WAJAX CORPORATION (WJX.TO) Bullish technical indication: MACD goes green, bullish cross in Stochastic oscillator and RSI is trading near to 67.49 level with positive bias.


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## hollyhunter (Mar 10, 2016)

Still looks good. On watch for clear above 16.25.


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## Testing-Testing-123 (Nov 2, 2017)

Been a while since a post was made on this stock.
I have several thousand shares, and am thinking of more. P/E is really good right now, the economy seems flat, and TD says hold..... I see that as buy indicators....any comments?


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