Devonshire Industries Limited
Devonshire Industries Limited - DEVON - BH
| Share Price (09/30/07): | $13.85 |
| Stock Rating: | Hold |
| Risk Profile: | Moderate |
| 1-Year Target Price: | $15.00 |
| 1-Year Implied ROR: | 15.5% |
| 52-Week High: | $14.80 |
| 52-Week Low: | $13.00 |
| Avg. Monthly Volume: | 500 |
| Current P/E Ratio: | 11.94x |
| Shareholder's Equity: | $3.0m |
| Total Assets: | $3.1m |
| Return on Equity: | 17.2% |
| Return on Assets: | 16.2% |
| Annual Dividend: | $1.00 |
| Current Yield: | 7.22% |
| Payout Ratio: | 86% |
| Ex-Dividend Date: | 12/27/07 |
| Frequency: | Semi-Annual |
| Shares O/S: | 438k |
| Market Cap: | $6.1m |
| BSX Weight: | 0.21% |
| Book Value: | $6.76 |
| Price/Book: | 2.05x |
| 2005 | 2006 | 2007 | 2008E | |
|---|---|---|---|---|
| EPS: | $1.06 | $0.90 | $1.16 | $1.25 |
| YoY Growth: | 41.3% | (15.1%) | 28.9% | 7.8% |
| P/E Ratio: | 10.85x | 16.61x | 12.50x | 12.00x |
| Fiscal YE Price: | $11.50 | $14.95 | $14.50 |
Website:www.bermudapaint.bm
Fiscal Year-End: March 31, 2007
Ticker: DEVON - BH
Sector: Consumer Products
DEVON 1-year price/volume chart:
Company Description
Devonshire Industries Limited and its subsidiary, Bermuda Paint Company, are engaged primarily in the manufacture and sale of paint and paint-related products. The company maintains ownership in a co-operative laboratory in Cleveland, Ohio, which aids in the development of its high-quality paint products. The company’s retail store “Bermuda Paint” is located on Watlington Road in Devonshire.
2007 Results
Devonshire reported net income for the fiscal year of $509,000, or $1.16 per share, representing a 29% increase over fiscal 2006 income of $396,000, or $0.90 per share. Overall sales grew by a marginal 3% to $3.64 million. The bottom line earnings growth can be attributed to lower cost of sales and a slight reduction in administrative and selling expenses for fiscal 2007 versus fiscal 2006.
Forecast and Recommendation
Devonshire is a small company operating in the limited, low-growth market of paint and paint-related products. Nonetheless, the company’s recent performance has been admirable, with record financial results reported for fiscal 2007, following a somewhat disappointing year in 2006. The company’s future sales growth will no doubt be supported by Bermuda’s steady growth in both home renovations and new residential and commercial construction.
We apply a 12.0x multiple to our fiscal 2008 earnings estimate of $1.25 and calculate a one-year price target of $15.00. LOM rates Devonshire Industries Limited as a “hold”. We note that shares of DEVON, though very thinly-traded, may hold significant appeal for the dividend-hungry investor, with a current yield above 7.0%.
