Linked here is a detailed quantitative analysis of Raven Industries Inc. (RAVN). Below are some highlights from the above linked analysis:
Company Description: Raven Industries Inc. manufacturer provides electronic precision-agriculture products, reinforced plastic sheeting, electronics manufacturing services, specialty aeronautics, and sewn products.
Fair Value: I consider four calculations of fair value, see page 2 of the linked PDF for a detailed description:
- Avg. High Yield Price
- 20-Year DCF Price
- Avg. P/E Price
- Graham Number
Dividend Analytical Data: In this section there are three possible Stars and three key metrics, see page 2 of the linked PDF for a detailed description:
- Free Cash Flow Payout
- Debt To Total Capital
- Key Metrics
- Dividend Growth Rate
- Years of Div. Growth
- Rolling 4-yr Div. > 15%
Dividend Income vs. MMA: Why would you assume the equity risk and invest in a dividend stock if you could earn a better return in a much less risky money market account (MMA)? This section compares the earning ability of this stock with a high yield MMA. Two items are considered in this section, see page 2 of the linked PDF for a detailed description:
- NPV MMA Diff.
- Years to > MMA
Other: RAVN is a member of the Broad Dividend Achievers™ Index.
Conclusion: RAVN did not earn any Stars in the Fair Value section, earned three Stars in the Dividend Analytical Data section and earned one Star in the Dividend Income vs. MMA section for a total of four Stars. This quantitatively ranks RAVN as a 4 Star-Buy.
Using my D4L-PreScreen.xls model, I determined the share price would need to increase to $35.67 before RAVN's NPV MMA Differential decreased to the $1,200 minimum that I look for in a stock with 23 years of consecutive dividend increases. At that price the stock would yield 1.54%.
Resetting the D4L-PreScreen.xls model and solving for the dividend growth rate needed to generate the target $1,200 NPV MMA Differential, the calculated rate is 14.0%. This dividend growth rate is slightly less than the 15.0% used in this analysis, thus providing only a slim margin of safety. RAVN has a risk rating of 1.25 which classifies it as a low risk stock.
RAVN is a company that I have recently started to follow closely. Its solid cash flows, stong balance sheet and lack of debt are alluring to a dividend investor. Although RAVN is trading near my buy price of $31.75, I have two concerns: 1.) the low dividend yield and 2.) the high growth rate needed to meet my NPV MMA Differential target. For now I will pass on a buy, but ill continue to closely monitor the stock. For additional information, including the stock's dividend history, please refer to its data page.
Disclaimer: Material presented here is for informational purposes only. The above quantitative stock analysis, including the Star rating, is mechanically calculated and is based on historical information. The analysis assumes the stock will perform in the future as it has in the past. This is generally never true. Before buying or selling any stock you should do your own research and reach your own conclusion. See my Disclaimer for more information.
Full Disclosure: At the time of this writing, I held no position in RAVN (0.0% of my Income Portfolio). See a list of all my income holdings here.