I do not own this stock of High Liner Foods (TSX-HLF, OTC-HLNFF). This is a stock liked by the Investment Reporter and is considered to be of average risk. The MPL Communication’s site is here. Ryan Irvine of Keystone also likes this company.
When I was updating my spreadsheet, I noticed that shareholders who bought some 30 years ago have done poorly. This is because the stock peaked in in 1986 around $70 a share. It has never come close to that since. This is why the low return over the past 30 and 33 years. It started to revive in 2009. This stock has a very checkered past with producing shareholder value. It is only the 10 year holding period with a good return. The started P/E Ratio for that is 9.09.
Dividends are paid in CDN$ currency even though this stock now reports in US$. The current dividend yield is low (below 2%) at just 1.73%. This is because it just decreased its dividend by 65.5%. Prior it this the dividend used to be in the moderate range (2% to 4% ranges). The 5, 10 and historical median dividend yields are 2.62%, 2.59% and 2.41%.
The growth rates in the table below are misleading. Generally, the growth to the end last financial year is representative of growth. However, since they just cut their dividends, the growth rate in CDN$ for 5, 10 and 15 years is a negative 13.37%, 4% and 5.85%. Dividend cutting is always negative. It signals that the company is expecting future problems.
The Dividend Payout Ratios are current fine. The DPR for EPS for 2018 was 85% with 5 year coverage at 44%. The DPR for CFPS for 2018 is 22% with 5 year coverage at 18%.
Debt Ratios are a vulnerability, but not serious at present. The Long Term Debt/Market Cap Ratio for 2018 is too high at 1.98. The stock price dropped as did a lot of Canadian stock at 2018 year end. However, the current ratio is still too high at 1.15. The Liquidity Ratio is good at 1.95. The Debt Ratio is a little low at 1.46. I like this ratio to be at 1.50 or higher. The Leverage and Debt/Equity Ratios are a little high at 3.17 and 2.17 respectively.
The Total Return per year is shown below for years of 5 to 35 to the end of 2018 in CDN$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 10.63% | -16.80% | -20.37% | 3.56% |
| 2008 | 10 | 18.22% | 14.53% | 8.15% | 6.38% |
| 2003 | 15 | 13.38% | 6.32% | 2.55% | 3.76% |
| 1998 | 20 | 4.27% | 1.67% | 2.60% | |
| 1993 | 25 | 6.25% | 3.96% | 2.29% | |
| 1988 | 30 | -1.79% | -3.15% | 1.36% | |
| 1983 | 35 | -0.50% | -1.81% | 1.31% |
The Total Return per year is shown below for years of 5 to 14 to the end of 2018 in US$. In US$, this stock has not been traded in the US for very long. Another problem is that this stock is not traded very often in the US in US$.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 5.38% | -22.30% | -25.87% | 3.57% |
| 2008 | 10 | 16.95% | 12.98% | 5.50% | 7.48% |
| 2004 | 14 | 12.37% | 5.76% | 1.06% | 4.70% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 9.31, 14.66 and 20.13. The corresponding 10 year ratios are 9.91, 14.29 and 19.63. The corresponding historical ratios are 8.35, 10.65 and 13.15. The current P/E Ratio is 9.76 based on a stock price of $11.55 and 2018 EPS estimate of $1.18 CDN$ (0.89 US$). This stock price testing suggests that the stock price is relatively cheap. This is in CDN$.
I get a Graham Price of $17.09. The 10 year low, median, and high median Price/Graham Price Ratios are 0.78, 1.12 and 1.47. The current P/GP Ratio is 0.68 based on a stock price of $11.55. This stock price testing suggests that the stock price is relatively cheap. This is in CDN$.
I get a 10 year median Price/Book Value per Share Ratio of 2.03. The current P/B Ratio is 1.05 based on a stock price of $11.55, Book Value of $366M, and Book Value per Share of $10.98. The current ratio is some 48% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This is in CDN$.
I get an historical median dividend yield of 2.41%. The current dividend yield is 1.73% based on a stock price of $11.55 and dividends of $0.20. The current yield is 28% below the historical dividend yield. This stock price testing suggests that the stock price is relatively expensive. This is in CDN$.
The 10 year median Price/Sales (Revenue) Ratio is 0.40. The current P/S Ratio is 0.31 based on 2019 Revenue estimate of $1,255 CDN$ ($944M US$), Revenue per Share of $28.28 and a stock price of $11.55. The current ratio is below the 10 year median ratio by 23%. This stock price testing suggests that the stock price is relatively cheap. This is in CDN$.
Results of stock price testing is that the stock price is probably cheap, but for good reasons. Most of the tests shows that the stock is cheap. The only one to show it is expensive is the dividend yield test and this is because of the dividend cut. Of course, dividend cuts show that the company expects future problems so it maybe a stock you want to avoid.
Is it a good company at a reasonable price? It would seem that the price is cheap, but that does not necessarily point to good stock to buy. There is a lot of risk here. The company, when it was called National Sea Products Ltd almost went bankrupt in 1984. In 1986 it had a high of around $138 pre-consolidation. It had dividends but suspended them in 1990 and did a stock consolidation in 1995. So, it has had a checked past. They had just cut dividends this year. The current cheap price might not make up for the risk involved in owning this company.
When I look at analysts’ recommendations, I find only Hold (4) recommendations. The 12 month price is $9.36 CDN$ ($7.04 US$). This implies a total loss of 17.23% with a capital loss of 18.96% and dividends of 1.36%.
See what analysts are saying on Stock Chase. One analyst says that they made a horrible acquisition in southeast Asia which they have not recovered from. David Jagielski on Motley Fool about this stock and it recent dividend drop. It is true that dividend stocks can cut their dividends, but you less likely to lose money on dividend stocks compared to growth stocks. The company has a press release for the second quarter on Yahoo via the Canadian Press. There is a report on IntraFish about the company dropping less profitable lines. DFS Staff on DFS News says that the Piotroski F-Score shows company has a reasonable good balance sheet. .
High Liner Foods Incorporated is the leading North American processor and marketer of value-added frozen seafood. High Liner Foods' retail branded products are sold throughout the United States, Canada and Mexico under the High Liner, Fisher Boy, Mirabel, and Sea Cuisine labels. The Company also sells branded products to restaurants and institutions under the High Liner, Icelandic Seafood and FPI labels and is the major supplier of private label value-added seafood products to North American food retailers and foodservice distributors. Its web site is here High Liner Foods.
The last stock I wrote about was about was ATCO Ltd (TSX-ACO.X, OTC-ACLLF) ... learn more. The next stock I will write about will be SmartCentres REIT (TSX-SRU.UN, OTC-CWYUF) ... learn more on Friday, September 6, 2019 around 5 pm. Tomorrow on my other blog I will write about Something to Buy September 2019.... learn more on Thursday, September 05, 2019 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
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