Is it a good company at a reasonable price? The stock price is testing as cheap, so it is a reasonable price to pay. I still think this is a good company. They have had problems because of Covid, but I expect improvements in the future. Of course, I could be wrong, but I have not lost faith in this company. They are still increasing their dividends, even if it is at a low rate. Future growth might be lower than in the past.
I own this stock of Saputo Inc (TSX-SAP, OTC-SAPIF). When I sold RIM in 2006, I bought some Saputo. I had been following this stock and thought it was a strong Canadian Dividend paying stock. In 2012, I sold some that I had in my RRSP account because I need more dividend income and dividend yield is low on this stock.
In 2013, I need to raise more money in the RRSP account because of yearly withdrawals. I sold the stock with the lowest dividend yield. I still want to hold this stock, but it would be a better stock in my Trading account rather than in my RRSP accounts because of the low dividends. In 2013 and 2014 I bought some of this stock for my TFSA.
When I was updating my spreadsheet, I noticed that this stock also has been publishing Adjusted Net Earnings and Adjusted EPS (AEPS) data. The financial year ends March 31, so the financial year I am reporting on is for March 31, 2022.
I have made money on this stock, at the rate of 15.12% per year over the past 16 years. However, I have made money because I have sold some of my stock at a higher price than I have paid for them.
If you had invested in this company in December 2011, $1014.78 you would have bought 52 shares at $19.52 per share. In December 2021, after 10 years you would have received $304.20 in dividends. The stock would be worth $1,482.00. Your total return would have been $1,786.20.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $19.52 | $1,014.78 | 52 | 10 | $304.20 | $1,482.00 | $1,786.20 |
The dividend yields are moderate with dividend growth low. The current dividend yield is moderate (2% to 4%) at 2.50%. The 5, 10 and historical dividend yields are low (below 2%) at 1.61%, 1.59% and 1.21%. The dividend growth over the past 5 years is low (below 8%) at 4% per year. The last dividend increase was in low at 2.9% and it was made in 2022.
The Dividend Payout Ratios (DPR) seem fine, although some are high for 2022, but 5 year coverage counts. The DPR for EPS for 2022 is 108% with 5 year coverage at 43%. The DPR for AEPS is 61% with 5 year coverage at 43%. The DPR for Cash Flow per Share (CFPS) is 25% with 5 year coverage at 20%. The Free Cash Flow for the Financial year of 2022 has not been published, and sites do not agree on what the FCF is, but both WSJ and MS imply it will be below $300 and that would give a DPR for FCF of 70% with 5 year coverage at 55%.
Debt Ratios are fine. The Long Term Debt/Market Cap for 2022 is 0.25 and is good. The Liquidity for 2022 is good at 1.54. The Debt Ratio is good at 1.91. The Leverage and Debt/Equity Ratio are fine at 2.10 and 1.10.
The Total Return per year is shown below for years of 5 to 25 to the end of 2021. 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. |
|---|---|---|---|---|---|
| 2016 | 5 | 3.95% | -7.96% | -9.72% | 1.76% |
| 2011 | 10 | 17.04% | 6.34% | 3.86% | 2.48% |
| 2006 | 15 | 9.00% | 10.73% | 7.80% | 2.93% |
| 2001 | 20 | 13.64% | 9.67% | 7.18% | 2.49% |
| 1996 | 25 | 13.49% | 15.22% | 7.91% | 7.31% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 19.50, 23.33 and 27.21. The corresponding 10 year ratios are 19.26, 22.44 and 25.36. The corresponding historical ratios are 17.14, 19.12 and 21.75. The current P/E Ratio is 18.09 based on a stock price of $28.76 and EPS estimate for 2023 of $1.59. The current ratio is below the low ratio 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I also have Adjusted Earnings per Share (AEPS) data. The 5 year low, median, and high median Price/Earnings per Share Ratios are 22.19, 24.28 and 26.38. The corresponding 10 year ratios are 19.68, 22.79 and 25.91. The current P/AEPS Ratio is 17.33 based on AEPS estimate for 2023 of $1.66. The current ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $23.63. The 10 year low, median, and high median Price/Graham Price Ratios are 1.59, 1.83 and 2.03. The current P/GP Ratio is 1.22 based on a stock price of $28.76. This ratio is below the low of the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median Price/Book Value per Share Ratio of 3.49. The current P/B Ratio is 1.84 based on a stock price of $28.76, Book Value of $6,505M and Book Value per Share of $15.61. The current ratio is 47% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median Price/Cash Flow per Share Ratio of 16.41. The current P/CF Ratio is 17.29 based on Cash Flow for last 12 months of $693M, Cash Flow per Share of $1.66 and a stock price of $28.76. The current ratio is 5% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
Mostly analysts expect Cash Flows to increase. If the Cash Flow increases by just 6% to 734M, then the P/CF Ratio would be at the median.
I get an historical median dividend yield of 1.67%. The current dividend yield is 2.50% based on a stock price of $28.76 and dividends of $0.72. The current dividend yield is 50% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 1.59%. The current dividend yield is 2.50% based on a stock price of $28.76 and dividends of $0.72. The current dividend yield is 57% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10 year median Price/Sales (Revenue) Ratio is 1.20. The current P/S Ratio is 0.73 based on a stock price of $28.76, Revenue estimate for 2023 of $13,479M and Revenue per Share of $39.54. The current ratio is 39% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
Results of stock price testing is that the stock price is probably cheap. The dividend yield tests and the P/S Ratio tests both say this. Most of the other tests say the same thing.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (6) and Hold (2). The consensus would be a Buy. The 12 month stock price consensus is $33.67. This implies a total return of 19.58% with 17.07% from capital gains and 2.50% from dividends based on a current stock price of $28.76.
There are lots of recent entries on Stock Chase but analysts have very different views of this company. Stock Chase gives the company 4 stars out of 5. The company is no longer on Money Sense list of top stock. Ambrose O'Callaghan on Motley Fool says it is a cheap dividend stock. Tony Dong on Motley Fool reviews this stock and thinks it is a buy. The company released its results on Newswire for its fourth quarter 2022.
Simply Wall Street on Yahoo Finance talk about dividends of this company. Simply Wall Street list three risks for this company of debt is not well covered by operating cash flow; dividend of 2.59% is not well covered by earnings or forecast to be in the next 3 years; and profit margins (1.8%) are lower than last year (4.4%).
Saputo is a global dairy processor domiciled in Canada (29% of fiscal 2021 sales) with operations in the United States (43%), the U.K. (6%), and other international markets (22%). Saputo also competes in food service (29% of revenue) and industrials (18% of revenue), which houses its ingredients business. Its web site is here Saputo Inc.
The last stock I wrote about was about was Parkland Fuel Corp (TSX-PKI, OTC-PKIUF) ... learn more. The next stock I will write about will be Empire Company Ltd (TSX-EMP.A, OTC-EMLAF) ... learn more on Monday, July 4, 2022 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.
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