Is it a good company at a reasonable price? I bought this small cap with my fooling around money. It has a high risk level mainly because it is a small cap. I plan to hold on to this stock and maybe in the future buy more. This stock is testing as relatively cheap.
I own this stock of Supremex Inc (TSX-SXP, OTC-SUMXF). I read about it in Money Sense article of 15 Stocks to help investors ride market swings by Michael Pe on Mar 4, 2018 . They were an envelope company, but are diversifying into packaging.
When I was updating my spreadsheet, I noticed I have had this stock for just under 5 years and I have made 10.01% per year with 7.77% from capital gains and 2.24% from dividends. They an EPS loss in 2024 because of an asset impairment charge.
If you had invested in this company in December 2014, for $1,001.66 you would have bought 319 shares at $3.14 per share. In December 2024, after 10 years you would have received $559.85 in dividends. The stock would be worth $1,196.25. Your total return would have been $1,756.10. This would be a total return of 7.23% per year with 1.79% from capital gain and 5.44% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $3.14 | $1,001.66 | 319 | 10 | $559.85 | $1,196.25 | $1,756.10 |
The current dividend yield is good with dividend growth restarted. The current dividend yield is good (5% to 6% ranges) at 5.42%. The 5 and 10 median dividend yields are moderate (2% to 4% ranges) at 3.09% and 4.12%. The historical median dividend yield is good at 6.52%. The last dividend increase was for 25% and it occurred in 2024. Dividends were cut for two years of 2012 and 2022. They were restarted in 2023.
The Dividend Payout Ratios (DPR) are good. The DPR for 2024 for Earnings per Share (EPS) is non-calculable because of an earnings loss with 5 year coverage good at 27%. The DPR for 2024 for Adjusted Earnings per Share (AEPS) is good at 35% with 5 year coverage at 20%. The DPR for 2024 for Cash Flow per Share (CFPS) is good at 15% with 5 year coverage at 9%. The DPR for 2024 for Free Cash Flow (FCF) is good at 13% with 5 year coverage at 10%. There is some agreement on what the FCF is.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 0.00% | 26.95% |
| AEPS | 35.42% | 19.87% |
| CFPS | 14.99% | 9.23% |
| FCF | 13.30% | 9.76% |
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2024 is good at 0.47 and currently at 0.47. The Liquidity Ratio for 2024 is good at 2.45 and 2.45 currently. The Debt Ratio for 2024 is good at 1.94 and 1.94 currently. The Leverage and Debt/Equity Ratios for 2024 are fine at 2.06 and 1.06 and currently at 2.06 and 1.06.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.47 | 0.47 |
| Intang/GW | 0.78 | 0.79 |
| Liquidity | 2.45 | 2.45 |
| Liq. + CF | 3.06 | 3.38 |
| Debt Ratio | 1.94 | 1.94 |
| Leverage | 2.06 | 2.06 |
| D/E Ratio | 1.06 | 1.06 |
The Total Return per year is shown below for years of 5 to 18 to the end of 2024. 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. |
|---|---|---|---|---|---|
| 2019 | 5 | -11.65% | 13.02% | 9.15% | 3.87% |
| 2014 | 10 | 0.74% | 7.23% | 1.79% | 5.44% |
| 2009 | 15 | -13.10% | 8.45% | 2.88% | 5.57% |
| 2006 | 18 | -11.65% | 0.70% | -4.43% | 5.12% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 3.19, 4.01, 5.45. The corresponding 10 year ratios are 4.78, 7.60 and 9.91. The corresponding historical ratios are 4.60, 6.72 and 9.25. The current P/E Ratio is 6.25 based on a stock price of $3.69 and EPS estimate for 2025 of $0.59. The current ratio is between the low and median ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Earnings per Share Ratios are 2.89, 4.49 and 6.18. The corresponding 10 year ratios are 6.36, 8.26 and 9.80. The corresponding historical ratios are 4.84, 7.26 and 9.49. The current P/AEPS Ratio is 5.77 based on a stock price of $3.69 and AEPS estimate for 2025 of $0.64. The current ratio is below the low ratio for the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $8.21. The 10-year low, median, and high median Price/Graham Price Ratios are 0.46, 0.63 and 0.86. The current ratio is 0.45 based on a stock price of $3.69. 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 10-year median Price/Book Value per Share Ratio of 1.10. The current ratio is 0.79 based on a Book Value of $114.97M, Book Value per Share of $4.68 and a stock price of $3.69. The current ratio is 28% below the 10 year median ratio. 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 4.22. The current P/CF Ratio is 1.96 based on a stock price of $3.69, Cash Flow per Share estimate for 2025 of $1.88 and Cash Flow of $46.2M. The current ratio is 53% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 6.52%. The current dividend yield is 5.42% based on a stock price of $3.69 and dividends of $0.20. The current dividend yield is 17% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median. Note that this company used to be an income trust, and income trusts had high dividend yields.
I get a 10 year median dividend yield of 4.12%. The current dividend yield is 5.42% based on a stock price of $3.69 and dividends of $0.20. The current dividend yield is 32% 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 0.46. The current P/S Ratio is 0.32 based on Revenue estimate for 2025 of $282M, Revenue per Share of $11.47 and a stock price of $3.69. The current ratio is 31% below the 10 year median ratio. 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 10 year median dividend yield says that the stock price is cheap. There is a problem with a dividend cut, but also this company used to be an income trust that those sorts of companies had high dividends. The P/S Ratio testing confirms the cheap price. Most of the rest of the testing is showing that the stock price is relatively cheap.
When I look at analysts’ recommendations, I find Buy (2). The consensus would be a Buy. The 12 months consensus stock price is $5.00 with the High of $5.00 and low of $5.00. The consensus stock price of $5.00 implies a total return of 40.92% with 35.50% from capital gains and 5.42% from dividends based on a current stock price of $3.69.
This stock is not much followed but one analyst in 2024 says on Stock Chase to sell. Company missed their estimates and has declining profits and revenue. Analysts liked it better in 2023. Amy Legate-Wolfe on Motley Fool in 2023 says that Analyst Matthew Lee see softness in 2024, but that investors should not ignore this stock. Aditya Raghunath on Motley Fool in 2023 said that the stock was affordable and has great potential. The company put out a press release via Global Newswire about their fourth quarter for 2024.
Simply Wall Street via Yahoo Finance says this is a small cap TSX stock to watch. Simply Wall Street via Yahoo Finance reviews this stock. Simply Wall Street has 3 warnings out on this stock of earnings have declined by 2.7% per year over past 5 years; does not have a meaningful market cap (CA$93M); and dividend of 5.42% is not well covered by earnings.
Supremex Inc is engaged in the manufacturing and marketing of envelopes and is a growing provider of paper-based packaging solutions and specialty products. The majority of its revenue is derived from its business in Canada. Its web site is here Supremex Inc.
The last stock I wrote about was about was Alaris Equity Partners Income Trust (TSX-AD.UN, OTC-ALARF) ... learn more. The next stock I will write about will be Leon's Furniture Ltd (TSX-LNF, OTC-LEFUF) ... learn more on Wednesday, April 16, 2025 around 5 pm. Tomorrow on my other blog I will write about Jim Balsillie Interview.... learn more on Tuesday, April 15, 2025 around 5 pm.
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