Is it a good company at a reasonable price? Currently, it would not be a stock I would be interested in. I like dividend growth companies and this is no one. The stock price has been rather flat lately, but I do realize that analysts do expect it to rise quite well over the next year. My stock price testing points to a rather cheap current price.
I do not own this stock of K-Bro Linen Inc (TSX-KBL, OTC-KBRLF). People were talking about this stock at the 2009 Toronto Money Show. This was one income trust being touted as currently a good buy with very good yield. It was also recommended by Aaron Dunn who is the Senior Equity Analyst for Keystone Publishing Corp, a publisher of Canadian investment newsletters.
When I was updating my spreadsheet, I noticed that they recently have started to use an Adjusted Earnings per Share value. A lot of companies are going that way. After two years of stock price rises, this stock is down by 6% so far this year. This company used to be an income trust and as such had a high dividend yield. Income Trust companies can pay out a lot more in dividends or distributions than corporations can. All the old income trust companies are having a hard time getting their dividends at the right level.
Note that the P/E Ratios and P/AEPS Ratios are quite high. This can occur, as in this case, when the EPS and AEPS goes down, but because of what the market thinks of the company, the stock price may not go down very far, and so you end up with high P/E and P/AEPS Ratios. For this sort of company, a ratio of 20.00 would be considered a high ratio but the 5 year P/E Ratios are 41.67, 49.35 and 57.04 for the low, median, and high ratios. The P/E Ratio went as high as 99.92 in 2022.
If you had invested in this company in December 2014, for $1,014.42 you would have bought 22 shares at $46.11 per share. In December 2024, after 10 years you would have received $264 in dividends. The stock would be worth $833.36. Your total return would have been $1,097.36. This would be a total return of 0.89% per year with 1.95% from capital loss and 2.83% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $46.11 | $1,014.42 | 22 | 10 | $264.00 | $833.36 | $1,097.36 |
The current dividend yield is moderate with dividend growth non-existent. The current dividend is moderate (2% to 4% ranges) at 3.38%. The 5, 10 and historical dividend yields are also moderate at 3.43%, 3.25% and 3.62%. This company used to be an income trust and therefore had some high yields in the past. Dividend have been flat since 2014. They would probably need to get them down in terms of DPR to do any increase in dividends.
The Dividend Payout Ratios (DPR) are fine. The DPR for 2024 for Earnings per Share (EPS) is high at 68% with 5 year coverage very high at 121%. The DPR for 2024 for Adjusted Earnings per Share (AEPS) is good at 40% with 5 year coverage high at 58%. The DPR for 2024 for Distributable Cash Flow (DCF) is good at 32% with 5 year coverage at 45%. The DPR for 2024 for Cash Flow per Share (CFPS) is good at 23% with 5 year coverage at 30%. The DPR for 2024 for Free Cash Flow (FCF) is good at 36% with 5 year coverage at 42%. There is no agreement on FCF, but values are similar in 2024 varying from $31M to $35M.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 67.80% | 121.46% |
| AESP | 39.79% | 58.37% |
| DCF | 32.00% | 45.11% |
| CFPS | 23.35% | 30.36% |
| FCF | 36.25% | 41.86% |
Debt Ratios are fine, but debt is going up. The Long Term Debt/Market Cap Ratio for 2024 is good at 0.31 and currently high at 0.66. It is best when this ratio is 0.50 or lower. The Liquidity Ratio for 2024 is good at 1.95 and 1.86 currently. The Debt Ratio for 2024 is good at 1.76 and 1.61 currently. The Leverage and Debt/Equity Ratios for 2024 are fine at 2.31 and 1.31 and currently at 2.63 and 1.63.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.31 | 0.66 |
| Intang/GW | 0.25 | 0.56 |
| Liquidity | 1.95 | 1.86 |
| Liq. + CF | 2.59 | 2.33 |
| Debt Ratio | 1.76 | 1.61 |
| Leverage | 2.31 | 2.63 |
| D/E Ratio | 1.31 | 1.63 |
The Total Return per year is shown below for years of 5 to 20 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 | 0.00% | 0.91% | -2.07% | 2.97% |
| 2014 | 10 | 0.00% | 0.89% | -1.95% | 2.83% |
| 2009 | 15 | 0.58% | 13.11% | 7.13% | 5.98% |
| 2004 | 20 | 0.80% | 12.56% | 6.06% | 6.50% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 41.67, 49.35 and 57.04. The corresponding 10 year ratios are 36.48, 42.73 and 48.98. The corresponding historical ratios are 19.60, 21.70 and 24.80. The current ratio is 18.73 based on a stock price of $35.55 and EPS estimate for 2025 of $1.90. The ratios are high because earnings were low from 2020 to 2022 inclusive. The current ratio is below the low ratio of the 10 year median ratio. It is also below the low ratio of the historical 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/Adjusted Earnings per Share Ratios are 41.67, 49.35 and 57.04. The corresponding 10 year ratios are 36.48, 42.73 and 49.98. The current P/AEPS Ratio is 16.77 based on a stock price of $35.55 and AEPS estimate for 2025 of $2.12. The ratios are high because earnings were low from2020 to 2022 inclusive. The current ratio is below the low ratio of the 10 year median ratio. It is also below the low ratio of the historical median ratios. This stock price testing suggests that the stock price is relatively cheap.
I also have Distributable Cash Flow (DC) data. The 5-year low, median, and high median Price/ Distributable Cash Flow Ratios are 8.95, 11.89 and 15.58. The corresponding 10 year ratios are 13.27, 15.55 and 17.74. The corresponding historical ratios are 9.28, 11.18 and 13.43. The current P/DC Ratio is 8.27 based on a stock price of $35.55 and DC estimate for 2025 of $4.30. The current ratio is below the low ratio of the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $31.62. The 10-year low, median, and high median Price/Graham Price Ratios are 1.95, 2.28 and 2.59. The current P/GP Ratio is 1.12 based on a stock price of $35.55. 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 2.00. The current ratio is 1.70 based on current Book Value of $272.3M, Book Value per share of $20.96 and a stock price of $35.50. The current ratio is 15% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I also have a Book Value per Share estimate for 2025 of $23.34. This implies a Book Value of $303M and a ratio of 1.52 with a stock price of $35.50. The current ratio is 24% 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 13.22. The current ratio is 6.10 based Cash Flow per Share estimate for 2025 of $5.83, Cash Flow of $75.7M and a stock price of $35.50. The current ratio is 54% 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 3.62%. The current dividend yield is 3.38% based on a stock price of $35.50 and dividends of $1.20. The current dividend yield is 7% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get an historical median dividend yield of 3.25%. The current dividend yield is 3.38% based on a stock price of $35.50 and dividends of $1.20. The current dividend yield is 3.9% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10-year median Price/Sales (Revenue) Ratio is 1.76. The current P/S Ratio is 0.93 based on Revenue estimate for 2025 of $496.2M, Revenue per Share of $38.20 and a stock price of $35.50. The current ratio is 47% 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 reasonable, but it could be cheap. The dividend testing, especially the 10 year one says that stock price is reasonable. The problem with the dividend testing is that dividends are flat due to the fact that this stock used to be an income trust, which all have problems resetting dividends appropriately. The P/S Ratio test says that the stock price is cheap. The rest of the testing is saying that the stock price is relatively cheap.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (2) and Hold (1). The consensus would be a Strong Buy. The 12 month stock price consensus is $50.67 with a high of $55.00 and low of $48.00. The consensus stock price of $50.67 implies a total return of 45.91% with 42.53% from capital gains and 3.38% from dividends based on a current stock price of $35.55.
There are two entries on Stock Chase for 2025 and both are top picks. They like this stock and comment on their recent UK acquisition. Aditya Raghunath on Motley Fool and talks about recent acquisition. Brian Paradza on Motley Fool says this business is boring but profitable. The company put out a Press Release about their fourth quarter of 2024. The company put out a press release via Newswire about their second quarter of 2025.
Simply Wall Street via Yahoo Finance reviews this stock. They say it covers all the check boxes for an income stock. Simply Wall Street has 3 warnings out on this stock of debt is not well covered by operating cash flow; large one-off items impacting financial results; and shareholders have been diluted in the past year. Note companies use Adjusted Earnings per Share because large one-off items.
K-Bro Linen Inc is a healthcare and hospitality laundry and linen processor in Canada. It operates in cities across Canada, and has two distribution centers, providing management services and laundry processing of hospitality, healthcare, and specialty linens. It operates through two divisions, which are the Canadian division and the United Kingdom division. Its web site is here K-Bro Linen Inc.
The last stock I wrote about was about was Granite REIT (TSX-GRT.UN, NYSE-GRP.U) ... learn more. The next stock I will write about will be BRP Inc (TSX-DOO, OTC-DOOO) ... learn more on Wednesday, October 1, 2025 around 5 pm. Tomorrow on my other blog I will write about Dividend Stocks October 2025 … learn more on Tuesday, September 30, 2025 around 5 pm.
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