Thursday, May 13, 2010

Superior Plus Corp 2

I am continuing my review this stock (TSX-SPB) today as the annual report for 2009 has been issued and I follow this stock. The company changed from a Unit Trust to a corporation in 2009. What I want to look at today is the ratios that deal with stock price and look at insider information.

The good think about the Insider Buying and Insider Selling report is that there has been more insider buying than selling. There is not a lot of Insider Buying, at just less than $.4M, but it is good to see. The other thing than I like is that insider have more shares than options. The only place I can find out what the CEO and CFO Officers own is the Information Circular for the annual meetings. Here I find that the CEO owns just over 1.8M shares. The other thing I like coming from management is their promise to maintain the strict management discipline to ensure the continuation of the company’s dividend.

When I look at the P/E ratios, I find this company has a 5 year average low of 11.9 and a 5 year average high of 18.7. The current P/E I get based on earnings estimates is 13.2, a not unreasonable P/E ratio. With the Graham Price, I get a current one of $11.36. This is 15% below the current stock price of $13.16. It would seem that, the stock price, especially in recent years has gone below the Graham Price sometime during the year.

When I look at the Price/Book Value, I get a current ratio of 1.29. This is just above the 10 year average of 2.11. What would signal a good stock price is a P/B Ratio 80% below the 10 year average of 2.11. The last thing to look at is the dividend yield. The current yield is 12.3% and the 5 year average is 11.8%. This is a good yield and it is slightly above the 5 year average. This is the only stock price test that shows a reasonable current stock price.

So, what do the analysts say? When I look at analysts’ recommendations, I see an awful lot of Hold recommendations. There are a few Buy recommendations, but very few. (See my site for information on analyst ratings.) The consensus recommendations would be a Hold. I think that the major reason for the Hold is that analysts think the stock is fully, or overpriced. Those analysts with Buy recommendations mention the very good current dividend yield.

I will not be buying this stock anytime soon. I have enough stocks in the Unit Trust converting to corporation category. I will continue to follow this stock.

Superior Plus Corp. is a group of diversified businesses that operate within three primary divisions. Superior’s Energy Services division provides distribution, wholesale procurement and related services in relation to propane, heating oil and other refined fuels throughout Canada and the North Eastern United States. Superior’s Specialty Chemicals division is a leading supplier of sodium chlorate and related technology to the pulp and paper sector and a regional Midwest supplier of chloralkali and potassium based products. Superior’s Construction Products Distribution division is a leading distributor of walls, ceilings and insulation products to the Canadian and United States construction industry. Its web site is here Superior. See my spreadsheet at spb.htm.

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. See my website for stocks followed and investment notes. Follow me on twitter.

1 comment:

  1. I recently found your blog and it is rather interesting.

    I'd say from your analysis of Superior Inc we'd share the same conclusion.

    I would however just like to add a few points not mentioned in the numbers recently.

    My small amount of knowledge stems from being an employee at Erco, sub company of Superior.

    Superior bought our small company in 2003 and another larger (JW aluminium) a few years later.

    Due to debt covenants, you mentioned, they were forced to sell JW shortly after aquiring.

    They also shuttered 1 of our 2 plants after they bought us due to market contractions in the Pulp industries.

    The original core industry, propane, has become less relevant as the years pass, but Erco isn't really growing. We can't because we need pulp mills and they are opening not closing.

    Bad balance sheet, bad history of over paying for growth and a large part of earnings coming from an industry shrinking (think Kindle, Ipad and add in cheaper off shore competition) and this is not the best investment.

    Our competitor Cus.un is almost worth a look however, but the same story of a bad out look long term for bleached paper still applies.

    i suspect we will still have paper around but i don't think growth will come from revenue but rather a focus on margins.

    thanks for the posts