Friday, June 11, 2010

Saputo Inc 2

I first bought this stock (TSX-SAP) in September 2006 and some more in November 2007. My total return to date is 14.25% per year. This is a dividend paying stock. This stock has a great record for increasing dividends with a growth rate for the last 5 years at almost 14%. However, the increase for 2010 was one of lowest increase with it being around 3.6%.

The first thing that I see when I look at the Insider Selling and Insider Buying reporting is lots and lots of insider selling to the tune of almost $11M. Just over $8M was by officers of the company getting rid of options. I reported on the same thing when I last reviewed this stock. The interesting thing is that insiders seem to get rid of options when stocks hit a high. I do not know what this means. The problem is insider selling may not mean anything besides the selling want or need money.

When I look at low 5 year average P/E ratio for this stock, I get a ratio of 14.8. When I look at the high 5 year average P/E ratio, I get one of 20.5. I get a current P/E ratio, based on earnings estimates for 2010 of just 14.5. So this ratio shows a good current price. The next thing I looked at is the Graham price. I get one for 2010 of $21.10. The current stock price of $29.35 is about 40% higher than this, but this is about average for this stock. (That is, most of the time, the stock price is about 40% above the Graham price.)

The next thing I like to look at is the Price/Book Value Ratio. The 10 year average P/BV ratio is 2.84 and the current P/BV ratio is 3.00. This would suggest the current stock price is not low. The last thing to look at is the dividend yield. The current yield is about 2% and the 5 year average is about 2%. Expect for the P/E ratio, all this seems to point to a current relatively average price for this stock.

So what do the analysts say? The recommendations I can find are Strong Buy, Buy and Hold. The consensus would be a Buy. (See my site for information on analyst ratings.) Analysts seem to like the long term potential of the stock.

This company is a dairy processor and cheese producer in Canada, USA, Argentina, UK and Europe. It is also the largest snack-cake manufacturer in Canada that accounts for about 3% of its business. Its web site is here Saputo. See my spreadsheet at sap.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.

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