Wednesday, June 29, 2011

Rogers Sugar Inc 2

I do not own this stock (TSX-RSI). This stock was brought to my attention by Dividend Ninja. This company used to be a Unit Trust (TSX-RSI.UN) but it has recently converted to corporation. On change to a corporation, it lowered its dividend.

There is a minimal of insider selling and insider buying with net selling. This tells us nothing. There are 11 institutions that own almost 20% of this stock. There has been some buying and selling in the last 3 months, and these institutions have marginally increased their investment in this stock..

When I look at the 5 year median Price/Earnings Ratios, I get a low of 8.06 and a high of 10.40. The current one of 13.35 is higher than the median high. The 5 year median Trailing Price/Earnings Ratios are a low of 8.57 and a high of 11.09. The current trailing P/E at 11.13 is higher than the median high also, but just.

The 10 year median Price/Book Value Ratio is 1.35 and the current one at 1.64 is some 22% higher. However, a P/B Ratio of 1.64 is a pretty good one, on an absolute basis. I get a Graham Price of $5.41 and a current stock price of $5.34. The stock price is below the Graham Price. However, the median high difference between the Graham Price and the stock price is 15%. So, on a relatively basis, the stock price is high.

On a dividend yield basis, the stock price is high also. The current Dividend yield of 6.37% is lower than the 5 year average of 10.18%. However, do not forget that this company just lowered the dividends as it changed to a corporation.

When I look at analysts’ recommendations, I find only Hold and Underperform. The consensus would be a Hold as there are lots of Hold recommendations. For the second quarter of their 2011 reporting year, it seems that this company missed some earnings estimates. Hold recommendations come with a stock price at or just below the current stock price.

One good thing about this company is that the Payout Ratios are expected to be good by 2012 based on current estimates. This stock is probably suitable for investors who want income rather than growth. However, note that this is considered a medium risk, not a low risk. Also, do not forget that sugar is a commodity. So there will be volatility with this stock because of this.

I know that this company has a habit and adjusting the dividend as they see fit. This has meant that in the past they have lowered as well as raised their dividends. However, personally, I would rather a company lower a dividend because they cannot not keep up the current one without going into debt. I think it is a bad idea for a company to borrow money to pay dividends. On the other hand, you have to look at such situations on a case by case basis.

There is a Wikipedia entry for this company. Dividend Girl owns this stock and has recently commented on it at her blog. The Dividend Ninja wrote about this stock on his blog recently also.

Rogers Sugar Inc. was established to hold all of the common shares and notes of Lantic Inc. Lantic Inc. is a refiner, processor, distributor and marketer of sugar products in Canada. Its web site is here Rogers Sugar. See my spreadsheet at rsi.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. Thanks for your informative review!

    I own RSI since a little while, and I don't recommend RSI because it's been below the stock price value since basically I initially invested in. RSI? It's a no-no for me!

    Beginning 2011, it was for me the ultimate rush to boost my dividend income. It work, but I now have to deal with some investments that are quite difficult to hold, at some points. I had name those my "troublemaker stocks", which I find very funny, the term of troublemaker for stocks...

    It's easy to fall into this type of investment who offer high dividend yield, but quality and stability are more or less there.

    I learn, and now I want to add more of those very quality holdings like the ones you have review in my portfolio. Example being CNR and Canadian Tires, among other. Its something that will eventually bring in more stability in my portfolio.

    Eventually, my portfolio will be perfect. Your blog help me a lot to achieve that. A LOT! :0)

    Happy Canada Day, enjoy your - day off - of the market.