I do not own this stock of Rogers Sugar Inc. (TSX-RSI, OTC-RSGUF). I started to follow this stock in June 2011. It was brought to my attention by Dividend Ninja. This company used to be a Unit Trust (TSX-RSI.UN) but it has converted to corporation. On change to a corporation, it lowered its dividend.
I do not have enough time in a year to do two day reports on all my stocks, so for this stock, I am only doing a one day report.
The lower dividend after 5 and 10 years does not reflect the true position of this company. After lowering the dividends in 2011 the dividends were increased in 2012 by 5.9%. However, sugar is a commodity and I would expect that the dividends on this stock might vary in the future. That is dividends could go down as well as up.
The return to the end of 2012 is good for the shareholders with 5 and 10 year total return at 13.02% and 11.72% per year. The portion of this return attributable to dividends would be 8.05% and 8.54% per year, respectively. The portion of the return attributable to capital gains would be 4.97% and 3.18% per year, respectively. This means that 62% and 73% of the total return over the past 5 and 10 years is in dividends.
They had in the past rather high Dividend Payout Ratios. The 5 year DPRs are 96% and 64% for earnings and cash flows. However, if there is no dividend increase in 2012 the DPR for earnings will be around 86%.
There has been some outstanding share increases over the past 5 years at 1.4% and 2% per year. This is low. The growth in revenues per share is the best at 3.4% and 5% per year. The growth or lack thereof in cash flow is the worst with cash flow per share down 13% and 1% per year over the past 5 and 10 years.
The Liquidity Ratio is low at 1.34, but the Debt Ratio is fine at 1.88 as are the Leverage and Debt/Equity Ratios at 2.14 and 1.14 for the financial year ending in September 2012.
The Return on Equity for net income is good with a 5 year median at 15.9% and it is confirmed by the ROE on comprehensive income at 15.9% also.
Not much is happening in insider trading with insider selling at $0.6M and insider buying at $0.5M. There is not much in the way of stock options outstanding. There are some 11 institutions that hold 26% of the outstanding stock. However, they have decreased their shares by just over 3% in the last 3 months and this does not look good.
The 5 year low, median and high median Price/Earnings Ratios are 8.44, 9.61 and 11.16. The current one is at 14.40 with 2013 earnings of $0.42 and a stock price of $6.05. The 10 year low, median and high median Price/Graham Price Ratios are 0.70, 0.81 and 0.94. The current P/GP Ratio is 1.15.
The 10 year Price/Book Value per Share Ratio is 1.47 and the current ratio is 2.05, a value some 40% higher. Since dividend yield has been declining checking the current stock price using dividend yield will not produce much information. All my stock price tests say that the stock price is relatively high.
When I look at analysts' recommendations all I find are Hold recommendations. The 12 month target stock price is $6.06 and this is only marginally higher than today's price. So there is not much in the way of capital gains, but dividends are good at 6%.
One analyst with a Hold recommendation thought that the stock price was expensive. It said that the company is in a low growth business, but that the company paid good dividends.
I think that this company is in a risky, low growth business. It is risky because sugar is a commodity and like all commodities its price can fluctuate. At present the stock price is relatively expensive.
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 or StockTwits.
One thing about Rogers Sugar that I don't know is really appreciated as you did not really touch on it is that Canada, it's a protected market. Sugar from outside Canada is subject to tariffs, the most recent challenge from the EU having been defeated, and as such Lantic and Redpath control pretty much the entire Canadian supply. While it's a commodity, it simply isn't subject to price fluctuations within the country the way it would be if it was a completely open market.
ReplyDeleteAs well, they recently announced a special dividend of .36 per share payable in February. I've held this for almost three years, and plan to continue doing so, at least so long as Canada has a protect market for this particular commodity.
Yes, shareholders have made money on this stock and yes governments can distort markets. That said, it is still a commodity and I still think it has a higher than normal risk. Just because a stock is risky does not make it a bad investment. I just think that people need to understand what it is they are buying.
ReplyDeleteI am also very sure that there are lots of people who disagree with me on my analysis.
The one time I disregarded your analysis on a stock (JE) I lost money, I won't do that again.
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