Rogers Sugar Inc. 2

I do not own this stock of Rogers Sugar Inc. (TSX-RSI, OTC-RSGUF). This stock 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.

When I look at the insider trading report, I find 0.135M of insider selling and $0.186M of insider buying for a small net of insider buying. There is some insider ownership, and the company of Belkin Enterprises Ltd. owns around 12% worth around $57M.

The 5 year low, median and high median Price/Earnings per Share Ratios are 10.62, 11.62 and 12.62. The current P/E Ratio is 13.76 based on 2014 earnings estimate of $0.37 and a stock price of $5.09. This stock price test suggests that the stock price is high.

I get a Graham Price of $4.75. The 10 year low, median and high Price/Graham Price Ratios are 0.70, 0.81 and 0.92. The current P/GP Ratio 1.07 based on a stock price of $5.09. This stock test also suggests that the stock price is high. On an absolute basis, a ratio of 1.07 says the price is a reasonable price.

The 10 year median Price/ Book Value per Share 1.50 and the current P/B Ratio is 1.88 based on a BVPS of $2.71 and a stock price of $5.09. This current P/B Ratio is some 25% higher than the 10 year median P/B Ratio. This stock test suggests that the stock price is high.

The only test that suggests otherwise is the Dividend Yield test. The 5 year median dividend yield is 6.2% and the current dividend yield is 7.1%, a value some 14.4% higher. This suggests that the stock price is reasonable. The current dividend yield would have to be 20% higher for the stock price test to suggest that the stock price is cheap.

When I look at analysts' recommendations, I find Hold and Sell recommendations. There are only 4 analysts that follow this stock. The consensus recommendation would be a Hold. The 12 month consensus stock price is $5.19. This implies a total return of 9.04% with 7.07% from dividends and 1.96% from capital gains.

This stock is currently been talked about at the Canadian Money Forum. There is an interesting comment on this stock in Seeking Alpha about the stock going up and down and lot and best to buy when it is down. This entry is dated in 2012, but it still seems to apply. Stock was $9.10 (almost 80% higher than today) in December 1997. It has gone up and down since but it has not really gone anywhere. However, investors have made money in dividends.

The only test to suggest that the stock might be at a reasonable price is the 5 year dividend yield test. All other tests say it is expensive. Especially worrying is the P/B Ratio test. This shows stock is expensive because the Book Value has declined so much over the years. See my spreadsheet at rsi.htm.

This is the second of two parts. The first part was posted on Thursday, January 30, 2014 and is available here.

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.

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.