Monday, September 15, 2014

High Liner Foods 2

On my other blog I am today writing about my dividends covering the cost of my stock continue...

I do not own this stock of High Liner Foods (TSX-HLF, OTC-HLNFF). This is a stock liked by the Investment Reporter and is considered to be of average risk. The MPL Communication's site is here. Ryan Irvine of Keystone also likes this company.

When I look at insider trading, I find insider selling at $3.2M and net insider selling at $3M. There is a bit of insider buying. Insider selling is just 0.47% of the market cap of this stock and so is a relatively small amount.

There is insider ownership with the Hennigar Family's holding company owning some 38% of the outstanding stock and worth some $275M. The CEO owns shares worth around $11M and the Chairman, who is of the Hennigar Family, owns shares worth around $4.7M.

In 2013, outstanding shares were increased by 157,000 for stock options. These stock options had a book value of $1.4M. This number of shares was worth $3.7M at the end of 2013 and would be some 0.52% of the outstanding shares. Stock Options for 2013 at 0.52% of the outstanding shares are a relatively reasonable percentage.

The 5 year low, median and high median Price/Earnings per Share Ratios are 11.59, 12.73 and 13.87. These are lower than the corresponding 10 year values of 12.75, 14.42 and 15.66. The current P/E Ratio is 14.42 based on a stock price of $21.20 and 2014 EPS estimate of $1.47 CDN$ (or $1.35 US$). This test says that the stock price is relatively reasonable.

A problem I see with EPS is that analysts had expected the EPS to grow by almost 35% in 2014 over 2013. We are into the Quarter 2 of 2014 and if you look at the 12 month EPS to the end of June 2014 compared to the 12 month EPS to the end of 2013, EPS is only up almost 8%. It makes you wonder about this company meeting the 2014 earnings estimates.

I get a current Graham Price of $15.16. The 10 year low, median and high median Price/Graham Price Ratios are 0.78, 0.86 and 0.99. The current P/GP Ratio is 1.40. This test says that the stock price is relatively expensive.

The 10 year median Price/Book Value per Share Ratios is 1.34 and the current P/B Ratio at 3.05 is some 127% higher. The current P/B Ratio is based on a stock price of $21.20 and BVPS of $6.95. This test says that the stock price is relatively expensive.

The 5 year median Dividend Yield is 2.58% and the current Dividend Yield at 1.98% is some 23% lower. This test says that the stock price is relatively expensive. However the historical average Dividend Yield is 2.41% and the historical median Dividend yield is 2.15%. These are some 18% and 8% higher than the current Dividend Yield. These tests say that the stock price could be relatively reasonable.

When I look at analysts' recommendations, I find Buy and Hold recommendations, with the consensus being a Hold recommendations as there are more Hold recommendations than Buy recommendations. The 12 month consensus stock price is $24.80. This implies a total return of 18.96% with 16.98% from capital gains and 1.98% from dividends.

There is a CBC News article on a challenging second quarter for this company. It also talks about how the company might be affected by sanctions on Russia. There is a recent positive article on this company at Seeking Alpha.

Sound bit for Twitter and StockTwits is: Stock price could be expensive. I do like this stock, but I think that it is currently getting a little pricey. See my spreadsheet at hlf.htm.

This is the second of two parts. The first part was posted on Friday, September 12, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

High Liner Foods is the leading North American processor and marketer of value-added frozen seafood. Their retail branded products are sold throughout the United States, Canada and Mexico and are available in most grocery and club stores. They also sell their branded products to restaurants and institutions and they are the major supplier of private label value-added frozen seafood products to North American food retailers and food service distributors. Its web site is here High Liner Foods.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

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