AGT Food and Ingredients Inc.

Sound bite for Twitter and StockTwits is: Relatively not cheap. You would think if the company thought that the EPS would be so good in 2016, they would increase the dividends. The company has kept them flat for several years. See my spreadsheet on AGT Food and Ingredients Inc..

I do not own this stock of AGT Food and Ingredients Inc. (TSX-AGT, OTC-AGXXF). I wanted to review all the income trust stocks touted in the 2009 Money Show. There was a lot of talk at this show about some of the Unit Trust being currently good buys with very good yield. This stock converted to a corporation in 2009. This is not a dividend growth stock, so I would not buy it. If it changes to a dividend growth stock, I would reconsider it. Also, the Return on Equity is quite low.

This company started to pay dividends in 2005. They have raised the dividends in the past, but nothing consistent and there has been no dividend raises since 2012. The 5 and 10 year dividend growth is 2.1% and 1.8% per year. This stock has a rather low dividend yield. The current dividend is 1.76% and the 5 year median is a little better at 2.6%. I would not consider this a good dividend growth stock if you want income.

In terms of total returns and earnings this company has not done well over the past 5 years. The total return is at 5.79% and 26.49% per year over the past 5 and 10 years. The portion that is capital is at 3.82% and 20.93% per year over the past 5 and 10 years. The portion that is dividends is at 1.97% and 5.56% per year over the past 5 and 10 years.

The growth in earnings is not great with earnings decline of 6.7% decline per year over the past 5 years and growth of just 2.9% per year over the past 10 years. They also had earnings losses in 2011 and 2013. With low earnings you also get low Return on Equity which was 4.5% in 2015 with a 5 year median of just 2.5%. Net Income has grown quite a lot over the past 10 years, but because shares have increased 37% over the past 10 years, you get low EPS.

The company has grown Revenue and Cash Flow nicely and this is a positive. The Revenue is up by 21.6% and 70.5% over the past 5 and 10 years. Revenue per Share is up by 17.1% and 24.2% per year over the past 5 and 10 years. Even through the shares outstanding increased a lot over the past 10 years growth in Revenue per Share is still good.

Cash Flow excluding Working Capital growth is also good. The Cash Flow is up by 30% and 55% per year over the past 5 and 10 years. CFPS is up by 24.8% and 13.3% per year over the past 5 and 10 years. Even through the shares outstanding increased a lot over the past 10 years growth in CFPS is still good.

Debt Ratios are mediocre. The Liquidity Ratio for 2015 is 1.40 and its 5 year median is 1.40. The Debt Ratios for 2015 is 1.38 and its 5 year ratio is better at 1.53. I prefer both these ratios to be 1.50 or higher all the time. The Leverage and Debt/Equity Ratios are a bit high at 3.63 and 2.63.

The 5 year low, median and high median Price/Earnings per Share Ratios are 16.81, 23.75 and 30.69. The corresponding 10 year values are a lot lower at 5.81, 7.70 and 11.33. The current P/E Ratio is 12.51 based on a stock price of $33.79 and 2016 EPS estimate of $2.70. The EPS estimate for 2016 is some 297% higher than EPS for 2015. However, if you compare the 12 month period to the end of March 2016 to the 12 month period to the end of December 2015, EPS is up by 162%. I would guess that a P/E Ratio of 12.51 is reasonable. On an absolute basis, a P/E of 10 is considered a low one.

I get a Graham Price of $30.59. The 10 year low, median and high median Price/Graham Price Ratios are 0.96, 1.38 and 1.76. The current P/GP Ratio is 1.10. This stock price test shows that stock price to be reasonable and below the median.

I get a 10 year Price/Book Value per Share Ratio of 1.43. The current P/B Ratio is 2.19 a value some 53% higher. The current P/B Ratio is based on a stock price of $33.79 and BVPS of $5.40. This stock price testing shows that the stock price is relatively expensive. The problem is that the BVPS has declined has been basically flat for the past 5 years. This is not a good sign.

I cannot use the historical median dividend yield because this stock used to be an income trust and income trusts have much higher dividend yields. The 5 year median dividend yield is 2.63%. The current dividend yield is 1.78% based on dividends of $0.60 and stock price of $33.79. The current dividend yield is some 32% lower than the 5 year median. This stock price testing shows that the stock price is relatively expensive. A flat dividend is not a good sign.

The Analysts’ recommendations are Buy and Hold recommendations. Most of the recommendations are a Buy and the consensus recommendation is a Buy. The 12 month stock price consensus is $43.79. This implies a total return of 31.37% with 29.59% from capital gains and 1.78% from dividends.

Michael Decter on BNN find this company a compelling story. He thinks that Murad Al-Katib is a very interesting and talented man. Mark Robinson on LMKAT talks about recent analyst reports on this company. Joseph Solitro of Motley like this company and feel that the P/E Ratio at 17.3 is low.

I will have only one entry for this stock this year. However, I did a more complete report on this company in 2015 and you can see that report here.

Yesterday on my other blog I wrote about Dividend Growth... learn more . The next stock I will write about will be Intact Financial Corp (TSX-IFC, OTC-IFCZF)... learn more on Monday, June 27, 2016 around 5 pm.

AGT Food and Ingredients is one of the largest suppliers of value-added pulses, staple foods and food ingredients in the world. They buy lentils, peas, beans and chickpeas from farmers around their 34 facilities located in the best pulse growing regions in Canada, the United States, Turkey, Australia, China and South Africa and ship their products to over 100 countries around the globe. Its web site is here AGT Food and Ingredients Inc.

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. I have three blogs. The first talks only about specific stocks and is called Investment Talk . The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits.