Premium Brands Holdings Corp

Sound bite for Twitter and StockTwits is: Relatively expensive. The stock has had a very good run up lately. It is expected that EPS will be growing strongly in the future. However, expectations do not always work out. I think it is a good company, but with the recent run up in price it may not be good time to buy at the moment. This looks like this stock is becoming a dividend growth stock. See my spreadsheet on Premium Brands Holdings Corp .

I do not own this stock of Premium Brands Holdings Corp (TSX-PBH, OTC-PRBZF). I was looking for another stock to follow and I found this is one of the top stocks in TD Bank's Canadian Equity Fund.

This company was an income trust between 2005 and 2009. Dividends were started in 2005 and as usual with income trusts, the yields were quite high. This historical high dividend is over 18%. The yield hit a peak in 2009 and have been travelling south since then.

Currently the dividends are moderate and increases are also moderate. The current dividend yield is 2.86%. The 5 and 10 year dividend growth is just 2.3% and 1.1% per year. However, dividends were cut in 2010 and they just started to growth then by 3 to 5% between 2013 and 2015. The last dividend increase was much higher and it was for 10% and it occurred in 2016.

Since 2009 they have been paying out more than their earnings. The 5 year running average to 2015 was 204%. However, even though there has been a big increase in dividends, analysts expect the Dividend Payout Ratio for 2016 to be around 74%. Analysts expect the EPS to jump significantly in 2016.The Dividend Payout Ratio for CFPS has always been better. The 5 year running average to 2015 was 58%. It is expected to be around 44% in 2016.

Total return to shareholders over the past 5 and 10 years is at 28.49% and 23.70% per year with 22.33% and 15.55% per year from capital gains and 6.15% and 8.15% per year from dividends. The stock price is up by 324% over the past 10 years. This has been a great run up in stock price.

The outstanding shares have been increasing and they have grown at 8.3% and 6.1% per year over the past 5 and 10 years. Shares have grown due to Share Issues, Conversion of Debt and Stock Options. So, it is important to look at the per share growth values. However, growth in Revenue and Cash has been good. They had a bad year in 2015 for EPS and earnings are down by 12% per year over the past 5 years and are flat over the past 10 years.

Analysts expect EPS to jump from $0.48 to $2.01 between 2015 and 2016. That is growth of 319%. If you compare the 12 month period to the end of the first quarter to the 12 month period to the end of 2015 EPS is up by 38%. Or EPS in the first quarter is 112% higher in 2016 than in 2015.

Debt Ratios are fairly good. The Liquidity Ratio for 2015 is 2.01 and has a 5 year median of 1.36. Debt Ratio for 2015 was 2.07 and had a 5 year median of 1.87. I prefer both to be at 1.50 or higher. The Leverage and Debt/Equity Ratios are a little high at 2.68 and 1.30 in 2015. The 5 year median for these ratios is 3.01 and 1.97.

The Return on Equity has been quite low for the past 5 years with the ROE for 2015 at 3.7% and the 5 year median at 6.1%. The comprehensive income for 2015 was at 10.5% and its 5 year median is 8.3%. This would imply that the earnings might be better than shown.

The 5 year low, median and high median Price/Earnings per Share Ratios are 28.73, 33.58 and 38.52. The corresponding 10 year ratios are a lot lower at 17.10, 19.05 and 20.97. The historical ones are even lower at 11.07, 12.83 and 14.58. It would appear that the recent gain in stock prices are coming mostly from an increase in P/E Ratios. The P/E Ratios over the past 5 years seem quite high for consumer staple sector company.

The current P/E Ratio is 27.16 based on EPS estimates for 2016 of $2.01 and a stock price of $54.59. This P/E Ratio to be seems quite high for such a company also. If compared to the last 5 years it is low, however, the P/E Ratios for the last 10 years is more reasonable and on this basis, the stock price looks high. On the other hand, analysts expect sharp rises in the EPS over the next couple of year. If you look at 2017 and 2018 EPS estimates of $2.53 and $3.50 then P/E Ratios become more reasonable at 21.58 and 15.60 based on a stock price of $54.59.

I get a Graham Price of $23.30. The 10 year low, median and high median Price/Graham Price Ratios are 1.06, 1.17 and 1.29. The current P/GP Ratio is 2.34 based on a stock price of $54.59. This testing suggests that the stock price is relatively expensive.

I get a 10 year median Price/Book Value per Share Ratio of 1.69. The current P/B Ratio is 4.55 based on a stock price of $54.59 and BVPS of $12.00. The current P/B Ratio is some 170% higher than the 10 year median. The stock price has been rising much faster than the Book Value per Share. The stock price is up by 22.3% per year over the past 10 years. The BVPS is up by 4.7% per year over the past 10 years. The 10 year P/B Ratio is a reasonable or low one. The current P/B Ratio is high. This stock price testing suggests that the stock price is relatively expensive.

This used to be an income trust company. As such it had high dividend yields. Even the 5 year median dividend yield is quite high at 6.12%. It was expected that the dividend yields on old income trust would end up at 4 to 5%. This one is a lot lower at 2.78% based on dividends of $1.52 and a stock price of $54.59. This also suggests that the stock price is relatively expensive.

Even looking at P/S and P/CF Ratios, the current stock price does not get better than relatively expensive. The current P/S Ratio at 0.84 is some 105% higher than the 10 year median of 0.41. However, for P/S Ratios, one under 1.00 is considered to be a good ratio.

The current P/CF Ratio is 16.01 and its 10 year median is 8.88. So the current P/CF Ratio is some 80% higher than the 10 year median. A P/CF Ratio of 8.88 is rather an average one. This check also points to the current stock price as being relatively expensive.

When I look at analysts' recommendations, I find Strong Buy, Buy and Hold recommendations. The consensus recommendation would be a Buy. The 12 month stock price consensus is $60.57. This implies a total return of 13.74% based on a stock price of $54.59. The portion of the total return attributable to capital gain is 10.95% and the portion of the total return attributable to dividends is 2.78%.

On Stock House is the press release for this company talking about the redemption of Debentures. Ryan Vanzo of Motley Fool talks about why he likes this company. . See what analysts say about this company at Stock Chase.

I will have only one entry for this stock as I must do on some stock because I cover too many stocks to do double entries on all that I follow.

The last stock I wrote about was about was Saputo Inc. (TSX-SAP, OTC-SAPIF)... learn more . The next stock I will write about will be Suncor Energy Inc. (TSX-SU, NYSE-SU)... learn more on Monday, July 4, 2016 around 5 pm.

Premium Brands Holdings Corporation, through its subsidiaries, owns a range of specialty food manufacturing and premium food distribution and wholesale businesses with operations in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nevada, Ohio and Washington State. Its web site is here Premium Brands Holdings Corp .

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.