Saputo Inc.

Sound bite for Twitter and StockTwits is: Price reasonable to expensive. This stock is getting expensive. Maybe buying should be done on any pull back in price. Low dividend and good dividend growth are stocks to own when building a portfolio. See my spreadsheet on Saputo Inc.

I own this stock of ). This was a stock on Mike Higgs' Canadian Dividend Growth Stock list and on the dividend lists that I followed. I bought this stock first in 2006 for my RRSP account. Because I am now taking money from my RRIF accounts, I have been selling this stock from these accounts because of the low dividend. I still like this stock so I have been buying it in my TFSA and Trading Accounts.

I have done really well with this stock. I have earned a total return of 18.43% per year with 2.07% from dividends and 16.36% from capital gains. For the shares I owned, dividends have paid some $11.51 per share and my average cost is $11.59. So dividends have paid almost 100% of the costs for this stock that I started buying in 2006 which is some 9.7 years ago.

The dividend yield has always quite low on this stock. The current dividend yield is 1.43% based on dividends of $0.54 and a stock price of $37.72. The dividend increases used to be good, but have turned moderate in recent years. A lot of retailers are having difficulties with the long drawn out recovery. The 5 and 10 year dividend growth is at 11.4% and 21.6% per year. I am earning a dividend yield of 5.83% on the stock bought in 2006 based on my original cost.

Outstanding shares have hardly changed over the years. Shares have increased due to Share Issues and Stock Options and have decreased due to Buy Backs. The company has good growth in Revenue and Cash Flow and moderate to good growth in Earnings. For example, the EPS has grown by 6.95% and 12.7% per year over the past 5 and 10 years. Growth of 3% to 8% I consider moderate and growth of 8% and over I consider good.

Debt Ratios are good. The Return on Equity has been over 10% since1998 where my records start. The 5 year median ROE is 18.1%.

The 5 year low, median and high median Price/Earnings per Share Ratios are 17.99, 21.17 and 24.35. The corresponding 10 year values are lower at 15.76, 18.81 and 21.59. The historical values are similar to the 10 year values at 12.71, 18.01 and 21.12. This means that recent increase stock price has been partly due to rising P/E Ratios. The current P/E Ratio is 20.96 based on a stock price of $37.72 and 2016 EPS estimate of $1.80. This stock price testing suggests that the stock price is reasonable and around the median.

I get a Graham Price of $20.32. The 10 year low, median and high median Price/Graham Price Ratios are 1.42, 1.70 and 1.96. The current P/GP Ratio is 1.86 based on a stock price of $37.72. This stock price testing suggests that the stock price is reasonable but above the median.

I get a 10 year median Price/Book Value per Share Ratio of 3.43. The current P/B Ratio is 3.70 a value some 7.7% higher. The current P/B Ratio is based on a stock price of $37.72 and BVPS of $10.20. This stock price testing suggests that the stock price is reasonable but above the median.

I get a dividend yield of $1.43 based on a stock price of $37.72 and Dividends of 0.54. The historical median dividend yield is 1.74%. The current yield is some 17.7% below the historical yield. This stock price testing suggests that the stock price is reasonable but above the median. By this measure the price is getting close to being expensive. If the current yield was 20% lower than the historical yield, it would show the stock as expensive.

When I look at analysts' recommendations, I find Buy and Hold. Most of the recommendations are a Hold, and the consensus recommendation is a Hold. The 12 month stock price consensus is $41.00. This implies a total return of 10.13% with 1.43% from dividends and 8.70% from capital gains based on a stock price of $37.72.

Reuters Media via Ag Week talks about Saputo posting lower profits on weaker prices. According Trent Williams on Community Financial News this company has been assigned a Hold rating by nine research firms. The Catalyst Tree did a long and thorough analysis on this stock at Seeking Alpha.

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 those reports here and here.

Yesterday on my other blog I wrote about Retirement Myth of 4%... learn more. Friday is a holiday, so I will do a stock rather than a blog entry on investing in general. I need to do 3 stocks a week to review all my stocks in 2016. The next stock I will write about will be Premium Brands Holdings Corp (TSX-PBH, OTC- PRBZF)... learn more on Thursday, June 30, 2016 around 5 pm. Premium Brands is a new addition to the stocks I review.

Saputo produces, markets, and distributes a wide array of products of the utmost quality, including cheese, fluid milk, yogurt, dairy ingredients and snack-cakes. Saputo is the twelfth largest dairy processor in the world, the largest in Canada; the third largest in Argentina and among the top three cheese producers in the United States. Their products are sold in more than 50 countries under well-known brand names. Its web site is here Saputo 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.