Monday, August 29, 2016

Superior Plus Corp

Sound bite for Twitter and StockTwits is: Price good, Dividend high. I can see some price rise as dividend is quite high for an ex-income trust stock. I would expect it to be under 5%. Price seems to be good at the present time and the dividend is quite good at 6.06%. See my spreadsheet on Superior Plus Corp.

I do not own this stock of Superior Plus Corp. (TSX-SPB, OTC-SUUIF). I started to follow this stock as it was an income trust company that was talked about in the Money Reporter from MPL Communications. This company changed to a corporation from Unit Trust (TSX-SPF.UN) in 2009.

When this stock became a corporation it decreased its dividends almost 63%. Dividends were flat for a few years and then in 2014 it started to raise its dividends again. If you look at growth of dividends over the past 5 and 10 years they come in at a negative 15% and 11.4% per year. However, over the past 3 years dividends are up by 6.3% per year.

The last dividend rise was in 2015 and it was for 20%. There has been no dividend raise so far this year. So dividends are inconsistent. They have been paying dividends since 1996 and their record is inconsistent. Prior to 2009 dividends went up and down and stayed level. I prefer companies that are more consistent with dividends.

They cannot afford their dividends currently, but maybe in the near future. The Dividend Payout Ratio for EPS was 360% in 2015. There was only one year that they could afford their dividends and that was in 2012. However, EPS is expected to be better in 2016 and the DPR is expected to be around 103%. Analysts are expecting a big increase in EPS from $0.20 to $0.70 a 250% increase. If you compare the 12 month period to the end of year and the 12 month period to the end of the second quarter, EPS is $0.61 a value some 205% higher than the EPS of last year. So this seems possible.

Analysts expect the DPR for EPS to be around 103% in 2016, dropping to 100% in 2017 and then to 91% in 2018. The Dividend Payout Ratio for Cash Flow per Share is better with the 2015 DPR for CFPS at 40% and the 5 year median at 30%.

Dividends are good with possible increases in the future. The current dividend is 6.06% based on dividends of $0.72 and a stock price of $11.89. If you had bought this stock 5, 10 or 15 years ago, the dividends would have covered 36.6%, 64% and 142% of your stock's purchase price. Also, you would be earning 8.1%, 4.2% or 4.7% on your stock's purchase price. High dividends ensure quick coverage of the stock's purchase price with dividends.

The outstanding shares have increased by 5.5% and 5.1% per year over the past 5 and 10 years. Shares have increased due to Debenture Conversions, Share Issues, DRIP and Stock Options. Because of this I would be more interested in the per share values. For example, Revenue is down by 1.3% and up by 4.9% per year over the past 5 and 10 years. However, the Revenue per Share is down by 6.4% and flat over the past 5 and 10 years. Analysts do not expect much improvement in Revenues over the next few years.

The 5 year low, median and high median Price/Earnings per Share Ratios are 26.53, 29.15 and 32.68. The corresponding 10 year values are a lot lower and more in line with this type of stock at 9.99, 12.44 and 15.35. The corresponding historical values are 15.13, 18.61 and 20.75. The current P/E Ratio is 10.50 based on a stock price of $11.89 and 2016 EPS estimate of $0.70. This testing suggests that the stock price is relatively cheap to relatively reasonable and below the median.

I get a Graham Price of $9.08. The 10 year low, median and high median Price/Graham Price Ratios are 0.87, 1.19 and 1.65. The current P/GP Ratio is 1.31 based on a stock price of $11.89. This stock price testing suggests that the stock price is reasonable but above the median.

The 10 year median Price/Book Value per Share Ratio is 2.43. The current P/B Ratio is 2.79 a value some 6.5% lower based on a stock price of $11.89 and BVPS of $5.23. This testing suggests that the stock price is relatively reasonable and below the median.

I cannot really compare the current dividend yield to the historical one because this stock used to be an income trust and income trusts had high dividend yields. The historical high is above 18%. However, the 5 year median dividend yield is 5.91% with the current dividend yield at 6.06% and some 2.4% higher. This testing suggests that the stock price is relatively reasonable and below the median.

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 is $12.40. This implies a total return of 10.34% with 4.29% from capital gains and 6.06% from dividends based on a current stock price of $11.89.

Will Ashworth of Motley Fool recently said why he liked this stock. He thinks it is good for income investors. Grant Hamersma on Baseball News Source talks about recent analysts ratings with a consensus of a Buy rating. Read what analysts say about this stock on Stock Chase

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.

The last stock I wrote about was about was Jean Coutu Group Inc. (TSX-PJC.A, OTC-JCOUF)... learn more . The next stock I will write about will be Andrew Peller Ltd. (TSX-ADW.A, OTC-ADWPF)... learn more on Wednesday, August 31, 2016 around 10 am. Tomorrow on my other blog I will write about Montreal Gazette Portfolio... learn more on Tuesday, August 30, 2016 around 5 pm.

Superior Plus Corp. is a group of diversified businesses that operate within three primary divisions. Superior's Energy Services division provides distribution, wholesale procurement and related services in relation to propane, heating oil and other refined fuels throughout Canada and the North Eastern United States. Superior's Specialty Chemicals division is a leading supplier of sodium chlorate and related technology to the pulp and paper sector and a regional Midwest supplier of chloralkali and potassium based products. Superior's Construction Products Distribution division is a leading distributor of walls, ceilings and insulation products to the Canadian and United States construction industry. Its web site is here Superior Plus 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.

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