Wednesday, June 28, 2017

AGT Food and Ingredients Inc.

Sound bite for Twitter and StockTwits is: Interesting Consumer Stock. I like my companies to be dividend growth companies and at the moment this company cannot be characterized as one. The stock price testing varies greatly. Part of the reason is the revenues are growing, but not the EPS. However, analysts expect the EPS to improve. So I would not personally be interested in this company. 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.

The company did not reduce the dividends when it because a corporation. In fact they raised their dividend once in 2011, but it has remained flat ever since. At first the Dividend Payout Ratio was high, but for 2016 it was 69% but with a 5 year DPR of 127%.

The dividend yield currently is moderate at 2.51%. It used to be higher when the stock was first on the TSX and has an historical dividend yield high over 10%. However, the historical low dividend yield is just 1.49%. This is a very broad range. Currently the historical median dividend yield is 3.38% but the 10 year and 5 year median dividend yields are a lower at 2.73% and 2.63% respectively.

No analyst seems to think that the dividends will be increase over the next few years. I would suspect that the dividend yields will be low to moderate in the future. The company itself says that they do not anticipate any reduction in dividends. They also say that dividends are paid at the discretion of the Board of Directors and may vary. Whether this will be a dividend growth company in the future is unknown, but it appears not to be at present.

The debt ratios are not very good. The Liquidity Ratio for 2016 is just 1.37. If you add in cash flow after dividends it is still low at 1.40. The Debt Ratio is 1.31. I like both of these ratios, for safety’s sake to be at 1.50 or above. The Leverage and Debt/Equity Ratios are quite high at 4.27 and 3.27 respectively. When debt ratios are not good it makes the company vulnerable in bad times.

The Return on Equity is rather low with the one for 2016 at 7% with a 5 year median of 4.5%. This has not been above 10% in the last 5 years. The ROE on Comprehensive Income for 2016 was a negative 14% with a 5 year median of just 3.3%.

The 5 year low, median and high median Price/Earnings per Share Ratios are 29.56, 41.60 and 46.79. The corresponding 10 year ratios are 11.04, 16.08 and 21.11. The 12 year ratios are lower still at 8.08, 9.16 and 11.33%. The stock price has been rising without a corresponding rise in the EPS. The current P/E Ratio is 22.73 based on a stock price of $23.87 and 2017 EPS estimate of $1.05. This is lower than for the past 5 years, but not for the corresponding 10 years. It is a rather high P/E Ratio. I would be inclined to suggest that the stock price based on P/E Ratio is relatively expensive.

I get a Graham price of $16.94. The 10 year low, median and high median Price/Graham Price Ratios are 1.04, 1.48 and 1.82. The current P/GP Ratio is 1.41 based on a stock price of $23.87. This stock price testing suggests that the stock price is relatively reasonable and below the median.

I get a 10 year median Price/Book Value per Share Ratio is 1.54. The current P/B Ratio is 1.96 based on a stock price of $23.87 and BVPS of 12.15. The current ratio is some 28% higher than the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.

Using the dividend yield for testing, the current stock price is quite high. The historical median dividend yield is 3.38%. The current dividend yield is 2.51% based on a stock price of $23.87 and dividends of $0.60. The current dividend yield is some 26% lower than the historical dividend yield. This stock price testing suggests that the stock price is relatively expensive.

The 10 year median P/S Ratio is 0.47. The current P/S Ratio is 0.27 based on 2017 revenue estimate of $2124M, 2017 Revenue per Share estimate of $88.73 and a stock price of $23.87. The current P/S Ratio is some 43% lower than the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

When I look at analysts' recommendations I find 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 $34.06. This implies a total return of 45.20% with 2.51% from dividends and 42.69% from capital gains based on a stock price of $23.87.

Cynthia Vaughn on Community Financial News talks about some analysts commenting on this stock. CIBC trimmed its target price from $39.00 to $33.00, but BMO Capital Markets issued a target price of $40.00. A Cision New Wire report says that Murad Al-Katib of this company was named ED World Entrepreneur of the Year 2017. See what analysts are saying about this stock on Stock Chase. Views are bit mixed.

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.

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 Intact Financial Corp (TSX-IFC, OTC-IFCZF)... learn more on Friday, June 30, 2017 around 5 pm. Tomorrow on my other blog I will write about Debt and Dividends... learn more on Thursday, June 29, 2017 around 5 pm.

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. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

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