High Liner Foods

Sound bite for Twitter and StockTwits is: Dividend Growth Consumer. It has had some problems lately so the price is current cheap by dividend yield and P/S Ratio testing. It would appear that they can overcome their problems so if you like this stock, now may be a good time to buy. See my spreadsheet on High Liner Foods.

I do not own this stock of High Liner Foods (TSX-HLF, OTC-HLNFF). This is a stock liked by the Investment Reporter and is considered to be of average risk. The MPL Communication's site is here. Ryan Irvine of Keystone also likes this company.

What surprised me about this stock when I was updating my spreadsheet is the volatility in the stock price. The price zoomed up from 2012 and reached heights in 2015 and again in 2016 from which it is falling from. The high in 2015 was $26.48 and in 2016 it was 27.22. However, this is not the first time this stock has zoomed up because in July 1986 it reached a high of $70.00. All these values are after 2014 split is taken into account. It fell from 1987 to 1993.

The stock did not do much between 1993 and 2008/2009 when it started to earn more and have higher revenue. It reached highs in 2015 then fell some 54% and again reached a high in 2016 and fell 54%. The stock at $14.14 is now down some 48% below the 2016 highs. The year 2016 was not good because of falling revenues, but earnings were up and cash flow was flat.

The other thing to note is the very high level of insider selling. The Net Insider Buying is at 0.28%. Normal would be around 0.1% or 0.2%. This is in contrast to last year when Net Insider Buying was at 0.04%. However, most of the selling was by the CEO who left the company and a director who left. If you take out this selling the NIS is at a normal 0.01%.

This company started to pay dividends in 2004, some 13 years ago. Since 2008 they have been raising their dividends every year. The dividend yields are moderate (2 to 3 range) and the dividend growth is good (over 15% per year). The current dividend is 3.96%, but the 5, 10 and historical yields are lower at 1.85%, 2.49% and 2.16% respectively. Dividends have grown at 21.7% and 17.9% per year over the past 5 and 10 years.

They can afford their dividends. The 2016 Dividend Payout Ratio is 36.5% with 5 year coverage of 39%. The DPR for 2016 for CFPS is 15.4% and with 5 year coverage at 13.1%. This company gives out an Adjusted EPS was well as EPS. I generally do not agree with individual companies doing their own thing for EPS, but the DPR for and Adjust EPS is at 29.6% with 5 year coverage of 25.6%.

The 5 year low, median and high median Price/Earnings per Share Ratios are 13.92, 18.32 and 22.39. The corresponding 10 year values are 10.39, 14.29 and 18.77. The historical values are 8.41, 10.88 and 13.32. It would seem that the rises in prices are due to rising P/E ratios. The current P/E Ratio is 12.95 based on a stock price of $14.14 CDN$ and 2017 EPS estimate of $1.09 CDN$ ($0.90 US$). This stock price testing suggests that the stock price is probably reasonable.

I get a Graham Price of $15.01 CDN$. The 10 year low, median and high median Price/Graham Price Ratios are 0.73, 1.01 and 1.28. The current P/GP Ratio is 0.94 based on a stock price of $14.14 CDN$. 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 of 1.73. The current P/B Ratio is 1.54 based on Book Value of $305M CDN$, $9.17 CDN$ and a stock price of $14.14 CDN$. The current P/B Ratio is some 10.8% lower than the 10 years ratio. . This stock price testing suggests that the stock price is relatively reasonable and below the median.

The current dividend yield is 3.96% based on dividends of $0.56 CDN$ and a stock price of $14.14 CDN$. The historical dividend yield is 2.16% a values some 83% lower. This stock price testing suggests that the stock price is relatively cheap.

The 10 year Price/Sales (Revenue) Ratio is 0.44. The current P/S Ratio is 0.30 based on a stock price of $14.14 CDN$, 2017 Revenue estimate of $1564M CDN$ ($1289M US$) and Revenue per Share of $46.92 CDN$. The current ratio is some 32% below the 10 year ratio. This stock price testing suggests that the stock price is relatively cheap.

When I look at analysts' recommendations I find Strong Buy (1), Buy (1) and Hold (3). The consensus would be a Buy. The 12 month stock recommendation is $15.80 US$ or $19.17 CDN$. This implies a total return of 39.52% with 3.96% from dividend and 35.56% from capital gains.

This press release on Cision talk about Henry Demone again becoming the company's CEO. Demone was chairman and CEO but then a couple of years ago Keith Decker being appointed CEO. Now effective August 2017 Henry Demone is again Chairman and CEO.

During the first half of 2017 this company had to recall products because they contained milk products that were not on the label. James Risdon writes about this in the Chronicle Herald of Halifax. There is an article on this stock by Patrick Pritchard on Seeking Alpha. See what analysts are saying about this stock on Stock Chase. They mostly like the company.

High Liner Foods is the leading North American processor and marketer of value-added frozen seafood. Their retail branded products are sold throughout the United States, Canada and Mexico and are available in most grocery and club stores. They also sell their branded products to restaurants and institutions and they are the major supplier of private label value-added frozen seafood products to North American food retailers and food service distributors. Its web site is here High Liner Foods.

The last stock I wrote about was about was ATCO Ltd. (TSX-ACO.X, OTC- ACLLF)... learn more. The next stock I will write about will be Smart REIT (TSX-SRU.UN, OTC-CWYUF)... learn more on Wednesday, September 13, 2017 around 5 pm. Tomorrow on my other blog I will write about Money Show 2017... learn more on Tuesday, September 12, 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.

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