Monday, January 8, 2018

Rogers Sugar Inc.

Sound bite for Twitter and StockTwits is: Good yield consumers. On a number of tests the current stock price is relatively reasonable and below or at the median. This is probably a fair judge of this stock’s price. It might take off with new purchases. See my spreadsheet on Rogers Sugar Inc.

I do not own this stock of Rogers Sugar Inc. (TSX-RSI, OTC-RSGUF). This stock was brought to my attention by Dividend Ninja. This company used to be an Income Trust (TSX-RSI.UN) but it has been converted to a corporation. On its change to a corporation, it lowered its dividend.

Both their Intangibles and goodwill and long term debt has increased. The debt has increased by 150% to a ratio with the market cap of 0.25 and Intangibles and Goodwill has increased by 50.4% to a ratio of 0.59. They also issued new shares and shares have increased by 12.7%. Any time you get big changes to these items you need to find out why.

In this case, the company acquired the outstanding shares of LBMT. LBMT is one of the world’s largest branded and private label maple syrup bottling and distribution companies. One analyst has said that Rogers in the past lacked a growth avenue, but with the addition of LBMT and Decacer they have one.

The dividend yields have always been high on this stock. The historical high yield is around 16% and the historical low yield is around 5.2%. This average historical yield is 10.57% with a historical median yield at 9.47%. They reduced their dividends when they became a corporation but even since then the median is still high at 6.18%. The current dividend yield is 5.78% which is still a pretty good yield.

The bad news is that there is no growth in dividends. The dividend has not increased since 2013. The 5 dividend growth is the only one that is positive because of an increase 5 years ago but that is still extremely low at just 0.85%. For the past, 10, 15 and 19 year dividends have declined by 1.69%, 0.94% and 3.43% per year. Analysts do not see any increase in the near term.

The problem is that the company has not been able to cover its dividends with its earnings since 2012. The Dividend Payout Ratio for 2017 is 164% with 5 year coverage of 119%. Analysts think that the dividends will be covered by earnings in 2018 at a rate of 68%. However, they also thought that earnings would be high enough for them to cover the dividends in 2017.

Actually the total return has been fairly good except for the 20 year one. The total return for the past 5, 10, 15 and 20 years is at 8.34%, 11.15%, 10.32% and 4.75% per year. A lot of things happen over the long term and I think that any per year total return over the long term at or above 8% is a good one.

However, most of the total return for this stock is in dividends. The total return for the past 5 and 10 years is at 8.34% and 11.15% per year with capital gain at 1.08% and 3.01% per year and dividends at 7.27% and 8.14% per year respectively.

The 10 year low, median and high median Price/Earnings per Share Ratios are 14.49, 16.21 and 18.52. The 10 year ratios are 12.26, 13.62 and 14.68. The historical ones are 9.02, 9.84 and 11.16. The current P/E Ratios are 11.75 based on a stock price $6.23 and 2018 EPS estimates of $0.53. This stock price testing suggests that the stock price is relatively cheap.

I get a Graham Price of $6.11. The 10 year low, median and high median Price/Earnings per Share Ratios are 0.92, 1.03 and 1.16. The current P/GP Ratio is 1.02 based on a stock price of $6.23. This stock price testing suggests that the stock price is reasonable and around the median.

The 10 year Price/Book Value per Share Ratio is 1.82. The current P/B Ratio is 1.99 based on a stock price of $6.23, Book Value of $331M and Book Value per Share of $3.13. The current P/B Ratio is some 9.3% above the 10 year median ratio. This stock price testing suggests that the stock price is reasonable but above the median.

The historical median dividend yield is 9.47%. The one since the company became a corporation is 6.18%. The current dividend yield is 5.78% based on dividends of $0.36 and stock price of $6.23. The current dividend yield is some 39% and 6.5% below these yields. The current yield is even below the 5 year median yield of 6.70% by 13.8%. All this testing suggests that the stock price could relatively reasonable, but it is certainly above the median.

You are never going to get a good result from using my favourite test using the dividend yield. The yields in the past have been very high. High dividend yields usually denote a company in problem. If they fix the problems, the dividend yield is going to go down.

The Price/Sales (Revenue) Ratio is 0.89. The current P/S Ratio is 0.75 based on 2018 Revenue estimate of $879M, Revenue per Share of $8.31 and a stock price of $6.23. This stock price testing suggests that the stock price is relatively reasonable and below the median.

When I look at analysts’ recommendations I find Buy (3) and Hold (2). The consensus would be a Buy. The 12 month stock price is $7.05. This implies a total return of 18.94% with 5.78% from dividends and 13.16% from capital gains.

Joseph Solitro on Motley Fool likes the dividend yield on this stock. Migdalia James on Herald KS talks about what analysts expect on this stock. See what analysts are saying about this stock on Stock Chase. Most think that they are making a good move into Maple Sugar.

Rogers Sugar Inc is engaged in refining, packaging and marketing of sugar products. The Company produces granulated, icing, organic and brown sugars, liquid sugars and syrups. Its web site is here Rogers Sugar Inc.

The last stock I wrote about was about was Royal Bank of Canada (TSX-RY, NYSE-RY)... learn more. The next stock I will write about will be Calian Group Ltd. (TSX-CGY, OTC- CLNFF)... learn more on Wednesday, January 9, 2018 around 5 pm. Tomorrow on my other blog I will write about Stock Entries 2018.... learn more on Tuesday, January 9, 2018 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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