I do not own this stock of Empire Company Ltd (TSX-EMP.A, OTC-EMLAF). I have known about this stock for some time before I decided to follow it. This stock has a financial year ending in end of April or first of May each year.
What I noticed on the spreadsheet was that EPS is down from where it was 5 and 10 years ago. There is also a decline in the Adjusted EPS over the past 5 and 8 years. For this company they have growing revenue, but the earnings are not growing in line with that growing revenue.
The dividend yield is low and the dividend growth is low to moderate. The dividend yield is currently at 1.67%. The 5, 10 and historical dividend yields are 1.56%, 1.56% and 1.45%. The dividend growth is shown in the table below. Dividend growth has gone up and down over the years and it has been mostly low lately. The last dividend increase occurred in 2018 and it was for 4.8%.
The Dividend Payout Ratio has gone up and down over the years, but mostly it has been quite low. The DPR for 2018 at 71.2% is probably the highest it has ever been. A lot of analysts expect this to improve in 2019 financial year and decrease to under 30%.
The Liquidity Ratio is low and has always been low. The one for 2018 financial year is just 0.84 with a 5 year median of 0.92. If the ratio is under 1.00, it means that current assets cannot cover current liabilities. If you add in cash flow after dividends you get a low ratio of 1.10. If you also add back in current portion of long term debt it is only 1.34. I prefer a value of 1.50 or higher.
Debt/Market Cap Ratio is good at just 0.17. The Debt Ratio is also good at 1.77 with 5 year median at 1.77also. The Leverage and Debt/Equity Ratio are typical at 2.34 and 1.32 respectively.
The Total Return per year is show below for years of 5 to 32. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See charts below.
This company has been having problems lately, so the recent total return is low. Over the long term, this company had done well for its shareholders. If you hold stocks for the long term, there is going to be up and down periods. It is not possible for a company to stable over the long term. However, it should produce good results over the long term. I want the total return long term to be 8% or more.
| Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|
| 5 | 5.59% | 6.30% | 4.50% | 1.78% |
| 10 | 6.68% | 7.33% | 5.55% | 1.80% |
| 15 | 9.34% | 8.03% | 6.27% | 1.76% |
| 20 | 12.42% | 12.10% | 10.02% | 2.09% |
| 25 | 11.13% | 13.30% | 11.13% | 2.16% |
| 30 | 10.11% | 10.80% | 9.15% | 1.65% |
| 32 | 9.95% | 12.04% | 10.15% | 1.89% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 22.20, 25.30 and 28.41. The 10 year corresponding ratios are 12.56, 14.57 and 17.08. The historical ones are 10.13, 12.10 and 13.63. The current P/E Ratio is 16.85 based on a $26.29 and 2019 EPS estimate of $1.56. This stock price testing suggests that the stock price is relatively reasonable but above the median.
A current problem with the stock market is that the average P/E Ratios are relatively high historically. The median P/E Ratios for the last 5 years are certainly high for this stock. Another problem is that for individual stocks the P/E Ratio testing may not be the best test. For this stock the EPS dropped over the past two years, but the stock price did not drop in line with the EPS drop. This results in high P/E Ratios.
I get a Graham Price of $21.87. The 10 year low, median, and high median Price/Graham Price Ratios are 0.78, 0.89 and 1.04. The current P/GP Ratio is 1.20. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median Price/Book Value per Share of 1.20. The current P/B Ratio is 1.93 based on Book Value of $3703M, Book Value of $13.63 and a stock price of $26.29. The current P/E Ratio is some 60% higher than the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 1.45%. The current dividend yield is 1.67 based on a stock price of $26.29 and Dividends of $0.44. The current yield is 15% higher than the historical median yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10 year median Price/Sales (Revenue) Ratio is 0.24. The current P/S Ratio is 0.29 based on 2019 Revenue of 24,507M, Revenue per Share of $90.20 and a stock price of $26.29. The current P/S Ratio is some 19.6% above the 10 year median. This stock price testing suggests that the stock price is relatively reasonable but above the median. If the difference were 20%, the stock price would be considered relatively expensive.
When I look at analysts’ recommendations I find Buy (6) and Hold (5). The consensus recommendation would be a Buy. The 12 month stock price consensus is $29.20. This implies a total return of 12.74% with 1.67% from dividends and 11.07% from capital gains.
On most tests this stock is coming up as relatively expensive. The time to buy it cheap has passed. It had really good prices in 2016 into 2017. Between the end of 2016 and 2017 the stock price is up some 56% and another 7% this year. It is not overly pricey, but it certainly is not a good deal at the moment.
Will Ashworth on Motley Fool says Empire has done well lately but wonders if it can keep it up. The Canadian Press with The Chronicle Herald says the CEO is proud of what the company has accomplished and raised the dividend. The People Space column of Real Estate News Exchange talk about recent management change at this company. See what analysts are saying about this stock on Stock Chase. They talk about the company being turned around and that it is well managed.
Empire Company Ltd is engaged in food retailing and real estate business. It is engaged in the food products retailing business through various store formats, including full service stores, discount service stores, among others. Its web site is here Empire Company Ltd.
The last stock I wrote about was about was Suncor Energy Inc. (TSX-SU, NYSE-SU) ... learn more. The next stock I will write about will be Morneau Shepell Inc. (TSX-MSI, OTC-MSIXF) ... learn more on Wednesday, July 11, 2018 around 5 pm. Tomorrow on my other blog I will write about My Stock Reviews 2018.... learn more on Tuesday, July10, 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.
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