I do not own this stock of Premium Brands Holdings Corp (TSX-PBH, OTC-PRBZF). I was looking for another stock to follow and I found this is one of the top stocks in TD Bank's Canadian Equity Fund.
When I was updating the spreadsheet, I noticed that long term debt has increased by 170% and that that the 5 year median Dividend Payout Ratio was high at 250%. However, the Debt/Market Cap Ratio is low at 0.13 and the current DPR is under 100%. Also, shareholders have had great returns on the stock, especially lately.
This stock used to be an income trust so the past dividend yield was high. Until 2009 when it changed to a corporation its median dividend yield was 11.25%. It travelled south ever since and hit a low of 1.50% in 2017. The current dividend yield is 1.68%. However, the 5, 10 and historical ones are much higher at 5.14%, 6.39% and 7.49%.
The dividend growth is going in the opposite direction of the dividend yield. It has been increasing since 2013. This is reflected in the chart below with 12 years growth at just 2.81% per year and 5 years at 6.88% per year. The last dividend increase was much higher at 13.1% in 2018.
Currently they can afford their dividends as the Dividend Payout Ratio for 2017 was 61%. However, this ratio has been quite high in the past and the 5 year coverage ratio is 104%. The DPR for CFPS is currently fine as it is below 40% at 39%. However, this ratio has also been much higher in the past and has a 5 year coverage at 45%.
Even through the long term debt has been increasing, the Debt/Market Cap Ratio is fine at 0.13. The Liquidity Ratio has always been fine and for 2017 it is 1.74 with 5 year median at 2.00. The Debt Ratio is also good at 1.95 with 5 year ratio at 2.05. Leverage and Debt/Equity Ratios are rather typical for this type of company and for 2017 they were at 2.93 and 1.50 respectively. The 5 year median ratios were also at 2.93 and 1.50 respectively.
The Total Return per year is show below for years of 5 to 22. 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.
Shareholders have done well with this stock even on a long term basis. The stock price has shot up and the 5 year total return is very high at 47%.
| Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|
| 5 | 6.88% | 47.47% | 43.17% | 4.30% |
| 10 | 3.38% | 26.65% | 22.19% | 4.45% |
| 12-15 | 2.81% | 21.00% | 17.03% | 3.96% |
| 20 | 9.78% | 8.35% | 1.43% | |
| 22 | 15.74% | 13.80% | 1.94% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 28.73, 33.58 and 40.54. The corresponding 10 year ratios are 21.60, 23.65 and 27.87. The corresponding historical ratios are 11.35, 15.00 and 16.26. The current P/E Ratio is 26.65 based on a stock price of $113.28 and 2018 EPS estimate of $4.25. This stock price testing suggests that the stock price is relatively reasonable but above the median.
To me the most reasonable series for P/E Ratios is the historical ones. The 5 and 10 year ratios are too high for a consumer sector company. Also, I have to wonder about the EPS estimate for 2018. EPS was lower in the first quarter of 2018 and in 2017.
I get a Graham Price of $40.19. The 10 year low, median, and high median Price/Graham Price Ratios are 1.31, 1.58 and 1.75. The current P/GP Ratio is 2.82 based on a stock price of $113.28. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median Price/Book Value per Share of 1.94. The current P/B Ratio is 6.71 based on a Book Value of $520M, Book Value per Share of $16.89 and a stock price of $113.28. The current P/B Ratio is some 245% above the 10 year median. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 7.29%. The current dividend yield is 1.68% based on dividends of $1.90 and a stock price of $113.28. The current yield is some 78% above this historical yield. This stock price testing suggests that the stock price is relatively expensive. However, since this used to an income trust this would not be a good test for this stock.
The 10 year median Price/Sales (Revenue) Ratio is 0.41. The current P/S Ratio is 1.16 based on 2018 Revenue estimate of $3,010M, Revenue per Share of $97.73 and a stock price of $113.28. the current P/S Ratio is some 184% above the 10 year median. This stock price testing suggests that the stock price is relatively expensive.
When I look at analysts’ recommendations I find Strong Buy (2), Buy (6) and Hold (2) recommendations. The consensus recommendation would be a Buy. The 12 month stock price consensus is $133.22. This implies a total return of 19.28% with 16.70% from capital gains and 1.68% from dividends based on a stock price of $113.28.
Joseph Solitro on Motley Fool talks about why this company’s stock price is rising. They had a very good year in 2017. John Heinzl at the Globe and Mail also likes this stock. Tremont Staff on Tremont Herald say that the Value Composite One (VC1) of this stock is 60 where close to 0 is for undervalued stocks and close to 100 I for overvalued stocks. See what analysts think of this stock on Stock Chase. Most like this company and many suggest that it is expensive.
Premium Brands Holdings Corp owns a specialty food manufacturing and differentiated food distribution businesses with operations in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nevada, Ohio, Arizona, and Washington State. Its web site is here Premium Brands Holdings Corp .
The last stock I wrote about was about was Intact Financial Corp (TSX-IFC, OTC-IFCZF)... learn more. The next stock I will write about will be Suncor Energy Inc. (TSX-SU, NYSE-SU) ... learn more on Friday, July 6, 2018 around 5 pm. Tomorrow on my other blog I will write about Something to Buy July 2018.... learn more on Thursday, July 5, 2018 around 5 pm.
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