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.
When I was updating my spreadsheet, I noticed that they have finally gotten their Dividend Payout Ratio for EPS under 100%. For 2018 it was 84% with 5 year coverage at 97%. There is still insider buying. The financial year ends at September 30 each year.
This stock used to be an income trust. Income Trust stocks had much higher dividends that other stocks and they also paid out all they could in dividends. The current dividend yield is very good at 6.57%. When they became a corporation, they decreased their dividends by 30% in 2011 and then kept their dividends flat. Analysts do not see any increase in dividends over the next two years.
Because of past high dividends, the historical median dividend yield is 9.32%. Dividends in the past went as high as 16%. Even if you look at dividends since 2011 it is high at 6.14%. The 5 and 10 year dividend yields are 6.70 and 6.44%.
Problem has been that their earnings were not covering their dividends. EPS has been volatile and they have not made much progress in growing their EPS. When they were an income trust, the rules were different on what the company could afford in divdends. Then dividends (or distributions) were measured against Adjusted Funds from Operations (AFFO). Now the company’s dividends are compared to the EPS to see if they can afford their dividends.
There is no good coverage of dividends by earnings and cash flow. There has been a couple of years plus the financial year of 2018 when the company could cover the dividends with earnings. Analysts expect dividends to be covered by EPS going forward. The dividends are not well covered by CFPS. The DPR for CFPS for 2018 is 41% with 5 year coverage at 46%. Top acceptable coverage is 40%.
Debt Ratios are fine. Long Term Debt/Market Cap Ratio for 2018 is 0.27. The Liquidity Ratio is 1.97 with 5 year median at 1.61. The Debt Ratio is 1.67 with 5 year median at 1.77. Leverage and Debt/Equity Ratios are 2.49 and 1.51 with 5 year medians at 2.19 and 1.19.
The Total Return per year is shown below for years of 5 to 21 to the end of 2018. 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.
As you can see from the table, most of the return is in dividends (distributions). Capital gain is non-existent to very low. The problem with the long term of 20 and 21 years is that the stock price went down after the stock was initially issued. Going forward, I do think that there will continue to be low growth in capital gains, but dividends are going to be lower as company is no longer an income trust.
| Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|
| 5 | 0.00% | 6.84% | 0.18% | 6.66% |
| 10 | -2.32% | 13.37% | 3.65% | 9.72% |
| 15 | -1.90% | 13.16% | 2.79% | 10.37% |
| 20 | -3.26% | 5.11% | -2.03% | 7.14% |
| 21 | 4.42% | -2.42% | 6.85% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 13.90, 16.21 and 18.52. The corresponding 10 year ratios are 13.08, 13.84 and 14.67. The corresponding historical ratios are 9.82, 10.73 and 11.89. The current P/E Ratio is 12.18 based on current stock price of $5.48 and 2019 EPS estimate of $0.45. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $5.74. The 10 year low, median, and high median Price/Graham Price Ratios are 0.97, 1.10 and 1.21. The current P/GP Ratio is 0.95 based on a stock price of $5.48. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median Price/Book Value per Share Ratio of 1.85. The current P/B Ratio is 1.68 based on Book Value of $3,445M, Book Value per Share of $3.26 and a stock price of $5.48. The current ratio is 9% below the 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 9.32%. The 5 and 10 median yields are 6.42% and 6.44%. The median yield since 2011 is 6.14%. The current yield is 6.57% based on dividends of $0.36 and a stock price of $5.48. The current yield is above all the yields except for the historical one. 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 0.83. The current P/S Ratio is 0.72 based on 2019 Revenue estimate of $802M, Revenue per Share of $7.58 and a stock price of $5.48. The current P/S Ratio is some 13% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
For testing this stock, the best one might be the P/S Ratio. In that case, the stock price would be reasonable and below the median. Another good one is the P/B Ratio test and that comes up with the same results. The dividend yield test is not good for old income trust companies nor for companies that do not rise their dividends. The P/E Ratios have gone up over time. A P/E Ratio of 12.18 is a good one, but it does not point to a cheap price for this sort of stock.
When I look at analysts’ recommendations, I find Buy (1) and Hold (4). The consensus would be a Hold. The 12 month consensus stock price is $6.05. This implies a 16.97% total return with 10.40% from capital gains and 6.57% from dividends.
Rogers Sugar Inc is on Small Cap Power’s list of 4 Canadian Dividend Stocks with a Good Mix of Income and Growth. Lisa Matthews on Fairfield Current talks about recent insider buying. says that the Williams Percent Range is -29.61 and stock with this Indicator below -20 says the stock is overbought (too high). Nelson Smith on Motley Fool thinks this is a good boring stock. See what analysts are saying about this stock on Stock Chase. It is not a favourite with analysts. One analyst mentioned that the expansion into Maple Syrup did not go all that well.
Rogers Sugar Inc is a Canada based sugar producing company. The company through its subsidiary is principally engaged in refining, packaging, and marketing of sugar products. 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 Friday, January 11, 2018 around 5 pm. Tomorrow on my other blog I will write about Why Buy Food Stocks.... learn more on Thursday, January 10, 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.
No comments:
Post a Comment