I do not own this stock of Supremex Inc (TSX-SXP, OTC-SUMXF). I read about it in Money Sense article of 15 Stocks to help investors ride market swings by Michael Pe of Mar 4, 2018. This link to the article is here. They were an envelope company, but are diversifying into packaging.
When I was updating my spreadsheet, I noticed that they were an income trust that changed into a corporation. The change occurred in 2010 and they decreased the dividend by almost 90%. They started to increase the dividend again in 2011. They are buying back shares, but not a lot. The buy backs are around 0.5% per year. So, there is not much difference between per share values and other value.
Dividends were very high to begin with. The top was in 2008 with a yield of 50%. The dividend yields came down with the dividend cuts, but dividends are back to being quite high. The current dividend yield is 7.98% with 5, 10 and historical yields at 5.23%, 6.46% and 7.21%. Note that income trust companies have higher yields that corporations.
The Dividend Payout Ratios are fine. I cannot calculate a DPR for EPS for 2018 as they had an earnings loss. However, the 5 year coverage is 63%. The DPR for 2019 for EPS is expected to 50% this year. The DPR for CFPS for 2018 is 46% with 5 year coverage at 26%.
Debt Ratios are fine. Long Term Debt/Market Cap Ratio for 2018 is 0.78. The Liquidity Ratio for 2018 is 2.35 with 5 year median of 2.03. These are good ratios. The Debt Ratio is 1.90 for 2018 with 5 year median of 2.38. These are fine. Leverage and Debt/Equity Ratios for 2018 are 2.11 and 1.11 respectively, with 5 year ratios of 1.72 and 0.72. This Leverage and Debt/Equity Ratios have varied over time for are currently rather normal.
The Total Return per year is shown below for years of 5 to 12 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.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 14.87% | 13.04% | 3.43% | 9.61% |
| 2008 | 10 | -13.81% | 5.51% | -2.54% | 8.06% |
| 2006 | 12 | -11.65% | -2.61% | -9.82% | 7.21% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 7.83, 9.20 and 10.58. The current P/E Ratio is 6.27 based on a stock price of $3.26 and 2019 EPS estimate of $0.52. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $ 5.59. The 10 year low, median, and high median Price/Graham Price Ratios are 0.45, 0.60 and 0.78. The current P/GP Ratio is 0.58 based on a stock price of $3.26. 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 Ratio of 1.21. The current P/B Ratio is 1.22 based on Book Value of $75,661, Book Value per Share of $2.68 and a stock price of $3.26. The current P/B Ratio is 1% above the 10 year median. This stock price testing suggests that the stock price is relatively reasonable and around the median.
I get an historical median dividend yield of 7.21%. The current dividend yield is 7.98% based on a stock price of $3.26 and dividends of $0.26. The current dividend is 11% above the historical dividend 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 0.49. The current P/S Ratio is 0.46 based on 2019 Revenue estimate of $199M, Revenue per share of $7.04 and a stock price of $3.26. The current P/S Ratio is some 6% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
Results of stock price testing is that the stock price is current reasonable and probably below the median. It is only the P/E Ratio test that shows the stock as cheap and this is not be best of testing for stock price.
When I look at analysts’ recommendations, I find only one analyst following this stock and giving it a recommendation of Buy. The consensus would therefore be a Buy. The 12 month stock price is $4.25. This implies a total return of 38.34% with 30.37% from capital gains and 7.98% from dividends.
A few analysts follow this stock on Stock Chase. Kris Knutson on Motley Fool thinks this company is worth a look at, but it is risky. A writer on Simply Wall Street says that the balance sheet is adequate and the stock has a good dividend. Alfredo Boyd on Augusta Review gives some metrics on this stock. Joe Cepeda on Z Tribune says there has been a decrease in shorted shares of this company.
Supremex Inc is engaged in manufacturer and marketer of a broad range of custom envelopes and packaging products. The company operates in one business segment that is Manufacturing and Sale of Envelopes, Packaging, and Specialty Products. Its web site is here Supremex Inc.
The last stock I wrote about was about was Russel Metals Inc. (TSX-RUS, OTC-RUSMF) ... learn more. The next stock I will write about will be Leon's Furniture Ltd (TSX-LNF, OTC-LEFUF) ... learn more on Friday, April 11, 2019 around 5 pm. Tomorrow on my other blog I will write about Investing and Stress.... learn more on Thursday, April 11, 2019 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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