I own this stock of Saputo Inc (TSX-SAP, OTC-SAPIF). This was a stock on Mike Higgs' Canadian Dividend Growth Stock list and on the dividend lists that I followed. I bought this stock first in 2006 for my RRSP account. Because I am now taking money from my RRSP accounts, I have been selling this stock because of the low dividend. I still like this stock so I have been buying it in my TFSA.
When I was updating my spreadsheet, I noticed that the next generation has taken over running the company and Lino Saputo is still both Chairman and CEO. I prefer to have these roles split into two people. I think that they give too much out in stock options. You except the percentage of shares to be no greater than 0.50%. This company average over past 5 years is 0.73%.
The dividend yields have always been low (below 2%). The current dividend yield is 1.68%. The 5, 10 and historical yields are 1.52%, 1.63% and 1.57%. In the past, dividend increases were good (over 15%). However, they have slowed after the 2010. A lot of companies are having a slow recovery from the last recession.
The Dividend Payout Ratios are good and low. The DPR for EPS for 2019 is 34% with 5 year coverage at 32%. The DPR for CFPS for 2019 is 21% with 5 year coverage at 19%.
Debt Ratios are all good. Long Term Debt/Market Cap Ratio is low and good at 0.11. The Liquidity Ratio is god at 1.62. The Debt Ratio is good high and god at 2.21. The Leverage and Debt/Equity Ratios are low and good at 1.82 and 0.82 respectively.
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 chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 7.80% | 12.04% | 10.06% | 1.98% |
| 2008 | 10 | 19.18% | 15.79% | 13.43% | 2.36% |
| 2003 | 15 | 11.98% | 13.20% | 11.13% | 2.07% |
| 1998 | 20 | 16.67% | 14.46% | 12.43% | 2.02% |
| 1993 | 21 | 15.05% | 21.19% | 12.70% | 8.49% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 19.07, 21.55 and 24.35. The corresponding 10 year ratios are 18.16, 20.61 and 22.69. The corresponding historical ratios are 15.82, 18.51 and 21.43. The current P/E Ratio is 23.20 based on a stock price of $39.20 and 2020 EPS estimate of $1.69. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $22.98. The 10 year low, median, and high median Price/Graham Price Ratios are 1.57, 1.80 and 2.00. The current P/GP Ratio is 1.71 based on a stock price of $39.20. This stock price testing suggests that the stock price is relatively reasonable, but above the median.
I get a 10 year median Price/Book Value per Share Ratio of 3.55. The current P/B Ratio is 2.82 based on a Book Vale of $5,421M, Book Value per Share of $13.89 and a stock price of $39.20. The current ratio is some 20% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 1.57%. The current dividend yield is 1.68% based on dividends of $0.66 and a stock price of $39.20. The current yield is some 7% above the historical 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 1.21. The current P/S Ratio is 1.02 based on 2020 Revenue estimate of $14,944M, Revenue per Share of $38.30 and a stock price of $39.20. The current ratio is 15% 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 that the stock price is probably reasonable. It is showing from cheap to below the median with the P/B Ratio, P/S Ratio, and dividend yield tests. The estimate for the EPS is expected to low in 2020 and this accounts for the expensive results for the P/E Ratio test.
Is it a good company at a reasonable price? This is a good company but it is currently having some problems. A lot of companies are finding that recovery from 2010 recession has been hard. The price is probably reasonable. I am retaining my shares because I am a long term investor and I believe I will still do well in the future with this stock. I have sold from my RIF as I sell the stocks with the lowest yields. However, I have shares in the TFSA and Trading account I will keep.
When I look at analysts’ recommendations, I find Buy (1), Hold (5), Underperform (1) and Sell (1). The consensus would be a Hold. The 12 month stock price consensus is $42.44. This implies a total return of 9.95% with 8.27% from capital gains and 1.68% from dividends.
See what analysts are saying on Stock Chase. There are some negative remarks because it has not done well in last 5 years. Mat Litalien on Motley Fool thinks the stock is in oversold territory. A Writer on Simply Wall Street determines that the CEO has an average pay packet. A Writer on Simply Wall Street says the P/E Ratio shows market optimism about this stock. An article from the Canadian Press on Times Colonist says the shares fell because of short fall in fourth quarterly earnings.
Saputo is a dairy processor and cheese producer that operates in Canada, the United States, Argentina, and Australia and sells products in more than 40 countries. It is the largest cheese manufacturer in and one of the top three cheese producers in the United States. The company's brands include Saputo, Armstrong, Frigo, and Stella. Its web site is here Saputo Inc.
The last stock I wrote about was about was Parkland Fuel Corp (TSX-PKI, OTC-PKIUF) ... learn more. The next stock I will write about will be Intact Financial Corp (TSX-IFC, OTC-IFCZF) ... learn more on Wednesday, July 3, 2019 around 5 pm. Today on my other blog I will write about Dividend Stocks July 2019.... learn more on Tuesday, July 2, 2019 around 5 pm.
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