I do not own this stock of Superior Plus Corp (TSX-SPB, OTC-SUUIF). I started to follow this stock as it was an income trust company that was talked about in the Money Reporter from MPL Communications. This company changed to a corporation from Unit Trust (TSX-SPF.UN) in 2009.
When I was updating my spreadsheet, I noticed the revenue has gone up in the last two years, but they have had earnings losses over these two years. This stock also shows why you buy dividend paying stock. Shareholders have not lost money and have had some good years because of dividends.
This probably cannot be called a dividend growth company as it has decreased the dividends as well as rise them. You can see from the chart below that dividends have not been growing. Since 2016 the dividends have been flat. However, they might again become a dividend growth company in the future.
Dividends have been in the good range (over 5%). The current dividend yield is 6.04%. The 5, 10 and historical dividend yields are 6.00%, 6.51% and 9.32%. Expect that the yield will be lower in the future as this company was an income trust and it now a corporation. Income Trust companies always have higher yields than corporations.
The Dividend Payout Ratios are too high for EPS, but analysts think that they will get this under control in the near future. The DPR for EPS is not calculable for 2018 because the company had an earnings loss. The 5 year coverage is too high at 159%. The DPR for EPS is expected to be around 83% next year. The DPR for CFPS for 2018 was fine at 38% with 5 year coverage also at 38%.
Debt Ratios are not great and a vulnerability. The Long Term Debt/Market Cap Ratio for 2018 was 1.08. However, this is because this company, along with the whole stock market when down at the end of last year. The current ratio is better at 0.75. The Liquidity Ratio is low at 1.12 and not much better when you added in cash flow after dividend when it reaches 1.36. I prefer it at 1.50 or higher. The Debt Ratio is also low at 1.43 where I like it at 1.50 or higher also. The Leverage and Debt/Equity Ratios are high at 3.35 and 2.35.
The Total Return per year is shown below for years of 5 to 22 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 | 3.71% | 1.45% | -4.76% | 6.20% |
| 2008 | 10 | -7.79% | 8.26% | -1.22% | 9.47% |
| 2003 | 15 | -7.40% | 1.29% | -6.29% | 7.58% |
| 1998 | 20 | -2.72% | 10.17% | -2.15% | 12.32% |
| 1996 | 22 | -1.48% | 10.77% | -1.57% | 12.34% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 4.24, 5.34 and 6.43. The corresponding 10 year ratios are 5.71, 7.59 and 9.48. The historical corresponding ratios are 12.98, 15.73 and 19.53. The current P/E Ratio is 13.26 based on a stock price of $11.93 and 2019 EPS estimate of $0.90. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $11.54. The 10 year low, median, and high median Price/Graham Price Ratios are 1.21, 1.58 and 1.90. The current P/GP Ratio is 1.32 based on a stock price of $11.93. 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 2.40. The current P/B Ratio is 1.75 based on a Book Value of $1189M, Book Value per Share of $6.80 and a stock price of $11.93. The current ratio is 27% 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 9.32%. The current dividend yield is 6.04% based on dividends of $0.72 and a stock price of $11.93. The current yield is 35% below the historical yield. This stock price testing suggests that the stock price is relatively expensive.
The 10 year median Price/Sales (Revenue) Ratio is 0.47. The current P/S Ratio is 0.71 based on 2019 Revenue estimate of $3,045M, Revenue per Share of $17.41 and a stock price of $11.93. The current ratio is 51% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
Results of stock price testing is that the stock price is probably relatively expensive. In actual price, the stock price is lower than any other year except for 2011. However, a number of good tests is showing it as relatively expensive. One is the P/S Ratio test which you would be wise not to ignore. The dividend yield test show this also. That is because the dividends paid are relatively low to past history.
Shareholders in the past have made most of their money from dividends and very little from capital gains. I do not see that changing much in the future, so returns will probably be lower in the future. The reason the stock showed expensive on the P/E Ratio test is because there has been lots of years with earnings losses. A P/E Ratio of 13.26 is not a high one, but for this sort of company it is not at a good buy place either.
Is it a good company at a reasonable price? This company shows why you should buy dividend paying stock because even though there have been little capital gains, shareholders have made money in dividends. With the company’s past history, I cannot see it making good capital gains. It might go back up into the $14.00 range, but it is hard to imagine good capital gains in the future. It is not a company that I would buy at present.
When I look at analysts’ recommendations, I find Strong Buy, (5), Buy (5) and Hold (2). The consensus would be a Strong Buy. The 12 month stock price consensus is $14.77. This implies a total return of 29.84% with 23.81% from capital gain and 6.04% from dividends.
See what analysts are saying at Stock Chase. They have mixed views on this company. Ryan Vanzo on Motley Fool thinks you should buy this for the dividend. A writer on Simply Wall Street talks about who owns this company shares. A writer on Simply Wall Street thinks that the company’s coverage of its interest payments is getting low at 2.5 times. The company talks about their second quarterly results on Business Wire.
Superior Plus Corporation is a Canadian-based company that engages in the energy distribution, specialty, and chemicals business. Energy Distribution operating segment provides distribution, wholesale procurement and related services in relation to propane, heating oil and other refined fuels. Its web site is here Superior Plus Corp.
The last stock I wrote about was about was Evertz Technologies (TSX-ET, OTC-EVTZF) ... learn more. The next stock I will write about will be Andrew Peller Ltd (TSX-ADW.A, OTC-ADWPF) ... learn more on Thursday, August 22, 2019 around 5 pm.
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