I do not own this stock of Richards Packaging Income Fund (TSX-RPI.UN, OTC-RPKIF). A member of one of my investment club suggested this stock.
When I was updating my spreadsheet, I noticed they have no information that I can find on their site that shows the Board of Trustee Members and Chief Officers of the company. I believe public companies should make this information easy to find. I could not even google this information, but finally found what I was looking for in the latest Notice of Annual Meeting of Unitholders and Management Information Circular.
The distributions are either not taxable or return of capital, so not taxable. I do not know why. I would like to know why.
Dividend yields used to very high, but have lately been in the moderate range (2% to 4% ranges). The current dividend 2.79%. The 5, 10 and historical dividend yields are 5.13%, 6.63% and 8.20%. The yield hit a high of almost 20% in 2008. Since then, the yield has steadily declined.
Dividends have grown nicely lately because of 3 increases in the last 5 years. The one in 2018 was for 21.7%. There have been no increases since. This company has never increased the dividends on any regular basis.
The Dividend Payout Ratios are fine. The DPR for EPS for 2018 is 60% with 5 year coverage of 89%. The DPR for CFPS is 31% with 5 year coverage at 33%. The DPR for Free Cash Flow for 2018 is 53% with 5 year coverage at 58%. All the DPRs have gone up and own but have basically been declining for some time.
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2018 is 0.07. The current one is 0.04. This ratio has been steadily declining since hitting a peak of 1.04 in 2008. The Liquidity Ratio for 2018 is 1.48 is low. The 5 year median is 1.51. If you add in cash flow after dividend is hits just 1.52. The Debt Ratio for 2018 is 2.05 with a current one at 2.12 and 5 year median at 1.95. The Leverage and Debt/Equity Ratios for 2018 are 1.95 and 0.95 with 5 year medians at 2.05 and 1.05.
The Total Return per year is shown below for years of 5 to 14 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 | 10.93% | 33.69% | 27.18% | 6.52% |
| 2008 | 10 | 1.64% | 26.30% | 19.49% | 6.81% |
| 2009 | 14 | 5.07% | 14.45% | 8.69% | 5.76% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 14.10, $16.71 and 19.77. The 10 year corresponding ratios are 13.81, 16.08 and 18.19. The corresponding historical ratios are 13.64, 15.70 and 18.00. The current P/E Ratio is 18.36 based on 2019 EPS estimate of $2.58 and a stock price of $47.38. This stock price testing suggests that the stock price is relatively expensive.
Because it is near the end of the year, we should also look at the P/E Ratio for 2020. The P/E Ratio of 15.59 based on a stock price of $47.38 and 2020 EPS estimate of $3.04. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $26.09. The 10 year low, median, and high median Price/Graham Price Ratios are 0.92, 1.08 and 1.20. The current P/GP Ratio is 1.82 based on a stock price of $47.38. This stock price testing suggests that the stock price is relatively expensive.
Because it is near the end of the year, lets look at the Graham Price of 2020 which is 28.32. The P/GP Ratio is 1.67 based on a stock price of $47.38. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median Price/Book Value per Share Ratio of 1.43. The current P/B Ratio is 4.04 based on a Book Value of $128M, Book Value per Share of $11.72 and a stock price of $47.38. The current P/B Ratio is 182% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 8.20. The current dividend yield is 2.79% based on dividends of $1.32 and a stock price of $47.38. The current yield is 66% below the historical dividend yield. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median dividend yield of 6.63%. The current dividend yield at 2.79% is some 58% below the 10 year median yield. This stock price testing suggests that the stock price is relatively expensive.
The 10 year median Price/Sales (Revenue) Ratio is 0.56. The current P/S Ratio is 1.32 based on 2019 Revenue estimate of $339M, and a stock price of $47.38. The current ratio is 172% 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 expensive. On a whole range of tests, this stock is coming up relatively expensive. I must admit that the P/E Ratios are pretty consistent and on one test the stock price is showing as relatively reasonable and below the median. However, I would not accept this test above all others.
Is it a good company at a reasonable price? Without knowing why the distributions are non-taxable, it is hard to know if this will change or not in the future. Increases in distribution occur erratically so a unit holder would not know when an increase will take place. Distributions have been cut in the past as well as increased. This is the reason for the very low increases over the past 10 and 14 years. Shareholders have done well, but there is also the saying that you should only invest in what you understand.
When I look at analysts’ recommendations, I find one Strong Buy (1), recommendation. The 12 month stock price is $50.00. This implies a total return of $8.32% with 5.53% from capital gains and 2.79% from dividends.
See what analysts are saying on Stock Chase. They like it, but one talks about it being illiquid sometimes. Mat Litalien, on Motley Fool thinks the company has plenty of room to raise the distributions. An writer on Simply Wall Street says the return on capital employed (ROCE) is good for this company. David Cockfield on BNN talks about this company. Ryan Modesto, Chief Executive Officer, 5I Research on BNN talks about this company.
Richards Packaging Income Fund is a Canada-based company involved in packaging distribution businesses throughout North America. The company principally distributes plastic and glass containers and associated closures. The business of the group is primarily spread across the market of Canada and United States of which the United States accounts the larger source of revenue. Its web site is here Richards Packaging Income Fund.
The last stock I wrote about was about was Magna International Inc. (TSX-MG, NYSE-MGA) ... learn more. The next stock I will write about will be Chartwell Retirement Residences (TSX- CSH.UN, OTC- CWSRF) ... learn more on Thursday, December 26, 2019 around 5 pm. Tomorrow on my other blog I will write about Money Show 2019 – Innovation and Disruption.... learn more on Tuesday, December 24, 2019 around 5 pm.
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