Sound bite for Twitter and StockTwits is: Dividend Growth Materials. This stock is cheap. It is high risk and a small cap. There is recent buying by the Chairman. See my spreadsheet on Supremex Inc .
I 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. See the article here . They were an envelope company, but are diversifying into packaging. I investigated this stock for buying for my TFSA. This is my fooling around money account.
When I was updating my spreadsheet, I noticed there was recent insider buying at $1.86 and then some more at $1.41. It would appear that most of the buying was by the Chairman. So far, I have only lost money on this stock. But I do have hopes that it will ultimately be a winner.
The dividend yields are good to high with dividend growth recently moderate. The current yield is high (7% and above) at 16.99%. The 5, 10 and historical yields are good (5% & 6% ranges) to high (7% and above) at 5.23%, 6.46 and 7.30%. This stock started off as an income trust fund and income trust funds had higher yields that corporations.
Income Trust also can payout more than their earnings, but when they became corporations, they had to get their payout ratios under their earnings. So, it is not surprising that this company, as other income trust did, cut dividends in the past. They started to increase dividends again in 2015. Over the past 5 years the increases were at 9.52% per year. However, starting in 2019, they stopped the increases due to an earning loss in 2018 due to a goodwill impairment write-off. See chart below for the dividend growth figures.
The Dividend Payout Ratios are fine. The DPR for EPS for 2019 was 103% with 5 year coverage at 75%. The DPR for CFPS for 2019 was 37% with 5 year coverage at 28%. This DPR is expected to decline this year and next year. Earnings are expected to increase and dividends are flat. The DPR for Free Cash Flow for 2019 is 54% with 5 year coverage at 55%. WSJ and Morningstar do not agree on FCF, but their values are close. Dividend Coverage Ratio for 2019 is 1.86 and the 5 year ratio is 1.83.
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2019 is 0.73. It is much higher now at 1.16 due to stock being down 40% this year. The Liquidity Ratio for 2019 is 1.97 with 5 year median at 2.03 and this ratio has been generally quite good. The Debt Ratio for 2019 is 1.74 with 5 year median at 2.21. This ratio has also been quite good. The Leverage and Debt/Equity Ratios for 2019 are 2.35 and 1.35. The 5 year median ratios are 1.83 and 0.83. This ratio has been good to fine.
The Total Return per year is shown below for years of 5 to 13 to the end of 2019. 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.|
The 5 year low, median, and high median Price/Earnings per Share Ratios are 9.15, 10.55, 11.62. The corresponding 10 year ratios are 5.90, 7.82 and 9.73. The corresponding historical ratios are 5.55, 7.82 and 9.73. The current P/E Ratio is 5.40 based on a stock price of $1.53 and 2020 EPS estimate of $0.34. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $4.56. The 10 year low, median, and high median Price/Graham Price Ratios are 0.52, 0.68 and 0.86. The current P/GP Ratio is 0.34 based on a stock price of $1.53. 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 1.21. The current P/B Ratio is 0.56 based on a Book Value of $76M, Book Value per Share of $2.72 and a stock price of $1.53. The current ratio is some 53% 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 7.30%. The current dividend yield is 16.99% based on a stock price of $1.53 and dividends of $0.26. The current dividend yield is 133% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 6.46%. The current dividend yield is 16.99% based on a stock price of $1.53 and dividends of $0.26. The current dividend yield is 163% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10 year median Price/Sales (Revenue) Ratio is 0.49. The current P/S Ratio is 0.20 based on 2020 Revenue estimate of $218M and a stock price of $1.53. The current ratio is 60% below the 10 year ratio. This stock price testing suggests that the stock price is relatively cheap.
Results of stock price testing is that the stock price is probably relatively cheap. There is no problems with any of my tests. The dividend yield tests are showing the stock price as cheap and this is confirmed by the P/S Ratio test.
Is it a good company at a reasonable price? The current price is cheap. This is a high risk stock and a small cap. However, I still like this company. They are moving into packaging and that would appear to be good considering all the online buying that is going and will go on in the future.
When I look at analysts’ recommendations, I find one Buy Recommendation. The 12 month stock price is $2.90. This implies a total return of 106.54%, with 89.54% from capital gains and 16.99% from dividends.
The last entry on Stock Chase was in 2016. It is not well followed by analysts. Kris Knutson on Motley Fool talks about small companies with big yields including this stock. A writer on Simply Wall Street talks about this stock being owned 19% by institutions. A writer on Simply Wall Street says TSR is down 46% over 3 years, but up 11% over one year. Note that all of the TSR over the past year is all dividends. An article on Lesprom News says that this company has received certification for Durabox Faciity. Their news release on the Fourth Quarter is here.
Supremex Inc is engaged in manufacturer and marketer of a broad range of custom envelopes and packaging products. The company operates in two business segments that are Manufacturing and Sale of Envelopes, and the manufacturing and sale of paper-based packaging solutions and specialty products. Its web site is here Supremex Inc .
The last stock I wrote about was about was Toromont Industries Ltd (TSX-TIH, OTC-TMTNF) ... learn more. The next stock I will write about will be Leon's Furniture Ltd (TSX-LNF, OTC-LEFUF) ... learn more on Friday, April 10, 2020 around 5 pm. Tomorrow on my other blog I will write about Something to Buy April 2020.... learn more on Thursday, April 09, 2020 around 5 pm.
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