I do not own this stock of Andrew Peller Ltd (TSX-ADW.A, OTC-ADWPF). This stock was on Mike Higgs' dividend growth stock list. I owned this stock as Andres Wines Ltd between 1996 and 2000.
When I was updating my spreadsheet, I noticed that EPS was growing faster than Revenue over the past 5 years. EPS has grown at 7.87% per year while Revenue per Share has grown at 3.57% per year. Dividends has grown even faster at 9.51% per year over the past 5 years. However, the last dividend increase was lower at 5%. Shareholders have done well with this stock over the years. See chart below.
The dividend yields are currently moderate with dividend growth low. The current dividend yield is moderate (2% to 4% range) at 2.36%. The 5 year median dividend yield is low (below 2%) at 1.50%. The 10 year and historical median dividend yields are moderate at 2.39% and 3.60%. The dividend growth was lower (below 8%) until the last 5 years when dividend grow was moderate (8% to 14% ranges) at 9.51% per year. However, the last dividend increase was low at 5%.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2020 is 39% with 5 year coverage at 31%. The DPR for CFPS for 2020 is 15% with 5 year coverage at 13%. The DPR for Free Cash Flow for 2020 is high at 111%, but 5 year coverage is good at 73%. Dividend Coverage Ratio for 2020 is 0.90 with the 5 year ratio at 1.36%. (Note: WSJ gives a higher FCF for 2020 and therefore a much better DPR for 2020.)
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2020 is good at 0.27. The Liquidity Ratio at 1.64 and the Debt Ratio at 1.91 for 2020 are good. The Leverage and Debt/Equity Ratios at 2.09 and 1.09 are fine.
The Total Return per year is shown below for years of 5 to 35 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. |
|---|---|---|---|---|---|
| 2014 | 5 | 9.51% | 21.18% | 18.65% | 2.53% |
| 2009 | 10 | 6.81% | 19.33% | 16.34% | 2.99% |
| 2004 | 15 | 7.52% | 11.51% | 9.29% | 2.22% |
| 1999 | 20 | 5.59% | 13.47% | 10.60% | 2.87% |
| 1994 | 25 | 4.76% | 12.33% | 9.31% | 3.02% |
| 1989 | 30 | 3.95% | 13.14% | 7.61% | 5.54% |
| 1984 | 35 | 3.70% | 10.21% | 6.53% | 3.68% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 13.41, 18.90 and 26.44. The corresponding 10 year ratios are 11.21, 14.69 and 17.09. The corresponding historical ratios are 11.07, 13.04 and 14.49. The current P/E Ratio is 13.79 based on a stock price of $9.10 and 2021 EPS estimate of $0.66. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $9.29. The 10 year low, median, and high median Price/Graham Price Ratios are 0.79, 1.06 and 1.29. The current P/GP Ratio is 0.98 based on a stock price of $9.10. 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 1.64. The current P/B Ratio is 1.56 based on a Book Value of $253.6M, Book Value per Share of $5.82 and a stock price of $9.10. The current ratio is 5% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median Price/Cash Flow per Share Ratio of 14.04. The current P/CF Ratio is 10.29 based on the last 12 months Cash Flow of $38.6M, Cash Flow per Share of $0.88 and a stock price of $9.10. The current P/CF 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 3.60%. The current dividend yield is 2.36% based on dividends of $0.215 and a stock price of $9.10. The current dividend yield is 34% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 median dividend yield of 2.39%. The current dividend yield is 2.36% based on dividends of $0.215 and a stock price of $9.10. The current dividend yield is 1% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
The 10 year median Price/Sales (Revenue) Ratio is 0.81. The current P/S Ratio is 1.08 based on 2021 Revenue estimate of $369M, Revenue per Share of $8.46 and a stock price of 9.10. The current ratio is 32% 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. The historical dividend yield test says that the stock price is relatively expensive and this is confirmed by the P/S Ratio test. The 10 year test shows the stock price as reasonable but above the median (or really close to the median). A number of tests show that the stock is reasonable and below the median. There is really nothing wrong with these tests.
The problem with the P/S Ratio test is that Sales are expected to drop some 4% in 2021, but then pick up about 4% in 2022. However, it is the Sales that drives other values in the long term and I tend to like the P/S Ratio test.
Is it a good company at a reasonable price? This stock has done well over the years for shareholders and it is growing its dividend. The dividend this year is lower than it has been, but it did grow. It is probably currently on the expensive side, but this is still a good company and a dividend growth stock.
When I look at analysts’ recommendations, I find Strong Buy (2) and Buy (1). The consensus would be a Strong Buy. The 12 month stock price consensus is $14.83. This implies a total return of 65.33% with 62.97% from capital gains and 2.36% from dividends.
There are not many entries on Stock Chase, but the ones there are positive. Daniel Da Costa on Motley Fool says this stock is an undervalued growth stock. A writer on Simply Wall Street says the company’s Net Income growth is higher than its industry’s average. A writer on Simply Wall Street says the fair value for this stock is $9.98. The blogger Dividend Earner has done a recent review of this stock.
Andrew Peller Ltd is a wine producing company. It is engaged in the production and marketing of wine and spirit products in Canada. Its web site is here Andrew Peller Ltd.
The last stock I wrote about was about was BlackBerry Ltd (TSX-BB, NASDAQ-BBRY) ... learn more. The next stock I will write about will be Evertz Technologies (TSX-ET, OTC-EVTZF) ... learn more on Wednesday, August 12, 2020 around 5 pm. Tomorrow on my other blog I will write about Why Dividend Stocks.... learn more on Tuesday, August 11, 2020 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.
See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures. The last stock I wrote about was about was BlackBerry Ltd (TSX-BB, NASDAQ-BBRY) ... learn more. The next stock I will write about will be Evertz Technologies (TSX-ET, OTC-EVTZF) ... learn more on Wednesday, August 12, 2020 around 5 pm. Tomorrow on my other blog I will write about Why Dividend Stocks.... learn more on Tuesday, August 11, 2020 around 5 pm.
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