I do not own this stock of High Liner Foods (TSX-HLF, OTC-HLNFF). This is a stock liked by the Investment Reporter and is considered to be of average risk. The MPL Communication’s site is here. Ryan Irvine of Keystone also liked this company.
When I was updating my spreadsheet, I noticed that over the long term shareholders have often not made much money with this stock. The 10, 15 and 20 year returns are not bad at 11.81%, 7.21% and 12.04% per year. The 25 year total return is ok at 5.25% per year. Shareholders that held this stock for 30, 35 and 36 years have broken even in total return. However, currently the stock has been falling since hitting a high in 2015.
The dividend yields are moderate with dividend growth currently non-existent. The current dividend yield is Moderate (2% to 4% ranges) at 2.48%. The 5, 10 and historical dividend yields are also moderate at 3.22%, 2.59% and 2.49%. The company decided to cut the dividend last year by some 66% to have been cash flow and pay down the debt. Prior to 2019 the company had been increasing the dividend since 2008. Dividends are paid in CDN$, but the company reports in US$.
The Dividend Payout Ratios (DPR) are fine. This dividend was cut in the 3 quarter of 2019 by 66%. The DPR for EPS for 2019 is 74% with 5 year coverage at 48%. The DPR for CFPS for 2019 was 17% with 5 year coverage at 15%. The DPR for Free Cash Flow for 2019 was 6% with 5 year coverage at 35%. The sites I look at seem to agree on FCF values.
Debt Ratios need improving. The Long Term Debt/Market Cap in 2019 was 1.40. Currently it is at 1.41. The Intangible and Goodwill/Market Cap Ratio for 2019 is 1.48 with a current ratio of 1.47. Both these are much too high. The Liquidity Ratio for 2019 was 1.87 and this is good. The Debt Ratio is a little low at 1.49 as I prefer this to be 1.50 or higher. Leverage and Debt/Equity Ratios for 2019 are too high at 3.06 and 2.06 as I prefer them to be less than 3.00 and 2.00. The current ratios are better at 2.81 and 1.81.
The Total Return per year is shown below for years of 5 to 36 to the end of 2019 in CDN$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2014 | 5 | -6.37% | -15.12% | -18.34% | 3.22% |
| 2009 | 10 | 8.13% | 11.81% | 5.93% | 5.87% |
| 2004 | 15 | 7.48% | 7.21% | 3.28% | 3.93% |
| 1999 | 20 | 12.04% | 8.05% | 3.99% | |
| 1994 | 25 | 5.15% | 2.93% | 2.22% | |
| 1989 | 30 | 0.84% | -0.65% | 1.49% | |
| 1984 | 35 | 0.79% | -0.63% | 1.42% | |
| 1983 | 36 | -0.28% | -1.56% | 1.28% |
The Total Return per year is shown below for years of 5 to 15 to the end of 2019 in US$. 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 | -8.89% | -17.75% | -20.71% | 2.96% |
| 2009 | 10 | 5.61% | 9.24% | 3.48% | 5.76% |
| 2004 | 15 | 6.77% | 6.80% | 2.61% | 4.19% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 9.31, 14.66 and 20.13. The corresponding 10 year ratios are 11.05, 15.13 and 21.02. The corresponding historical ratios are 8.41, 10.88 and 13.32. The current P/E Ratio is 6.33 based on a stock price of $8.06 and 2020 EPS estimate of $1.29. This stock price testing suggests that the stock price is relatively cheap. This is in CDN$.
I get a Graham Price of $17.67. The 10 year low, median, and high median Price/Graham Price Ratios are 0.78, 1.12 and 1.47. The current P/GP Ratio is 0.46 based on a stock price of $8.06. This stock price testing suggests that the stock price is relatively cheap. This is in CDN$.
I get a 10 year median Price/Book Value per Share Ratio of 2.07. The current P/B Ratio is 0.74 based on a Book Value of $277M, Book Value per Share of $8.31 and a stock price of $6.17. The current ratio is 64% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This is in US$. You will get a similar result in CDN$.
I get a 10 year median Price/Cash Flow per Share Ratio of 5.10. The current P/CF Ratio is 3.01 based on 2020 Cash Flow per Share estimate of $2.05, Cash Flow of $68.4M and a stock price of $6.17. The current ratio is 41% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This is in US$. You will get a similar result in CDN$.
I get an historical median dividend yield of 2.49. The current dividend yield is 2.48% based on dividends of $0.20 and a stock price of $8.06. The current dividend yield is 0.4% below the historical dividend yield. This stock price testing suggests that the stock price is relatively reasonable and at the median. This is in CDN$. A problem is the big cut in dividends in 2019 of 66%.
I get a 10 year median dividend yield of 2.59. The current dividend yield is 2.48% based on dividends of $0.20 and a stock price of $8.06. The current dividend yield is 4% below the historical dividend yield. This stock price testing suggests that the stock price is relatively reasonable and above the median. This is in CDN$. A problem is the big cut in dividends in 2019 of 66%.
The 10 year median Price/Sales (Revenue) Ratio is 0.40. The current ratio is 0.24 based on a stock price of $6.07, 2020 Revenue estimate of $842 and Revenue per Share of $25.22. The current ratio is 39% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This is in US$. You will get a similar result in CDN$.
Results of stock price testing is that the stock price is relatively cheap. This stock is showing as relatively cheap in most of the tests except for the dividend yield tests. The problem with the dividend yield tests is the 2019 dividend cut. I see no problems with the other tests.
Is it a good company at a reasonable price? The current stock price is probably cheap. This stock has had a very checkered pass. Unfortunately, the stock was falling in 2019 before the recent problems. Analysts expect it to give good EPS growth going forward and the stock has recovered a lot in August.
When I look at analysts’ recommendations, I find Buy (1) and Hold (3). The consensus would be a Hold. The 12 month stock price is $10.49 ($7.99 US$). This implies a total return of 32.57% with 30.09% from capital gains and 2.48% from dividends.
There are not many entries on Stock Chase and they are mostly negative.. Aditya Raghunath on Motley Fool says this is a good stock to pick up for your TFSA, but it is high risk. A writer on Simply Wall Street says the company’s debt could be a risk. A writer on Simply Wall Street says this company’s higher than average P/E Ratio is justified because of expected future growth. Ostrich Investing on YouTube talks about the first quarterly review of 2019 when the company cut the dividend. The Blogger Dividend Gangster talks about this stock in an blog. See near the bottom of the blog entry.
High Liner Foods Inc. is North America's processor and marketer of value-added frozen seafood companies servicing the retail, food service and club store channels. The Company's retail branded products are sold in the U.S., Canada and Mexico under the High Liner, Fisher Boy, Mirabel, and Sea Cuisine labels, and are available in groceries and club stores. The Company also sells branded products to restaurants and institutions under the High Liner, Icelandic Seafood, FPI, Viking, Mirabel, Samband of Iceland, and American Pride Seafoods labels. Its web site is here High Liner Foods.
The last stock I wrote about was about was Capital Power Corp (TSX-CPX, OTC- CPRHF) ... learn more. The next stock I will write about will be SmartCentres REIT (TSX-SRU.UN, OTC-CWYUF) ... learn more on Tuesday, September 8, 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.
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