Sound bite for Twitter and StockTwits is: Dividend Paying Consumer. The stock price seems reasonable. The dividend is good at 6.42% and is probably safe. Once DPR for EPS is good, dividends might increase. There is insider buying. See my spreadsheet on Rogers Sugar Inc.
I do not own this stock of Rogers Sugar Inc (TSX-RSI, OTC-RSGUF). This stock was brought to my attention by Dividend Ninja. This company used to be an Income Trust (TSX-RSI.UN) but it has been converted to a corporation. On its change to a corporation, it lowered its dividend.
When I was updating my spreadsheet, I noticed they may finally be getting their DPR for EPS under control. This stock used to be an Income Trust. As an Income Trust they could pay out more than the EPS is dividends and mainly Income Trusts did. When they became a corporation, they decreased the dividend by 26% and went from monthly dividends to quarterly dividends. Since then, they had a DPR for EPS mostly over 100%. Analysts expect the DPR for EPS to be 84% in 2021 and go lower from there. They do not have a good track record for dividends. Of the 22 years that they have paid dividends, there has been 9 increases and 5 decreases and the rest of the time the dividends have been flat.
The dividend yields are good with dividend growth non-existent. The current dividend is good (5% and 6% ranges) at 6.42%. The 5 and 10 year median dividend yields are also good at 6.23% and 6.25%. The historical median dividend yield is high (7% range and higher) at 9.09%. The very high dividend yields of this company in the past is typical of Income Trust companies. Once they get their DPRs under control, it might become a dividend growth stock.
The Dividend Payout Ratios (DPR) are getting better. The DPR for EPS for 2020 was 106% with 5 year coverage at 116%. Analysts expect this to decline in 2021 is around 84%. The DPR for CFPS for 2020 is 41% with 5 year coverage also at 41%. The DPR for Free Cash Flow for 2020 is 100% with 5 year coverage at 99%. (Site I looked at seemed to agree on FCF.)
Debt Ratios could be improved. The Long Term Debt/Market Cap Ratio for 2020 is good at 0.63. The Liquidity Ratio or 2020 is good at 1.72. The Debt Ratio for 2020 is a bit low at 1.44, but has a 5 year median that is better at 1.67. I like to see this ratio at 1.50 or higher. Leverage and Debt/Equity Ratios are too high at 3.28 and 2.33. I prefer these to be under 3.00 and under 2.00. The 5 year median ratios are better at 2.29 and 1.29.
The Total Return per year is shown below for years of 5 to 23 to the end of 2020. 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 11.38, 13.72 and 15.19. The corresponding 10 year ratios are 13.08, 14.70 and 16.46. The corresponding historical ratios are 9.82, 10.73 and 11.89. The current P/E Ratio is 13.05 based on a stock price of $5.61 and EPS estimate for 2021 of $0.43. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $4.98. The 10 year low, median, and high median Price/Graham Price Ratios are 1.02, 1.16 and 1.30. The current P/GP Ratio is 1.13 based on a stock price of $5.61. 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 1.90. The current P/B Ratio is 2.19 based on a stock price of $5.61, Book Value of $265M and a Book Value per Share of $2.56. The current ratio is 15% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. The reason for the higher P/B Ratio is that the book value to not growing. It has grown by 0% per year over the past 5 years.
I get a 10 year median Price/Cash Flow per Share Ratio of 11.70. The current P/CF Ratio is 10.39 based on CFPS estimate for 2021 of $0.54, Cash Flow of $55.9M and a stock price of $5.61. The current ratio is 11% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 9.09%. The current dividend yield is 6.42% based on a stock price of $5.61 and dividends of $0.36. The current dividend yield is 29% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. This stock used to be an income trust and these stocks had high dividend yields. This is why the historical median dividend yield is so high.
I get a 10 year median dividend yield of 6.25%. The current dividend yield is 6.42% based on a stock price of $5.61 and dividends of $0.36. The current dividend yield is 3% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10 year median Price/Sales (Revenue) Ratio is 0.83. The current P/S Ratio is 0.67 based on Revenue estimate for 2021 of $863M, Revenue per Share of $8.34 and a stock price of $5.61. The current ratio is 19% below the 10 year ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
Results of stock price testing is that the stock price is probably reasonable. The 10 year median dividend yield test shows that it is reasonable and below the median and this is confirmed by the P/S Ratio test. Because this company was an income trust, I do not expect the same tests results for the historical dividend yield test. However, I think it is a problem that the Book Value is not growing.
Is it a good company at a reasonable price? The stock price seems reasonable. The dividend is good, but do not expect any increase anytime soon. When the DPR gets under control, dividends might increase. However, there is a trade off between dividend yield and dividend growth. This is not a dividend growth company at present and it is hard to say if it would become one in the future. However, it is not in a growth industry.
When I look at analysts’ recommendations, I find Buy (1) and Hold (4). The consensus would be a Hold. The 12 month stock price is $5.60. This implies a total return of 6.24% with a capital loss of 0.18% and dividends of 6.42% based on a stock price of $5.61.
There are few analysts comments on Stock Chase for this stock. The last one says Don’t Buy. Christopher Liew on Motley Fool thinks the stock is cheap with a great dividend. The Executive Summary on Simply Wall Street gives this stock 3 stars out of 5 with 3 risk factors. A writer on Simply Wall Street wonders about the company’s ability to handle its debt. Brian Madden on BNN says this is not a growth stock and it will never be one.
Rogers Sugar Inc is a Canada based sugar producing company. The company along with its subsidiaries is principally engaged in refining, packaging, and marketing sugar products. The products offered by the company include iced tea mix, stevia, yellow sugar, Cubes, Coconut sugar, and other related sugar products. Its geographical segments include Canada, which is the key revenue generator; the United States; Europe; and others. Its web site is here Rogers Sugar Inc.
The last stock I wrote about was about was Royal Bank of Canada (TSX-RY, NYSE-RY) ... learn more. The next stock I will write about will be Calian Group Ltd) ... learn more on Monday, January 11, 2021 around 5 pm.
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