I own this stock of Saputo Inc (TSX-SAP, OTC-SAPIF). This was a stock on Mike Higgs' Canadian Dividend Growth Stock list and on the dividend lists that I followed. I bought this stock first in 2006 for my RRSP account. Because I am now taking money from my RRSP accounts, I have been selling this stock because of the low dividend. I still like this stock so I have been buying it in my TFSA. I have transferred some from my RRSP account to my Trading Account. The year end date is March 31 of each year, so I looking at the year end for March 31, 2021.
When I was updating my spreadsheet, I noticed that although I have done well with this stock over the longer term, over the short term it has not done that well. I have this stock for just over 14 years and I have a total return of 16.43% with 14.06% from capital gains and 2.37% from dividends. For the shares I bought 14 years ago, I have a yield of 7.6% on my original cost. However, the total return to the end of 2020 for the past 5 years is 3.38% with 1.48% from capital gains and 1.90% from dividends. Analysts are putting the recent low return down to pandemic problems.
The dividend yields are low with dividend growth low. The current dividend yield is low (under 2%) at 1.90%. The 5, 10 and historical dividend yields are also low at 1.57%, 1.59% and 1.61%. The dividend increases over the past 5 years has been low (under 8%) at 5.37% per year. The last dividend increase was in 2021 and it was for 2.9%. The dividend increases used to be higher, in the moderate (8% to 14% ranges) to high (15% and above). We last had an 8% increase in 2018. However, analysts expect an 8% plus increase in 2023.
The Dividend Payout Ratios (DPR) are good. The DPR for 2021 was 46% with 5 year coverage at 36%. The DPR for EPS was higher in 2021 than in the past. Mostly in the past the DPR for EPS was in a 30% range. The DPR for CFPS for 2021 was 19% with 5 year coverage also at 19%. The DPR for Free Cash Flow for 2021 was 31% with 5 year coverage at 42%.
Debt Ratios are good. The Long Term Debt/Market Cap Ratio for 2021 was 0.21. This is a good ratio. The Liquidity Ratio for 2021 is 1.84. The Debt Ratio or 2021 is 1.96. These are both good ratios. The Leverage and Debt/Equity Ratios for 2021 are 2.04 and 1.04 and these are fine.
The Total Return per year is shown below for years of 5 to 24 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 19.50, 23.33 and 26.37. The corresponding 10 year ratios are 19.26, 22.09 and 25.08. The corresponding historical ratios are 16.97, 19.11 and 27.21. The current P/E Ratio is 22.33 based on EPS estimate for 2022 of $1.65 and a stock price of $36.85. The current ratio is between the median and high 10 year median P/E Ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a Graham Price of $24.09. The 10 year low, median, and high median Price/Graham Price Ratios are 1.59, 1.83 and 2.03. The current P/GP Ratio is 1.53 based on a stock price of $36.85. The current ratio is below the low 10 year median ratio. 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 3.55. The current P/B Ratio is 2.36 based on a Book Value of $6,444M, Book Value per Share of $15.63 and a stock price of $36.85. The current ratio is 34% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median Price/Cash Flow per Share Ratio of 16.17. The current P/CF Ratio is 12.80 based on Cash Flow per Share estimate for 2022 of $2.88, Cash Flow of 41,188M and a stock price of $36.85. The current ratio is 21% 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 1.61%. The current dividend yield is 1.90% based on a dividend of $0.70 and a stock price of $36.85. The current yield is 18% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 1.59%. The current dividend yield is 1.90% based on a dividend of $0.70 and a stock price of $36.85. The current yield is 19% 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 1.21. The current P/S Ratio is 1.03 based on Revenue estimate for 2022 of $14,715M, Revenue per Share of $34.26 and a stock price of $36.85. The current ratio is 14% below the 10 year median dividend yield. 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 dividend yield tests both say that the stock price is reasonable and below the median. This is confirmed by the P/S Ratio test. Some of the other tests, like the P/B Ratio and P/CF Ratio are saying the stock price is cheap.
Is it a good company at a reasonable price? I think that the stock price is probably reasonable. I will continue to hold stock in this company. I do not expect to do as well in the future as I have done in the pass, but I expect to get a decent long term return and growing dividends. However, the rate of growth of dividends is much lower now than in the past, but a lot of companies are being cautious because of the pandemic. I review the stocks I hold every year.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (5), Hold (1), Underperform (1) and Sell (1). This is quite a mixed bag. The consensus would be a Buy. The 12 month stock price consensus is $41.33. This implies a total return of 14.06% with 1.90% from dividend and 12.16% from capital gains.
This stock is not well liked or covered by Stock Chase. Ambrose O'Callaghan on Motley Fool thinks this is a defensive dividend stock. The executive summary on Simply Wall Street gives this stock 4 stars out of 5 and lists one risk. A writer on Simply Wall Street likes the revenue and earnings trend on this stock. The company reports on their fourth quarter on newswire.
Saputo Inc is a dairy processor and cheese producer that operates in Canada, the U.S., Argentina, the United Kingdom, and Australia and sells products in more than 50 countries. Roughly half of Saputo's sales are to retail customers, but the firm also sells its products to food service (34% of sales) and industrial (17% of sales) clients. Its web site is here Saputo Inc.
The last stock I wrote about was about was Parkland Fuel Corp (TSX-PKI, OTC-PKIUF) ... learn more. The next stock I will write about will be Empire Company Ltd (TSX-EMP.A, OTC-EMLAF) ... learn more on Friday, July 2, 2021 around 5 pm. Tomorrow on my other blog I will write about Dividend Portfolio.... learn more on Friday, July 02, 2021 around 5 pm.
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