I do not own this stock of Intertape Polymer Group Inc (TSX-ITP, OTC-ITPOF). I got this stock suggestion from Peter Keyser who I met in an Investment Club. The company reports in US$ and distributes its dividend in US$.
When I was updating my spreadsheet, I noticed that they had dividends in 1998 and then cancelled them for 15 years and restarted dividends in 2013. Long term investors did not do well, but investors have done better in the last 5 and 10 years. See chart below.
The dividend yields are moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 2.82%. The 5, 10 and historical dividend yield is also moderate at 3.86%, 3.42% and 3.64%. The dividends are paid in US$. The dividend growth in US$ over the past 5 years is low (below 8%) at 3.7% per year. Also, note that there were no dividends paid between 1999 and 2012.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2020 is 49% with 5 year coverage at 61%. The DPR for CFPS for 2020 is 17% with 5 year coverage at 22%. The DPR for Free Cash Flow for 2020 is 27% with 5 year coverage at 57%.
Debt Ratios could stand to be improved. The Long Term Debt/Market Cap Ratio for 2020 is 0.41 and this is good. The Liquidity Ratio for 2020 is good at 1.72. The Debt Ratio is a bit low at 1.40 and I prefer this at 1.50 or above. This has always been often low with the 5 median Debt Ratio at 1.40. The Leverage and Debt/Equity Ratios are 3.64 and 2.60. These are high and I prefer them to be below 3.00 and 2.00.
The Total Return per year is shown below for years of 5 to 27 to the end of 2020 in CDN$. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2015 | 5 | 26.12% | 8.84% | 5.25% | 3.59% |
| 2010 | 10 | #NUM! | 44.29% | 35.35% | 8.94% |
| 2005 | 15 | #NUM! | 7.51% | 5.79% | 1.71% |
| 2000 | 20 | 10.03% | 5.19% | 4.01% | 1.18% |
| 1995 | 25 | 10.63% | 1.35% | 0.48% | 0.88% |
| 1993 | 27 | 10.25% | 4.87% | 3.83% | 1.04% |
The Total Return per year is shown below for years of 5 to 27 to the end of 2020 in US$. 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. |
|---|---|---|---|---|---|
| 2015 | 5 | 3.71% | 10.79% | 7.11% | 3.68% |
| 2010 | 10 | 9.40% | 39.75% | 31.83% | 7.91% |
| 2005 | 15 | #NUM! | 7.20% | 5.52% | 1.68% |
| 2000 | 20 | #NUM! | 6.11% | 4.90% | 1.21% |
| 1995 | 25 | 10.34% | 1.65% | 0.77% | 0.88% |
| 1990 | 30 | 10.79% | 4.97% | 3.95% | 1.02% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 13.69, 17.31 and 20.88. The corresponding 10 year ratios are 11.80, 16.16 and 21.27. The corresponding historical ratios are 10.32, 15.70 and 21.07. The current P/E Ratio is 13.62 based on a stock price of $27.74 and EPS estimate for 2021 of $2.04 ($1.64 US$). The current ratio is between the low and median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in CDN$.
I get a Graham Price of $17.51. The 10 year low, median, and high median Price/Graham Price Ratios are 1.19, 1.48 and 1.86. The current P/GP Ratio is 1.58 based on a stock price of $27.74. The current ratio is between the median and high 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in CDN$.
I get a 10 year median Price/Book Value per Share Ratio of 3.28. The current P/B Ratio is 4.16 based on a Book Value of $318M, Book Value per Share of $5.39 and a stock price of $22.41. The current ratio is 27% above 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is in US$. You will get a similar result in CDN$.
I get a 10 year median Price/Cash Flow per Share Ratio of 8.00. The current P/CF Ratio is 6.87 based on a stock price of $22.41, Cash Flow per Share estimate for 2021 of $3.26 and Cash Flow of $192M. The current ratio is 14% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. This testing is in US$. You will get a similar result in CDN$.
I will skip the historical median dividend yield test because dividends were not paid for quite a number of years between 1999 and 2012.
I get a 10 year median dividend yield of 3.42%. The current dividend is 2.81% based on dividends of $0.63 and a stock price of $22.41. The current dividend is 18% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$. You will get a similar result in CDN$.
The 10 year median Price/Sales (Revenue) Ratio is 0.87. The current P/S Ratio is 0.93 based on Revenue estimate for 2021 of $1,416M, Revenue per Share of $23.99 and a stock price of $22.41. The current ratio is 7% above the 10 year median ratio. This testing is in US$. You will get a similar result in CDN$.
Results of stock price testing is that the stock price is probably reasonable, but on the high side. The 10 year dividend yield test shows this and it is confirmed by the P/S Ratio test. The other tests all show the stock price is reasonable, but above or below the median.
Is it a good company at a reasonable price? The stock price is probably still reasonable, but a bit on the high side. Long Term investors have not done well, and there were a number of years of not dividends. This company looks like it will provide better total returns and more consistent for shareholders in the future.
When I look at analysts’ recommendations, I find Strong Buy (2) and Buy (6). The consensus is a Buy. The 12 month stock price of $39.72 ($31.98 US$). This implies a total return of 45.99% with 43.17% from capital gains and 2.82% from dividends. With the total return so high, it is a wonder there are not more Strong Buys.
This is the top pick on Stock Chase of James Telfser. Robin Brown onMotley Fool says this stock trades at a discount to its larger peers. The executive summary on Simply Wall Street gives this stock 4 stars out of 5 and lists 3 risks. However, it does not have an unstable dividend record, but pays dividends in US$, so for Canadians, dividends will fluctuate. Also, I do not see insider selling, it is just insiders are not keeping all the stock options they earned. A writer on Simply Wall Street likes the payout ratio for this stock. A writer on Simply Wall Street thinks this company’s CEO is paid high than others in this industry.
Intertape Polymer Group Inc is engaged in the manufacturing of packaging products and systems for industrial and retail use. It offers its products to industrial and specialty distributors, consumer outlets, and end-users. Its web site is here Intertape Polymer Group Inc.
The last stock I wrote about was about was Waste Connections Inc (TSX-WCN, NYSE-WCN) ... learn more. The next stock I will write about will be CI Financial Corp (TSX-CIX, OTC-CIFAF) ... learn more on Wednesday, June 23, 2021 around 5 pm. Tomorrow on my other blog I will write about AltaGas Ltd.... learn more on Tuesday, June 22, 2021 around 5 pm.
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