I do not own this stock of Premium Brands Holdings Corp (TSX-PBH, OTC-PRBZF). I was looking for another stock to follow and I found this is one of the top stocks in TD Bank's Canadian Equity Fund.
When I was updating my spreadsheet, I noticed shareholders have done well in this stock. The dividends have increased by 11.4% per year over the past 5 years. Total Return for the last 5, 10 and 15 years has been over 20% per year. I look at my spreadsheet and there is a lot of green. And, I, of course, like this.
The dividend yields are moderate with dividend growth moderate. The current dividend yield is moderate (2% to 4% ranges) at 2.03%. The 5, 10 dividend yields are moderate (2% to 4% ranges) at 2.43% and 3.45%. The historical dividend yield is good (5% to 6% ranges) at 6.39%. This company used to be an income trust and these companies had higher dividends. The dividend yield since this company became a corporation in 2009 is moderate at 4.82%. The dividend increases for the past 5 years is moderate (8% to 14%) at 11.4% per year.
The Dividend Payout Ratios (DPR) are fine. The DPR for 2020 is 105% with 5 year coverage at 74%. This DPR for EPS is expected to drop in to 60% in 2021. The DPR for CFPS for 2021 is 40% with 5 year coverage at 37%. The DPR for Free Cash Flow for 2021 is 52% with 5 year coverage at 72%.
Debt Ratios are good. The Long Term Debt/Market Cap Ratio for 2021 is low and good at 0.12. The Liquidity Ratio for 2021 is high and good at 2.48. The Debt Ratio for 2021 is high and good at 2.33. The Leverage and Debt/Equity Ratios 2021 are fine at 2.22 and 0.95.
The Total Return per year is shown below for years of 5 to 25 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. |
|---|---|---|---|---|---|
| 2015 | 5 | 11.41% | 24.71% | 21.41% | 3.30% |
| 2010 | 10 | 6.74% | 26.77% | 21.87% | 4.90% |
| 2005 | 15 | 4.44% | 23.95% | 17.47% | 6.48% |
| 2000 | 20 | 12.06% | 9.55% | 2.51% | |
| 1995 | 25 | 14.33% | 11.94% | 2.39% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 23.86, 32.20 and 40.54. The corresponding 10 year ratios are 26.30, 32.89 and 40.37. The corresponding historical ratios are 14.52, 18.84 and 22.42. The current P/E Ratio is 29.37 based on a stock price of $125.13 and EPS estimate for 2021 of $4.26. The current ratio is between the low and median 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median. A problem I have is that the EPS estimate for 2021 is out of line with past EPS and is an increase of 98% over the 2020 EPS.
I get a Graham Price of $59.23. The 10 year low, median, and high median Price/Graham Price Ratios are 1.59, 2.09 and 2.51. The current P/GP Ratio is 2.11 based on a stock price of $125.13. 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.
I get a 10 year median Price/Book Value per Share Ratio of 2.59. The current P/B Ratio is 3.42 based on a stock price of $125.13, Book Value of $1,592M and a Book Value per Share of $36.60. The current ratio is 32% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median Price/Cash Flow per Share Ratio of 17.69. The current P/CF Ratio is 13.51 based on a Cash Flow per Share estimate for 2021 of $9.26, Cash Flow of $402.8M and a stock price of $125.13. The current ratio is 24% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. A problem I have here is that the CFPS estimate for 2021 is 77% above the one for 2020 and is out of line with recent CFPS.
I get an 11 year median dividend yield of 4.82%. This is from 2009 when the company became a corporation. I am using that yield because this company used to be an income trust and income trust had higher than normal yields. The current yield is 2.03% based on dividends of $2.54 and a stock price of $125.13. The current dividend yield is 68% below the 11 year median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median dividend yield of 3.45%. I am using that yield because this company used to be an income trust and income trust had higher than normal yields. The current yield is 2.03% based on dividends of $2.54 and a stock price of $125.13. The current dividend yield is 41% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10 year median Price/Sales (Revenue) Ratio is 0.72. the current P/S Ratio is 1.17 based on a stock price of $125.13, Revenue estimate for 2021 of $4,638M and Revenue per Share of $106.62. The current ratio is 63% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. Unlike the EPS estimate, the Revenue estimate for 2021 is only a 14% increase over Revenue for 2020.
Results of stock price testing is that the stock price is relatively expensive. The dividend yield testing is showing the stock as expensive and this is confirmed by the P/S Ratio test. The P/B Ratio test also says that this stock is relatively expensive.
There are problems with a number of these stock price tests. There are problems with the dividend yield test as this company was, until 2009 an income trust, which had high dividends. However, even the 5 year median dividend yield is lower than the other median dividend yields at 2.43%, which is still higher than the current one by 16%. I had wondered above the estimate for EPS and Cash Flow as these do seem out of line. However, the first quarterly EPS and Cash Flow per Share do show improvement over the year end values.
Is it a good company at a reasonable price? I do not think the stock price is currently at a reasonable level. It has done well for shareholders in the past and analysts expect it will continue to be a dividend growth company. If you have a list of potential stocks to buy in the next bear market, this might be a good one to place on that list.
When I look at analysts’ recommendations, I find Buy (8), Hold (2) and Sell (1). The consensus would be a Buy. The recommendations are rather mixed. The 12 month stock price consensus is $133.00. This implies a total return of 8.32% with 6.29% from capital gains and 2.03% from dividends.
Analysts on Stock Chase really like this company. Vineet Kulkarni on Motley Fool thinks this stock is at a reasonable price and has appealing growth prospects, but says it also might look expensive after its recent rally. The executive summary at Simply Wall Street gives this stock 4 stars out of 5 and lists 3 risks. A writer on Simply Wall Street has reservations about its dividend prospects. Dylan Callaghan on Stock Trades Canada did an analysis of this stock at the end of last year.
Premium Brands Holdings Corp is engaged in specialty food manufacturing, premium food distribution, and wholesale businesses with operations in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nevada, and Washington State. Its web site is here Premium Brands Holdings Corp.
The last stock I wrote about was about was Empire Company Ltd (TSX-EMP.A, OTC-EMLAF) ... learn more. The next stock I will write about will be Suncor Energy Inc (TSX-SU, NYSE-SU) ... learn more on Wednesday, July 7, 2021 around 5 pm. Tomorrow on my other blog I will write about Dividend Stocks July 2021 .... learn more on Tuesday, July 06 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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