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 likes this company.
When I was updating my spreadsheet, I noticed both Revenue and Earnings have been going down over the past few years. However, analysts expect this to change in 2021. For example, Revenue was $1,054M in 2017, but declined to 828M in 2020. Analysts expect the Revenue to grow by 3.09% and 5.28% in 2021 and 2022 rather than decline as it did from 2017 to 2020.
The dividend yields are moderate with dividend growth currently pausing. The current dividend yield is moderate (2% to 4% range) at 2.11%. The 5, 10 and historical dividend yields are also moderate at 3.22%, 3.57% and 2.56%. The company started dividends in 2003 and started to raise them in 2008, but in 2019 they decreased the dividends by 66%, then in 2020 they raised the dividends by 40%. I suspect they will grow their dividend again when business improved.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2020 is 21% with 5 year coverage at 46%. The DPR for EPS was high in 2019 at 74% and they cut their dividend to bring this DPR under control. Analysts expect that the DPR for EPS will be around 19% in 2021. The DPR for Cash Flow per Share in 2020 was 6.6% with 5 year coverage at 15%. The DPR for Free Cash Flow for 2020 was 8% with 5 year coverage at 28%. Some sites agree on FCF. The DPR for FCF and CFPS has been good in the past.
Debt Ratios are fine. The Long Term Debt/Market Cap too high at 0.91, but is better than previous years (2019 the ratio was 1.40). Prior to 2017, this ratio was good. The Liquidity Ratio is good at 2.31. The Debt Ratio is good at 1.60. The Leverage and Debt/Equity Ratios are fine at 2.67 and 1.67.
The Total Return per year is shown below for years of 5 to 37 to the end of 2020 in CDN$. 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 | -13.90% | -3.36% | -6.52% | 3.16% |
| 2010 | 10 | 2.92% | 7.19% | 3.17% | 4.02% |
| 2005 | 15 | 5.40% | 9.91% | 6.13% | 3.78% |
| 2000 | 20 | 5.05% | 12.21% | 8.62% | 3.59% |
| 1995 | 25 | 8.64% | 6.32% | 2.32% | |
| 1990 | 30 | 0.97% | -0.26% | 1.23% | |
| 1985 | 35 | -1.34% | -2.32% | 0.98% | |
| 1983 | 37 | 0.34% | -0.72% | 1.06% |
The Total Return per year is shown below for years of 5 to 16 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 | -12.44% | -1.33% | -4.57% | 3.24% |
| 2010 | 10 | 0.43% | 4.53% | 0.89% | 3.64% |
| 2005 | 15 | 4.78% | 9.48% | 5.60% | 3.88% |
| 2004 | 16 | 4.68% | 8.27% | 4.74% | 3.53% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 9.31, 13.93 and 19.13. The corresponding 10 year ratios are 11.05, 15.13 and 21.02. The corresponding historical ratios are 8.35, 10.65 and 13.15. The current P/E Ratio 8.61 based on a stock price of $13.25 and EPS estimate for 2021 of $1.54 ($1.22 US$). 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 Graham Price of $20.54. 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 0.65 based on a stock price of $13.25. The current ratio is below the low 10 year median ratios. 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 2.07. The current P/B Ratio is 1.15 based on a stock price of $11.05, Book Value of $322M and a Book Value per Share of $9.65. The current ratio is 45% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This testing is in US$. You will get similar results in CDN$ testing.
I get a 10 year median Price/Cash Flow per Share Ratio of 5.10. The current P/CF Ratio is 10.23 based on a stock price of $11.05, Cash Flow per Share estimate for 2021 of $1.08 and Cash Flow of $36M. The current ratio is 101% above the 10 year median ratio. This stock price testing suggests that the stock price is expensive. A problem here is that Cash Flow tends to be rather volatile for this company. This testing is in US$. You will get similar results in CDN$ testing.
I get an historical median dividend yield of 2.56%. The current dividend yield is 2.11% based on a stock price $13.25 and dividends of $0.28. The current yield is 17% below the historical dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get an historical median dividend yield of 2.57%. The current dividend yield is 2.11% based on a stock price $13.25 and dividends of $0.28. The current yield is 17% below the historical dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
The 10 year median Price/Sales (Revenue) Ratio is 0.40. The current P/S Ratio is 0.43 based on Revenue estimate for 2021 of $853M, Revenue per Share of $25.60 and a stock price of $11.05. The current ratio is 8/% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is in US$. You will get similar results in CDN$ testing.
Results of stock price testing is that the stock price is probably reasonable but above the median. The dividend yield tests say this and it is confirmed by the P/S Ratio test. A problem is the dividends were recently cut by 50%.
Is it a good company at a reasonable price? The stock price would seem reasonable at present if a bit on the high side. This company has had a very checkered past. You can see this reflected in the total returns in CDN$ chart above over the past 37 years. It is not a good sign that they recently cut their dividends. What a company does with their dividends shows how confident management is in the future. It would not seem to be a company to just buy and hold. You would also have to be careful about paying too much for this stock.
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 $16.87 ($13.37 US$). This implies a total return of 29.45% with 27.33% from capital gains and 2.11% from dividends.
Analysts at Stock Chase are quite negative about this company. Nikhil Kumar on Motley Fool says following the execution of the company’s critical initiative plan in 2020, High Liner Foods is a more profitable business. The executive summary on Simply Wall Street gives this stock 4 stars out of 5 and lists 3 risks. A writer on Simply Wall Street says investors should keep an eye on the debt of this company. Cliff White writes an article on this stock on Sea Food Source.
High Liner Foods Inc is a Canadian company which is mainly engaged in the processing and marketing of prepared and packaged frozen seafood products. The company sells its products to institutions, health care facilities, and quick-service family and casual dining establishments. 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 Wednesday, September 1, 2021 around 5 pm. Tomorrow on my other blog I will write about Consumer Stocks.... learn more on Tuesday, August 31, 2021 around 5 pm.
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