I do not own this stock of Superior Plus Corp (TSX-SPB, OTC-SUUIF). I started to follow this stock as it was an income trust company that was talked about in the Money Reporter from MPL Communications. This company changed to a corporation from Unit Trust (TSX-SPF.UN) in 2009.
When I was updating my spreadsheet, I noticed Revenue estimate for 2021 and 2022 have been decreased because of drop in Revenue for 2020. Last year, revenue estimate for 2020 was $2,587M, but it came in at 2,394M. Last year analysts estimated Revenue for 2021 and 2022 at $2,795M and $2,755M. Now estimate for 2021 and 2022 are 2,175M and $2,312M. Even for 2023 it is lower than what was expected before at just $2,508M.
Analysts also moved EPS down this year. Last year the EPS for 2021 was given as $0.77. Now analyst say the EPS for 2021 is expected to be $0.40. However, for EPS, the first Quarter was a good one. The last 12 month EPS to the end of March 31, 2021 is $0.77.
The dividend yields are moderate with dividend growth flat. The current dividend yield is moderate (2% to 4% ranges) at 4.62%. The 5, and 10 year median dividend yields are good (5% and 6% ranges) at 6.30% and 6.22%. The historical dividend yield is high (7% and higher) at 9.20%. This company used to be an income trust and as such high dividend payouts. They became a corporation at 2009, but dividend rates did not fall until 2011. The historical dividend yield since 2009 is in the good range at 6.51%. After the fall of the dividends because of the switch to a corporation, there was one dividend increase in 2015 and the dividends have been flat ever since.
The Dividend Payout Ratios (DPR) need improving and analyst expect this to happen. The DPR for EPS for 2020 is 167% with 5 year coverage at 127%. Analysts expect some improvement by 2022 with a DPR going to around 86%. The DPR for CFPS for 2020 is 24% with 5 year coverage at 32%. The DPR for Free Cash Flow for 2020 is $52% with 5 year coverage at 70%.
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2020 is 0.73. It moves to 0.59 currently because of a rise in the stock price. The Liquidity Ratio for 2020 is 1.04. If you added in cash flow after dividends, it is 1.59 and fine. The Debt Ratio for 2020 is fine at 1.50. The Leverage and Debt/Equity Ratios 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. |
|---|---|---|---|---|---|
| 2015 | 5 | 0.00% | 8.90% | 2.51% | 6.39% |
| 2010 | 10 | -7.79% | 7.51% | 0.97% | 6.54% |
| 2005 | 15 | -7.74% | 1.71% | -4.29% | 6.00% |
| 2000 | 20 | -3.20% | 9.63% | -1.34% | 10.97% |
| 1996 | 24 | -1.36% | 10.92% | -0.49% | 11.41% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 4.24, 5.34 and 6.43. the corresponding 10 year ratios are 9.56, 12.07 and 14.58. The corresponding historical ratios are 12.98, 15.73 and 19.53. The current P/E Ratio is 38.98 based on a 15.59 and EPS estimate of $.40. The current ratio is above the 10 year high median ratio. This stock price testing suggests that the stock price is relatively expensive.
However, all the ratios are negatively affected by earning losses that produce negative P/E Ratios. They are also affected by high P/E Ratios because of some years of very low earnings. Earnings for this stock are quite volatile also. The P/E Ratio for 2022 is better with a P/E Ratio of 18.56 based on a stock price of $15.59 and EPS estimate for 2022 of $0.84. This testing also says that the stock price is relatively expensive because the P/E is higher than the 10 year high median ratio.
The P/E Ratio for 2023 is 12.37. This is based on a stock price of $15.59 and EPS estimate for 2023 of $1.26. This testing says that the stock price is relatively reasonable but above the median because the P/E Ratio is between the median and high 10 year median ratios. However, the further out an estimate is from today’s date, the less trustworthy it is. This is not a good test for assessing the current stock price.
I get a Graham Price of $8.20. The 10 year low, median, and high median Price/Graham Price Ratios are 0.90, 1.14 and 1.42. The current P/GP Ratio is 1.90. The current ratio is above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. Unfortunately, the Graham Price calculations are negatively affected by earnings losses and very low earnings. This test is probably also not a good one for assessing the current stock price.
I get a 10 year median Price/Book Value per Share Ratio of 2.30. The current P/B Ratio is 2.09 based on a stock price of $15.59, Book Value of $1314M and Book Value per Share of $7.47. The current ratio is 9% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median Price/Cash Flow per Share Ratio of 6.82. The current P/CF Ratio is 9.68 based on Cash Flow per Share estimate for 2021 of $1.61. The current ratio is 42% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
However, the estimate for 2021 suggests a 33% drop in CFPS for 2021 and you have to wonder about this. Also, CFPS for this stock is volatile. The P/CF Ratio for 2022 is lower at 7.99 based on an CFPS estimate for 2022 of $1.95. This ratio is 17% above the 10 year median ratio and points to a stock price that is relatively reasonable but above the median.
The P/CF Ratio for 2023 is even lower at 5.75 with a CFPS estimate of 2.71. This ratio is 16% below the 10 year median ratio. It points to a stock price that is relatively reasonable and below the median. However, this estimate is quite far out from today’s date and therefore could be considered less trustworthy.
I get an historical median dividend yield since 2009 of 6.51. The current dividend yield is 4.62% based on a dividend of $0.72 and a stock price of $15.59. The current dividend yield is 29% below the historical median dividend yield. This stock price testing suggest that the stock price is relatively expensive. It is 2009 when this company changed from an income trust to a corporation. Corporations have much lower dividends and dividend yields than Income Trust companies. Another problem with the testing is that the dividend has remained flat since 2015. This is not a good test for testing the current stock price.
I get a 10 year median dividend yield of 6.22. The current dividend yield is 4.62% based on a dividend of $0.72 and a stock price of $15.59. The current dividend yield is 26% below the historical median dividend yield. This stock price testing suggest that the stock price is relatively expensive. The problem with the testing is that the dividend has remained flat since 2015.
The 10 year median Price/Sales (Revenue) Ratio is 0.60. The current P/S ratio is 1.26 based on a stock price of $15.59, Revenue estimate for 2021 of $2,175M and Revenue per Share of $12.36. The current P/S Ratio is 109% above the 10 year ratio. This stock price testing suggests that the stock price is relatively expensive. Analysts expect a drop in Revenue in 2021 of 9%.
Results of stock price testing is that the stock price is probably relatively expensive. The problem with testing the stock price on this stock is that there is volatility in Revenue, Earnings and Cash Flow. The stock price has also been volatile. If you notice in the Total Return chart above, shareholders who have held this stock for 15 years have a Total Return of just 1.71% per year. The cleanest test is the P/B Ratio test and it shows that the stock price is reasonable and below the median. However, you cannot ignore the fact that analysts are suggesting that Revenue, Earnings and Cash Flow are expected to go down and that gives you a stock price that is considered current expensive.
Is it a good company at a reasonable price? The stock price is probably relatively expensive at present until the company does better. This is not a dividend growth company. Dividends have either declined or been flat for a long time and dividends have been a large part of the past returns. Revenue, Earnings and Cash Flow has always been volatile. The return on this stock does not seem to pay you for the risk of volatility.
When I look at analysts’ recommendations, I find Buy (4) and Hold (8). The consensus would be a Hold. The 12 month stock price consensus is $16.31. This implies a total return of 9.24% with 4.62% from capital gains and 4.62% from dividends.
Last year analysts liked this stock on Stock Chase. There are no entries for 2021. Robin Brown on Motley Fool says even though this stock has gone up a lot lately, it still has a very good dividend yield. 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 thinks this company’s characteristics does lead to outstanding dividend performance. A writer on Simply Wall Street says that the company’s high debt level and low ROE is not appealing to him. I agree.
Superior Plus is a Canadian-based company that distributes energy and specialty chemicals. The company is organized into three business segments: Canadian propane distribution, U.S. propane distribution, and specialty chemicals. The company's propane distribution segments together generate the vast majority of revenue, and more than half of the total company revenue is earned in the United States. Its web site is here Superior Plus Corp.
The last stock I wrote about was about was Evertz Technologies (TSX-ET, OTC-EVTZF) ... learn more. The next stock I will write about will be Badger Infrastructure Solutions Ltd (TSX-BDGI, OTC-BADFF) ... learn more on Friday, August 13, 2021 around 5 pm. Tomorrow on my other blog I will write about P/E Ratio and Stock Price.... learn more on Thursday, August 12, 2021 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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