Is it a good company at a reasonable price? This could be a good investment if you want a rather stable company with a very good yield. Going forward, most of your total return will be in dividends, but the dividends will be lower than in the past because this company is no longer a income trust.
I do not own this stock of Rogers Sugar Inc (TSX-RSI, OTC-RSGUF). This stock was brought to my attention by Dividend Ninja. This company used to be an Income Trust (TSX-RSI.UN) but it has been converted to a corporation. On its change to a corporation, it lowered its dividend.
When I was updating my spreadsheet, I noticed this stock pays a good dividend (5% to 6% ranges) with a current yield of 6.05%. Some investors like high dividend paying stocks. The current dividend is $0.36 per share. If you hold this stock for 15 years, you could collect $4.68 per share in dividends. If your stock purchase price was $5.95, your dividends to date would cover some 79% of the cost of your stock. See chart below.
| Total Div | Years | At IRR | Div Inc |
|---|---|---|---|
| $1.80 | 5 | 0.00% | 30.25% |
| $3.24 | 10 | 0.00% | 54.45% |
| $4.68 | 15 | 0.00% | 78.66% |
If you bought this stock at the beginning, December 31, 1998, the cost per share would have been $8.20. For $1,000.40 (approximately $1,000) you could have bought 122 Shares. By December 31, 2021 some 23 years later, your stock would be worth $725.90 and you would have collected $1,129.81 in Dividends. Your Total Return would be $1,855.71.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $8.20 | $1,000.40 | 122 | 22 | $1,129.81 | $725.90 | $1,855.71 |
If you bought this one year later on December 31, 1999, the cost per share would have been $5.20. For $1003.60 (approximately $1,000) you could have bought 193 Shares. By December 31, 2021, some 22 years later, your stock would be worth $1,148.35 and you would have collected $1,787.32 in Dividends. Your Total Return would be $2,935.67. As you can see from the Total Return chart below, most of your return is in dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $5.20 | $1,003.60 | 193 | 21 | $1,787.32 | $1,148.35 | $2,935.67 |
The dividend yields are good with dividend growth non-existent. The current dividend yield is good (5% - 6% ranges) at 6.05%. The 5 and 10 year dividend yields are also good at 6.32% and 6.51%. The historical median dividend yield is high (7% and over) at 9.01%. This stock used to be an income trust, so it had high dividend yields. Dividends were decreased in 2011 and they have been flat ever since.
The Dividend Payout Ratios (DPR) need improving. The DPR for EPS for 2021 is 82% with 5 year coverage at 133%. This has been high in the past but analysts expect the DPR for EPS to be lower in the future. The DPR for Cash Flow per Share for 2021 if 32% with 5 year coverage at 42%. It is best if the DPR for CFPS if 40% or less. This DPR has often been too high. The DPR for Free Cash Flow for 2021 is 69% with 5 year coverage at 99.5%. The DPR for FCF is also too high. However, there is considerable disagreement on what the FCF is, but in any case, it is also too high.
Debt Ratios are fine. The Long Term Debt/Market Cap is low and good at 0.18. The Liquidity Ratio is high and good at 2.33. The Debt Ratio is normal and good at 1.57. The Leverage and Debt/Equity Ratios are fine at 2.76 and 1.79.
The Total Return per year is shown below for years of 5 to 24 to the end of 2021. 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. |
|---|---|---|---|---|---|
| 2016 | 5 | 0.00% | 2.90% | -2.66% | 5.57% |
| 2011 | 10 | 1.08% | 8.57% | 1.24% | 7.33% |
| 2006 | 15 | -0.74% | 12.95% | 3.26% | 9.70% |
| 2001 | 20 | -2.36% | 10.57% | 1.64% | 8.93% |
| 1997 | 24 | -2.84% | 7.19% | -0.67% | 7.86% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 11.38, 13.72 and 15.19. The corresponding 10 year ratios are 13.08, 14.70 and 16.46. The corresponding historical ratios are 10.62, 11.62 and 12.62. The current P/E Ratio is 14.51 based on a stock price of $5.95 and EPS estimate for 2022 of $0.41. The current ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $5.28. The 10 year low, median, and high median Price/Graham Price Ratios are 1.02, 1.16 and 1.30. The current P/GP Ratio is 1.13 based on a stock price of $5.95. The current ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median Price/Book Value per Share Ratio of 1.90. The current P/B Ratio is 1.97 based on a Book Value of $313.87, Book Value per Share of $3.03 and a stock price of $5.95. The current ratio is 3% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10 year median Price/Cash Flow per Share Ratio of 11.07. The current P/CF Ratio is 7.85 based on Cash Flow for the last 12 months of $78.6M, Cash Flow per Share of $0.76 and a stock price of $5.95. The current ratio is 29% 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 9.01%. The current dividend yield is 6.05% based on a stock price of $5.95 and dividends of $0.36. The current dividend yield is 33% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median dividend yield of 6.51%. The current dividend yield is 6.05% based on a stock price of $5.95 and dividends of $0.36. The current dividend yield is 7% below the historical median 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 0.83. The current P/S Ratio is 0.66 based on Revenue estimate for $931M, Revenue per share of $8.98 and a stock price of $5.95. The current ratio is 20.1% below the 10 median ratio. This stock price testing suggests that the stock price is relatively cheap.
Results of stock price testing is that the stock price is probably reasonable. The P/S Ratio test says it is cheap and the 10 year dividend test says it is reasonable but above the median. There are problems in dividend yield testing because this company used to be an income trust which had very high yields. Also, the dividends have been flat for almost 10 years. Both these conditions are not good for a valid test. None of the other tests say the stock is expensive.
I look at the total return over a number of years. For P/S Ratio and P/E Ratio, the lower the ratio the cheaper the stock. For yield, the higher the yield, the cheaper the stock. In the chart below you can see that the beginning P/S Ratios is lower than at other times. Also, the beginning yield is fairly high at 6.05%.
In the following chart the capital gains for the 10 years to December 31, 2021 is 1.24% per year. The beginning yield was at 6.34%, and the P/E Ratio and the P/S Ratio were at 11.69 and 0.74. Does this chart change my opinion of the stock price? Not really, as there are problems with the dividend yield testing and the P/S Ratio is relatively low.
| # Years | Cap Gains | Beg P/E | Beg P/S | Beg Yield |
|---|---|---|---|---|
| 5 | -2.66% | 10.64 | 1.11 | 5.39% |
| 10 | 1.24% | 11.69 | 0.74 | 6.34% |
| 15 | 3.26% | 8.98 | 0.73 | 9.17% |
| 20 | 1.64% | -143.33 | 0.94 | 13.81% |
| current | 14.51 | 0.66 | 6.05% |
When I look at analysts’ recommendations, I find Hold (5) recommendations. The consensus would be a hold. The target price is $6.01. This implies a total return of 7.06% with 1.01% from capital gains and 6.05% from dividends based on a stock price of $5.95.
Last year when I look at analysts’ recommendations, I found Buy (1) and Hold (4). The consensus would be a Hold. The 12 month stock price is $5.60. This implies a total return of 6.24% with a capital loss of 0.18% and dividends of 6.42% based on a stock price of $5.61. What happened was the stock price moved to $5.95 in one year which resulted in a total return of 12.48% with 6.06% from capital gains and 6.42% from dividends based on a starting stock price of $5.61. Last year I thought that the stock price was reasonable.
Analysts on Stock Chase thinks it is a safe stock, but they do not recommend it. Christopher Liew on Motley Fool says it is a stable company with a good dividend. Adam Othman on Motley Fool thinks this is a buy for passive income. The company reports on Globe Newswire their fourth quarterly results. A report from Simply Wall Street on Yahoo Finance talks about this company’s debt and its ROE.
Rogers Sugar Inc is a Canada based sugar producing company. It operates in the following reportable segments: Sugar and Maple products, of which the majority of the revenue comes from sugar products. Its geographical segments include Canada, which is the key revenue generator; the United States; Europe; and others. Its web site is here Rogers Sugar Inc.
The last stock I wrote about was about was Royal Bank of Canada (TSX-RY, NYSE-RY) ... learn more. The next stock I will write about will be Calian Group Ltd (TSX-CGY, OTC-CLNFF) ... learn more on Wednesday, January 12, 2022 around 5 pm. Tomorrow on my other blog I will write about Retirement Etc..... learn more on Tuesday, January 11, 2022 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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