Is it a good company at a reasonable price? The stock price is expensive. This is because the stock price went up when it was announced that the company would be acquired by Clearlake Capital. Since the price is high, shareholders could sell now or just hold on until the company is acquired. Since the stock is unlikely to go up again and it will go down if the company is not acquired, I would personally just sell this stock and move on.
I do not own this stock of Intertape Polymer Group Inc (TSX-ITP, OTC-ITPOF). I got this stock suggestion from Peter who I met in an Investment Club. The company reports in US$ and distributes its dividend in US$.
When I was updating my spreadsheet, I noticed that his company is suppling Adjusted Earnings Per Share (AEPS) data. What AEPS is to show is the real earnings from Sales. It can be quite different from EPS which can include such things as write-offs and gains or losses from asset sales.
The other thing is that the stock price zoomed up in March 2022. This is because the company is expected to be bought out by Clearlake Capital. There was an earnings loss in March 2022 due to charges related to the Arrangement with Clearlake Capital.
The dividend yields are moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 2.24%. The 5, 10 and historical dividend yields are 4.10, 3.42 and 3.55. Note that dividends were stopped in 1998 and then restarted in 2013. The dividend increases over the past 5 years is low with a rate of 2.75% per year. Over the past 5 years, dividends have increased and decreased. The last dividend increase was in 2022 and it was for 7.9%.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2021 is 58% with 5 year coverage at 60%. The DPR for Adjusted Earnings per Share (AEPS) for 2021 is 33% with 5 year coverage at 47%. The DPR for Cash Flow per Share for 2021 is 16% with 5 year coverage at 20%. The DPR for Free Cash Flow (FCF) for 2021 is 48% with 5 year coverage at 55%.
Debt Ratios need improving. The Long Term Debt/Market Cap Ratio for 2021 is good at 0.44. The Liquidity Ratio for 2021 is good at 1.55. The Debt Ratio for 2021 is low at 1.36 and I prefer to see this at 1.50 or higher. The Leverage and Debt/Equity Ratios for 2021 are 3.94 and 2.90. These are too high and prefer them to be below 3.00 and below 2.00.
The Total Return per year is shown below for years of 5 to 28 to the end of 2021 in CDN$. 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. |
|---|---|---|---|---|---|
| 2016 | 5 | 2.75% | 3.85% | 0.89% | 2.97% |
| 2011 | 10 | 11.79% | 29.70% | 23.04% | 6.66% |
| 2006 | 15 | 12.41% | 10.13% | 2.28% | |
| 2001 | 20 | 4.74% | 3.49% | 1.25% | |
| 1996 | 25 | 9.30% | 0.63% | -0.25% | 0.88% |
| 1993 | 28 | 10.56% | 5.09% | 4.01% | 1.08% |
The Total Return per year is shown below for years of 5 to 28 to the end of 2021 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. |
|---|---|---|---|---|---|
| 2016 | 5 | 3.94% | 4.94% | 1.93% | 3.01% |
| 2011 | 10 | 9.37% | 27.22% | 21.09% | 6.13% |
| 2006 | 15 | 13.41% | 11.04% | 2.37% | |
| 2001 | 20 | 5.99% | 4.69% | 1.31% | |
| 1996 | 25 | 9.63% | 0.90% | 0.02% | 0.88% |
| 1993 | 28 | 10.73% | 5.18% | 4.12% | 1.06% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 13.73, 17.31 and 20.88. The corresponding 10 year ratios are 13.30, 16.92 and 21.27. The corresponding historical ratios are 10.68, 15.79 and 21.26. The current P/E Ratio is 47.44 based on a stock price of $39.59 and EPS estimate for 2022 of $0.64. This Ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive. Although the EPS estimate for 2022 is a 41% drop from that of 2021. This testing is in CDN$.
I also have Adjusted Earning (AEPS) per Share data. The 5 year low, median, and high median Price/Adjusted Earnings per Share Ratios are 10.39, 12.92 and 14.39. The corresponding 10 year ratios are 10.56, 13.37 and 15.83. The current P/AEPS Ratio is 15.00 based on a stock price of $30.15, and AEPS estimate for 2022 of $2.01. The current ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is US$ and you will get similar results in CDN$.
I get a Graham Price of $10.72. The 10 year low, median, and high median Price/Graham Price Ratios are 1.28, 1.60 and 1.92. The current P/GP Ratio is 3.69 based on a stock price of $39.59. The current ratio is above the high of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive. This testing is in CDN$.
In the above test, the very low EPS estimate for 2022 is part of the Graham Price calculation. I get a Graham Price for 2023 of $19.74. This gives a ratio of 2.01 based on a stock price of $39.59. This ratio is also above the high of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive. This testing is in CDN$.
I get a 10 year median Price/Book Value per Share Ratio of 3.49. The current P/B Ratio is 6.42 based on a Book Value of $277M, Book Value per Share of $4.70 and a stock price of $30.15. The current ratio is 84% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is US$ and you will get similar results in CDN$.
I get a 10 year median Price/Cash Flow per Share Ratio of 8.00. The current P/CF Ratio is 8.17 based on Cash Flow per Share estimate for 2022 of $3.69, Cash Flow of $218M and a stock price of $30.15. The current ratio is 2% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. This testing is US$ and you will get similar results in CDN$.
I get an historical median dividend yield of 3.55%. The current dividend yield is 2.24% based on a dividend $0.89 and a stock price of $30.15. The current ratio is 37% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. This testing is US$ and you will get similar results in CDN$.
I get a 10 year median dividend yield of 3.42%. The current dividend yield is 2.24% based on a dividend $0.89 and a stock price of $30.15. The current ratio is 34% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively expensive. This testing is US$ and you will get similar results in CDN$.
The 10 year median Price/Sales (Revenue) Ratio is 0.87. The current P/S Ratio is 1.05 based on Revenue estimate of $1,698M, Revenue per Share of $28.77 and a stock price of $30.15. The current ratio is 20.4% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This testing is US$ and you will get similar results in CDN$.
Results of stock price testing is that the stock price is probably expensive. The dividend yield tests and the P/S Ratio test suggest this. The stock price also rose when the acquisition of the company by Clearlake Capital was announced. Most of the other testings show the same thing, but some show it is reasonable but above the median.
When I look at analysts’ recommendations, I find only one recommendation and this is a Hold. The consensus would be a Hold. The 12 month stock price consensus is $41.14 ($31.56 US$). This implies a total return of 6.18 with 3.94% from capital gains and 2.24% from dividends based on a current stock price of $39.58.
An article on Newswire talks about Clearlake Capital having an arrangement to acquire this company. There is only one recommendation on Stock Chase in 2022 and that is Hold because it is being taken out. Amy Legate-Wolfe Motley Fool talks about what happened after the company announce it was being acquired by Clearlake Capital. On May 13, 2022 the company has announced on Newswire that the Superior Court of Québec Approved the Arrangement with Clearlake Capital.
Intertape Polymer Group Inc manufactures and sells a variety of packaging products. The majority of revenue comes from the United States. 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, NYSE-CIXX) ... learn more on Friday, June 24, 2022 around 5 pm. Tomorrow on my other blog I will write about Debt Collectors .... learn more on Thursday, June 23, 2022 around 5 pm.
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