Is it a good company at a reasonable price? The stock price is probably reasonable. The basic holding of this company is Sobeys, so it is like Metro or Loblaws. It is good to have at least one stock of these 3 grocery stocks. The company has provided reasonable returns over the long term.
I do not own this stock of Empire Company Ltd (TSX-EMP.A, OTC-EMLAF). I have known about this stock for some time before I decided to follow it.
When I was updating my spreadsheet, I noticed the company met expectations on revenue which was 29,536M and it came in at 30,162M. EPS was expected at $2.72 and came in at $2.80. The financial year I am reviewing is dated May 22, 2022. The financial year ends after April 30 each year.
If you had invested in this company in December 2011, $1,004.70 you would have bought 51 shares at $19.70 per share. In December 2021, after 10 years you would have received $218.11 in dividends. The stock would be worth $2,034.39. Your total return would have been $2,183.65.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $19.70 | $1,004.70 | 51 | 10 | $218.11 | $2,034.39 | $2,183.65 |
The dividend yields are low with dividend growth low. The current dividend yield is low (below 2%) at 1.65%. The 5, 10 and historical dividend yields are also low at 1.56%, 1.56% and 1.15%. The dividend growth is low at 7.9% per year over the past 5 years. The last dividend increase was for 10% and it was done in 2022.
The Dividend Payout Ratios (DPR) are fine. The DPR for EPS for 2022 21% with 5 year coverage at 26%. The DPR for Cash Flow per Share is 7% with 5 year coverage at 8%. The DPR for Free Cash Flow is 9% with 5 year coverage at 12%.
Debt Ratios are not the best. The Long Term Debt/Market Cap is good and low at 0.05. The Liquidity Ratio is low at 0.76. If you add in Cash Flow after dividends, you only get to 1.22 and I prefer this to be at 1.50 or higher. The Debt Ratio is also low at 1.45 and I prefer this to be 1.50 or higher. The Leverage and Debt/Equity Ratios are too high at 3.31 and 2.29. I prefer these to be under 3.00 and 2.00, respectively.
The Total Return per year is shown below for years of 5 to 37 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 | 7.91% | 21.82% | 19.64% | 2.18% |
| 2011 | 10 | 7.18% | 8.52% | 6.94% | 1.58% |
| 2006 | 15 | 7.60% | 8.70% | 7.10% | 1.60% |
| 2001 | 20 | 11.24% | 10.34% | 8.56% | 1.78% |
| 1996 | 25 | 11.83% | 14.53% | 12.11% | 2.42% |
| 1991 | 30 | 10.94% | 12.20% | 10.36% | 1.83% |
| 1986 | 35 | 9.95% | 10.10% | 8.70% | 1.40% |
| 1984 | 37 | 9.89% | 15.02% | 12.34% | 2.67% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 13.18, 14.74 and 17.38. The corresponding 10 year ratios are 13.74, 17.32 and 20.70. The corresponding historical ratios are 11.25, 13.03 and 14.21. The current P/E Ratio is 13.04 based on a stock price of $38.89 and EPS estimate for 2023 of $3.06. The current ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $36.04. The 10 year low, median, and high median Price/Graham Price Ratios are 1.00, 1.18 and 1.37. The current P/GP Ratio is 1.11 based on a stock price of $39.89. This 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 1.74. The current ratio is 2.11 based on a Book Value of $5,009M, Book Value per Share of $18.87 and a stock price of $39.89. The current ratio is 21.7% 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 6.64. The current P/CF Ratio is 5.73 based on a stock price of $39.89, Cash Flow per Share estimate for 2023 of $6.96 and Cash Flow of $1848M. The current ratio is 14% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 1.45%. The current dividend yield is 1.65% based on a stock price of $39.89 and dividends of $0.66. The current dividend yield is 14% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median dividend yield of 1.56%. The current dividend yield is 1.65% based on a stock price of $39.89 and dividends of $0.66. The current dividend yield is 6% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10 year median Price/Sales (Revenue) Ratio is 0.30. The current P/S Ratio is 0.34 based on a stock price of $39.89, Revenue estimate for 2023 of $30,342 and Revenue per Share of $115.81. The current ratio is 15% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
Results of stock price testing is that the stock price is probably reasonable. The dividend yield tests say it is reasonable and below the median and the P/S Ratio test says it is reasonable and above the median. Except for the P/B Ratio test, which says the stock price is expensive and the P/E Ratio test says the stock price is cheap, the other tests say the stock price is reasonable and below the median.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (4) and Hold (2). The consensus would be a Buy. The 12 month stock price consensus is $46.33. This implies a total return of 17.80% with 16.14% from capital gains and 1.65% from dividends.
There are no recent comments on Stock Chase by analysts. They do think it is a safe stock. Stock Chase gives it 3 stars out of 5. Money Sense gives it a C rating. Ambrose O'Callaghan on Motley Fool likes the low P/E on this stock. Christopher Liew Motley Fool says that although a Bear Market is just 6% away, this company has held steady. The company has put out a News Release on their fourth quarterly results. A Simply Wall Street report on Yahoo Finance says that this stock is selling just below its fair market value of $40.90.
Empire Co Ltd key businesses are food retailing, investments, and other operations. The company's investment and other operations segment include the investment in Crombie REIT, which is an open-ended Canadian real estate investment trust, as well as the Genstar Development Partnership. Sobeys and represents nearly all of the company's income. Its web site is here Empire Company Ltd.
The last stock I wrote about was about was Saputo Inc (TSX-SAP, OTC-SAPIF) ... learn more. The next stock I will write about will be Premium Brands Holdings Corp (TSX-PBH, OTC-PRBZF) ... learn more Wednesday, July 6, 2022 around 5 pm. Tomorrow on my other blog I will write about Dividend Stocks July 2022 .... learn more on Tuesday July 5, 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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