Is it a good company at a reasonable price? The current stock price is probably reasonable. The last dividend increase was in 2022 and it was for 10%, so this is a positive sign. This company has done well for shareholders over a long time.
I do not own this stock of Premium Brands Holdings Corp (TSX-PBH, OTC-PRBZF). I was looking for another stock to follow and I found this is one of the top stocks in TD Bank's Canadian Equity Fund.
When I was updating my spreadsheet, I noticed analysts expected the Revenue to increase by 14% to $4,638M, but it increased by 21% to 4,932M. However, EPS was expected to increase by 98% to 4.26, but it only increased by 41% to $3.04. It would seem the reason for the lower EPS was due to a Change in Fair Value of option Liabilities and Provision for Income Taxes. Also, the Diluted and Average outstanding shares increased by 12%.
If you had invested in this company in December 2011, $1015.65 you would have bought 61 shares at $16.65 per share. In December 2021, after 10 years you would have received $1,019.55 in dividends. The stock would be worth $7,712.84. Your total return would have been $8,732.39.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $16.65 | $1,015.65 | 61 | 10 | $1,019.55 | $7,712.84 | $8,732.39 |
The dividend yields are moderate with dividend growth moderate. The current dividend yield is moderate (2% to 4% ranges) at 2.92%. The 5 and 10 year median dividend yields are also moderate at 2.24% and 2.71%. The historical median dividend yield is good (5% to 6% ranges). This historical dividend yield is so high because this company used to be an income trusts that switched to a corporation in 2009. The dividend growth is currently moderated (8% to 14% ranges) at 10.82% per year for the past 5 years. The last dividend increase was in 2022 and it was for 10.2%
Some Dividend Payout Ratios (DPR) are too high, but they are expected to improve. The DPR for EPS for 2021 are 82% with 5 year coverage at 77.61%. This is too high. Analysts expect the DPR for EPS to be over 100% this year then falling to 44% in 2023. The DPR for Cash Flow per Share for 2021 is 35% with 5 year coverage at 37%. For CFPS, a rate 40% or less is fine. The DPR for Free Cash Flow for 2021 is not calculable because of a negative FCF. The 5 year coverage at 151%. This is too high. Analysts expect DPR for FCF to be around 41% in 2022.
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2021 is 0.19 but rising to 0.29 in the first quarter of 2022. However, any ratio below 0.50 is good. The Liquidity Ratio is good at 2.09. The Debt Ratio is good at 1.91. The Leverage and Debt/Equity Ratios are fine at 2.49 and 1.30.
The Total Return per year is shown below for years of 5 to 26 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 | 10.82% | 15.21% | 12.89% | 2.88% |
| 2011 | 10 | 7.76% | 26.73% | 22.47% | 2.15% |
| 2006 | 15 | 5.11% | 23.88% | 18.27% | 2.53% |
| 2001 | 20 | 4.78% | 16.13% | 12.86% | 2.21% |
| 1996 | 25 | 11.72% | 9.88% | 2.21% | |
| 1995 | 26 | 14.69% | 12.44% | 2.21% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 29.60, 36.05, and 41.86. The corresponding 10 year ratios are 29.17, 34.81 and 41.20. The corresponding historical ratios are 15.29, 22.02 and 24.89. The current P/E Ratio is 18.01 based on a stock price of $95.98 and EPS estimate for 2022 of $5.33. 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. However, the 5 and 10 year median ratios are high.
I get a Graham Price of $68.82. The 10 year low, median, and high median Price/Graham Price Ratios are 1.75, 2.18 and 2.55. The current P/GP Ratio is 1.39 based on a stock price of $95.98. 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. Here again, the ratios are rather high.
I get a 10 year median Price/Book Value per Share Ratio of 2.82. The current P/B Ratio is 2.43 based on a Book Value of $1762M, Book Value per Share of $39.50 and a stock price of $95.98. 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 a 10 year median Price/Cash Flow per Share Ratio of 21.35. The current ratio is 10.46 based on Cash Flow per Share estimate for 2022 of $9.18, Cash Flow of $409M and a stock price of $95.98. The current ratio is 51% 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 6.12%. The current dividend yield is 2.92% based on a dividend of $2.80 and a stock price of $95.98. The current dividend yield is 52% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 2.71%. The current dividend yield is 2.92% based on a dividend of $2.80 and a stock price of $95.98. The current dividend yield is 7.7% above the historical 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 0.86. The current P/S Ratio is 0.74 based on Revenue estimate for 2022 of $5,761M, Revenue per Share of $129.17 and a stock price of $95.98. 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.
Results of stock price testing is that the stock price is probably reasonable. Both the 10 year median dividend yield test and the P/S Ratio test says this. Because this stock used to be an income trust, the historical median dividend yield test says it is expensive, but income trust had much higher dividends than corporations. The P/B Ratio is a good one and it says the stock price is reasonable.
There are problems with some of the other tests again this year. Analysts was expecting the CFPS to be around $9.26 for 2021 and it came in at 1.49. Most of the recent CFPS have come in, in the $4.00 and $5.00 ranges. The ratios for the P/E Ratio and P/GP Ratio tests are rather high.
Last year I said that the results of stock price testing were that the stock price is relatively expensive. The dividend yield testing was showing the stock as expensive and this is confirmed by the P/S Ratio test. The P/B Ratio test also says that this stock is relatively expensive.
Last year, I also said that there were problems with a number of these stock price tests. There are problems with the dividend yield test as this company was, until 2009 an income trust, which had high dividends. However, even the 5 year median dividend yield is lower than the other median dividend yields at 2.43%, which is still higher than the current one by 16%. I had wondered above the estimate for EPS and Cash Flow as these do seem out of line. However, the first quarterly EPS and Cash Flow per Share do show improvement over the year end values.
When I look at analysts’ recommendations, I find Buy (8) and Hold (2). The consensus would be a Buy. The 12 month consensus stock price is $139.10. This implies a total return of 47.87% with 44.93% from capital gains and 2.92% from dividends based on a stock price of $95.98.
When I look at analysts’ recommendations last year, I found Buy (8), Hold (2) and Sell (1). The consensus was a Buy. The recommendations are rather mixed. The 12 month stock price consensus is $133.00. This implies a total return of 8.32% with 6.29% from capital gains and 2.03% from dividends based on a stock price of $125.13. What happened was a move to a stock price of $95.98 and a loss of 21.27% with a capital loss of 23.30% and dividends of 2.03%.
The last recommendation on Stock Chase was in 2009. Stock Chase gives this stock 3 stars out of 5. The last time it was listed on Money Sense’s 100 best dividend stocks was 2020 and it was rated D. Adam Othman on Motley Fool says restaurants are returning to normal and you can capitalize on this bullish phase. Christopher Liew on Motley Fool thinks this is a underperforming stock ready to bounce back. A report by Simply Wall Street on Yahoo Finance that this company is priced above its peers so now may not be a good time to buy. The company on newswire talks about their fourth quarterly results. The company reports on Newswire their first quarterly results for 2022.
Premium Brands Holdings Corp is engaged in specialty food manufacturing, premium food distribution, and wholesale businesses with operations in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nevada, and Washington State. Its web site is here Premium Brands Holdings Corp.
The last stock I wrote about was about was Empire Company Ltd (TSX-EMP.A, OTC-EMLAF) ... learn more. The next stock I will write about will be Suncor Energy Inc (TSX-SU, NYSE-SU) ... learn more on Friday, July 8, 2022 around 5 pm. Tomorrow on my other blog I will write about Something to Buy July 2022.... learn more on Thursday, July 7, 2022 around 5 pm.
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Extra zero in the Total cost column in the first table. Should be 1015.65
ReplyDeleteThanks. I have fixed the problem.
ReplyDelete