Is it a good company at a reasonable price? The stock price is reasonable. The dividend yield is good, but do not expect much in dividend increases. This company has been returning to shareholders a reasonable return, but most of the return is in dividends. I prefer stocks with a balance between growth and dividends in the total return.
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 that this company has been reporting Adjusted Operating Cash Flow (AOCF) and Adjusted Operating Cash Flow per Share. I have added this to my spreadsheet. The EPS estimate was $0.40. The EPS came in at $0.99. However, the good earnings were due to money from Discontinue Operations. The company said that EPS from Continuing Operations was a Loss of $0.04 compared with EPS from Continuing Operations of $0.29 of last year.
If you had invested in this company in December 2011, $1,000.50 you would have bought 174 shares at $5.75 per share. In December 2021, after 10 years you would have received $1,191.90 in dividends. The stock would be worth $2,262.00. Your total return would have been $3,453.90.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $5.75 | $1,000.50 | 174 | 10 | $1,191.90 | $2,262.00 | $3,453.90 |
The dividend yields are good with dividend growth non-existent. The current dividend yield is good (5% and 6% ranges) at 6.38%. The 5 and 10 year dividend yields are also good at 6.15% and 6.07%. The historical median dividend yield is high (7% and above) at 9.12%. This company was started as an income trust and become a corporation in 2009. That is why the historical dividend yield is so high. They reduced the dividend several times, but it has been flat since 2015. Income Trust company can afford to pay out more in dividends that corporations.
The Dividend Payout Ratios (DPR) are too high, but are expected to fall. The DPR for EPS for 2021 is 73% with 5 year coverage at 198%. Analysts expect the DPR for EPS to continue to all over the next few years. The DPR for Cash Flow per Share (CFPS) for 2022 is 32% with 5 year coverage at 30%. The DPR for Free Cash Flow is 119% with 5 year coverage at 74%. Analysts expect this DPR to be 222% in 2022 and then drop to $60% in 2023 and 40% in 2024.
Debt Ratios need improving. The Long Term Debt/Market Cap Ratio for 2021 is 0.63. (Prefer this to be 0.50 or less.) The Liquidity Ratio is low at 1.05. If you add in Cash Flow after dividends it is still low at 1.25. I prefer this to be 1.50 or higher. The Debt Ratio is fine at 1.58. The Leverage and Debt/Equity Ratios are 2022 is 3.62 and 2.29. These are high and I prefer them to be below 3.00 and below 2.00.
The Total Return per year is shown below for years of 5 to 25 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% | 5.99% | 0.39% | 5.61% |
| 2011 | 10 | -5.40% | 17.14% | 8.50% | 8.64% |
| 2006 | 15 | -6.00% | 11.11% | 1.30% | 9.81% |
| 2001 | 20 | -4.12% | 8.71% | -1.31% | 10.02% |
| 1996 | 25 | -1.31% | 10.93% | -0.21% | 11.14% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 11.94, 14.09 and 15.96. The corresponding 10 year ratios are 12.08, 14.19 and 16.30. The corresponding historical ratios are 12.60, 15.32 and 18.86. The current P/E Ratio is 35.25 based on a stock price of $11.28 and EPS estimate for 2022 of $0.32. The current ratio is between the above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I also have Adjusted Operations Cash Flow (AOCF) data. The 5-year low, median, and high median P/AOCF Ratios are 5.64, 6.89 and 8.64. The corresponding 10 year ratios are 6.32, 7.59 and 8.59. The current P/AOCF Ratio is 6.56. 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 Graham Price of $6.62. The 10-year low, median, and high median Price/Graham Price Ratios are 1.01, 1.22 and 1.36. The current P/GP Ratio is 1.70 based on a stock price of $11.28. The current is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a 10-year median Price/Book Value per Share Ratio of 2.30. The current P/B Ratio is 1.85 based on a stock price of $11.28, Book Value of $1073M and Book Value per Share of $6.09. The current P/B Ratio is 19.7% 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 7.35. The current P/CF Ratio is 7.07 based on a stock price of $11.28, Cash Flow per Share estimate for 2022 of $1.71 and Cash Flow of $301M. The current ratio is 10% 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 9.12%. The current dividend yield is 6.38% based on dividends of $0.72 and a stock price of $11.28. The current dividend yield is 30% below the historical year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median dividend yield of 6.07%. The current dividend yield is 6.38% based on dividends of $0.72 and a stock price of $11.28. The current dividend yield is 5% above the 10 year median ratio. 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 0.71. The current P/S Ratio is 0.58 based on Revenue estimate for 2022 of $3,396M, Revenue per Share of $16.35 and a stock price $11.28. The current ratio is 17% 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 and below the median. The P/S Ratio test says this. The difficulty with the dividend yield tests is that the dividends have been flat for some time, but the 10 year median dividend yield test says the stock price is reasonable. Several the other pricing tests say the stock price is reasonable and below the median.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (5) and Hold (5). The current consensus is a Buy. The 12 month stock price consensus is $13.50. This implies a total return of 26.06% with 19.68% from capital gains and 6.38% from dividends.
Some analysts on Stock Chase like this company and some do not. One analyst says not to expect dividend increases. Another says the company throws off tons of cash. Stock Chase gives this company 4 stars out of 5. Money Sense rates this company a C. Robin Brown on Motley Fool says buy for passive dividend income. Ambrose O'Callaghan on Motley Fool says this is a good stock for a passive income portfolio. The company on Business Wire reports on their fourth quarter results . The company on Business Wire announces their results for the first quarter of 2022.
A Simply Wall Street report on Yahoo Finance says this company has a bad combination of high debt and low ROE. Simply Wall Street list 5 warnings for this stock of interest payments are not well covered by earnings; dividend of 6.45% is not well covered by earnings or forecast to be in the next 3 years; large one-off items impacting financial results; profit margins (1.9%) are lower than last year (5.7%); and shareholders have been diluted in the past year.
Superior Plus is a Canadian-based company that distributes energy and specialty chemicals. The company is organized into below business segments: Canadian propane distribution, and U.S. propane distribution. Its web site is here Superior Plus Corp.
The last stock I wrote about was about was Evertz Technologies Ltd (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 Monday, August 15, 2022 around 5 pm.
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