Sound bite for Twitter and StockTwits is: Dividend Growth Consumer. The stock price is probably cheap. Debt Ratios are fine for the Income Fund. The dividend yields are high with dividend growth restarting and back to 2019. The Dividend Payout Ratios (DPR) are probably fine as they can basically pay out all that the Keg passes to them. See my spreadsheet on Keg Royalties Income Fund.
Is it a good company at a reasonable price? The stock price is probably cheap. It is not well followed and again this year, I could not find estimates. It is never a good sign when analysts and sites lose interest in a stock. Also, I can find out about this stock is the Keg Revenue (for the Royalty Pool), the stock price of this Keg Royalties Income Fund, and Recipe Unlimited Corp owns lost of this company (around 47%). Because there seems to be no information on how financially health the Keg Restaurant Ltd (KLR) is, I do not know what their ability to pay royalties are. Bye the way, I enjoy eating at the Keg.
I do not own this stock of Keg Royalties Income Fund (TSX-KEG.UN, OTC-KRIUF). This was a stock suggested by one of my readers. I like dinning at The Keg. I find the food very good. At stock forums I viewed, investors liked this company as it is guaranteed 4% of the sales at Keg restaurants as income to the fund. So, I decided to take a look at it.
When I was updating my spreadsheet, I noticed that the Keg site does not work when it comes to downloading annual reports. They are shown on the site as PDFs, but the site cannot find them. I basically relied on the Press Releases. Generally, WSJ has financials on stocks, but not this one. It is not well followed and again this year, I could not find estimates. It is never a good sign when analysts and sites lose interest in a stock.
The company cut the dividends for the years of 2020 and 2021. In 2022, they increased the dividends back to what they were in 2019. I have a spreadsheet on this stock, but I am not confident that I can do a proper analysis on what financial information I find available. The only information I feel confident about is the stock price and the Dividend Distribution.
If you had invested in this company in December 2000, for $1,003.30 you would have bought 79 shares at $12.70 per share. In December 2021, after 10 years you would have received $777.53 in dividends. The stock would be worth $1,155.77. Your total return would have been $1,933.30.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $12.70 | $1,003.30 | 79 | 10 | $777.53 | $1,155.77 | $1,933.30 |
The dividend yields are high with dividend growth restarting and back to 2019. The current dividend yield is high (7% and higher) at 7.17%. The 5 year, 10 year, and historical median dividend yields are good (5% to 6%) at 5.95%, 5.89% and 6.92%. Dividends were cut in 2019 by 43%. They increased them in 2021 and this year 2022, they are back to the 2019 level. Over the past 19 years, there has been 3 years of dividend declines and 11 years of dividend increase.
The Dividend Payout Ratios (DPR) are probably fine as they can basically pay out all that the Keg passes to them. The DPR for EPS 2021 cannot be calculated because an earnings loss. The 5 year coverage is 135%. The DPR for Distributable Cash for 2021 is 122%. The DPR for Cash Flow per Share (CFPS) for 2021 is 18% with 5 year coverage at 53%. The DPR for Free Cash Flow (FCF) for 2021 is 99% with 5 year coverage at 98%. Because the only income is Royalties, the company can pay out most of the Royalties in dividends.
Debt Ratios are fine for the Income Fund. The Long Term Debt/Market Cap for 2021 is 0.88. It is fine because this is a flow through entity. The Liquidity Ratio for 2021 is good at 1.75. The Debt Ratio is good at 1.68. The Leverage and Debt/Equity Ratios for 2021 are fine at 2.47 and 1.47. However, the Debt Ratios that really count are for the Keg Restaurant that produces the royalty payments and we do not know them.
The Total Return per year is shown below for years of 5 to 20 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 | -7.60% | -1.80% | -7.06% | 5.26% |
| 2011 | 10 | -3.12% | 8.83% | 1.42% | 7.40% |
| 2006 | 15 | -2.95% | 10.08% | 1.44% | 8.64% |
| 2001 | 20 | 1.52% | 11.08% | 1.92% | 9.16% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 13.13, 15.18 and 17.23. The corresponding 10 year ratios are 17.02, 18.98 and 24.05. The corresponding historical ratios are 10.98. 13.11 and 14.31. The current ratio is 37.99 based on a stock price of $15.84 and EPS for the last 12 months of $0.42. This ratio is above the high of the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $6.05. The 10-year low, median, and high median Price/Graham Price Ratios are 1.30, 1.49 and 1.69. The current P/GP Ratio is 2.62 based on the stock price of $15.84. 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.
I get a 10-year median Price/Book Value per Share Ratio of 1.95. The current P/B Ratio is 1.73 based a stock price of $15.84, Book Value of $104M and Book Value per Share of $9.14. The current ratio is 11% 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 9.24. The current P/CF Ratio is 7.01 based on a stock price of $15.84, Cash Flow for the last 12 months of $25.7M and Cash Flow per Share of $2.26. The current ratio is 1.5% 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 6.92%. The current dividend yield is 7.17% based on dividends of $1.135 and a stock price of $15.84. The current dividend yield is 3.6% 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 5.89%. The current dividend yield is 7.17% based on dividends of $1.135 and a stock price of $15.84. The current dividend yield is 22% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10-year median Price/Sales (Revenue) Ratio is 0.36. The current P/S Ratio is 0.28 based on a stock price of $15.84 and Gross Sales KRL (Royalty Pool) Revenue for the last 12 months of 646M, Revenue per Share of $56.91 and a stock price of 15.84. The current ratio is 23% below the 10 year 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 cheap. The 10 year dividend yield test says this and it is confirmed by the P/S Ratio test. These are valid tests. We do know what the Royalty Pool value is and we do know what the dividend it. The rest of the tests, future values are based on what the Keg Restaurant and we have no figures on this outside their Revenue.
When I look at analysts’ recommendations, I find on Yahoo Finance, 1 Buy recommendation from November. That is all I can find.
The last analyst comment in 2016 Stock Chase the analysts said it was not well followed and not very liquid. This really has not changes. Andrew Walker on Motley Fool says the Keg has survived every economic downturn over the past 50 years. Ambrose O'Callaghan on Motley Fool says the company has big passive income. The company put out a Press Release on Globe Newswire about their fourth quarter of 2021. The company put out a Press Release on Globe Newswire about their third quarter of 2022. Simply Wall Street on Yahoo Finance looks at this company. They put out 3 warning signs of earnings have declined by 29% per year over past 5 years; interest payments are not well covered by earnings; and dividend of 7.12% is not well covered
The Keg Royalties Income Fund is a Canada-based company. The organization works under the Restaurant business sector. The target market of this company is those people who want a higher-end casual dining experience. Two main products of this company are High-quality steak and Prime-Rib. Its web site is here Keg Royalties Income Fund.
The last stock I wrote about was about was Waterloo Brewing Ltd (TSX-WBR, OTC-BIBLF) ... learn more. The next stock I will write about will be Stantec Inc (TSX-STN, NYSE-STN) ... learn more on Friday, December 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.
See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
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