Is it a good company at a reasonable price? The stock price maybe relatively cheap. Since all the covering analysts recommend a Hold, you have to wonder. I really do not know what to think about this stock. It has a dividend, which is paid from the distributions that it receives from Kruger Products L.P. It issues common shares each year, but this just shows up in the Change in Equity. The good thing is that it is a holding company for Kruger Products. However, the company’s statements show that it has seldom any positive Income or Earnings and never any Operating Cash Flow. Dividend is high, but flat. Not my sort of stock.
I do not own this stock of KP Tissue Inc (TSX-KPT, OTC-KPTSF). This was a stock suggested by a speaker at the Ellen's Investment Club.
When I was updating my spreadsheet, I noticed that the company is not making money, has no cash flow and is paying a dividend. This does not compute very well. And yet, if you had invested in this stock over the past 9 years, you would not have lost much. See chart below.
If you had invested in this company in December 2012, for $1,013.84 you would have bought 58 shares at $17.48 per share. In December 2021, after 9 years you would have received $377.99 in dividends. The stock would be worth $603.78. Your total return would have been $981.77.
|Cost||Tot. Cost||Shares||Years||Dividends||Stock Val||Tot Ret|
The dividend yields are high with dividend growth non-existent. The current dividend yield is high (7% and higher) at 7.09%. The 5, 10 and historical dividend yield is good (5% and 6% ranges) at 6.72%, 5.54% and 5.54%. Dividends have only been paid for 7 years. The dividend has basically been flat since its inception. Analysts do not expect any change anytime soon.
The Dividend Payout Ratios (DPR) are awful because of no positive earnings and cash flow. Basically the company cannot afford to pay a dividend as mostly they have had earnings losses except for the years of 2012 and 2021. The DPR for EPS for 2021 is 554%. They did not earn much. They have no Cash Flow. They have no Free Cash Flow because they have no Cash Flow.
For Debt Ratios the Liquidity Ratio is a problem, but other ratios are fine. They have no long term debt. They also have no Intangible or Goodwill Assets. The Liquidity Ratio is awful at 0.49. That means that they cannot cover their current liabilities with current assets. This can get companies into trouble quickly when the economy is not good. However, the Debt Ratio is good at 16.65 (where anything over 1.50 is good). The Leverage and Debt/Equity Ratios are good at 1.06 and 0.06.
The Total Return per year is shown below for years of 5 to 9 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.|
The 5-year low, median, and high median Price/Earnings per Share Ratios are negative and so unusable. The corresponding 10 year and historical ratios are also negative and unusable. The current P/E Ratio is negative, so we can not doing any testing with that.
I guess a Graham Price of $1.95. There are so many earning losses that no proper calculation can be done. The 10-year low, median, and high median Price/Graham Price Ratios are 4.52, 5.77 and 6.61. The current P/GP Ratio is 5.21 based on a stock price of $10.15. This ratio is between and low and median 10 year median P/GP Ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median. However, this testing must be look at as unreliable.
I get a 10-year median Price/Book Value per Share Ratio of 1.01. The current P/B Ratio is 1.20 based on a stock price of $10.15, Book Value of $83.5M and a Book Value per Share of $8.43. The current ratio is 19% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. This is a good test.
I also have a Book Value per Share estimate for 2022 of $8.03. This gives a Book Value of $79.8M and with a stock price of $10.15, a ratio of 1.26. This ratio is 25% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. This is also a good test.
I cannot do any Price/Cash Flow per Share Ratio testing as there is no cash flow.
I get 7 year and historical median dividend yield of 5.54%. The current dividend yield is 7.09% based on a dividend of $0.72 and a stock price of $10.15. This dividend yield is 28% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap. This is also a good test.
The 10-year median Price/Sales (Revenue) Ratio is 0.10. The current P/S Ratio is 0.06 based on Revenue of $1,697M, Revenue per Share of $170.72 and a stock price of $10.15. the current ratio is 41% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. I wonder about this test because the Revenue is for Kruger Products L.P and the stock price is for KP Tissue Inc. There is no stock price for Kruger Products. Also, the Revenue for KP Tissue Inc has fallen by 900% comparing the last 12 months to 2021.
Results of stock price testing is that the stock price maybe cheap. The dividend yield tests is a valid test and it says that the stock price is cheap. Who know about the P/S Ratio test, and I wonder how good it is. The P/B Ratio tests are good, but one says it is reasonable but above the median and the other says expensive.
When I look at analysts’ recommendations, I find only Hold (6) recommendations. The 12 months stock price consensus is $10.17. This implies a total return of 7.29% with 0.20% from capital gains and 7.09% from dividends based on a stock price of $10.15. This stock does not trade often and the stock price has been higher than the 12 month stock consensus a number of times over the past 6 months.
Analysts do not show much interest in this stock on Stock Chase. There was a comment in 2020 and prior one in 2019. Stock Chase gives this stock 1 star out of 5. Joey Frenette on Motley Fool said in September 2021 that he liked to juicy 7% dividend. Joey Frenette on Motley Fool in August 2021, said to start buying some of this stock if you have a tolerance for volatility. The company put out a press release on Globe Newswire about their fourth quarterly results. The company put out a press release on Globe Newswire about their third quarter of 2022.
Simply Wall Street via Yahoo Finance reviews this stock. It talks about the company having Free Cash Flow, but the statements for KP Tissue does not show this as far as I can see. The Morningstar Quant Report shows $0 Free Cash Flow. However, it does get a distribution from Kruger Products that it uses to fund the dividends. KP Tissue owns part of Simply Wall Street has 3 warnings of makes less than USD$1m in revenue (CA$0); dividend of 7.09% is not well covered; and does not have a meaningful market cap.
KP Tissue Inc operates as a holding company owning part of Kruger Products L.P. The firm produces, distributes, markets, and sells a range of disposable tissue products in North America. Its web site is here KP Tissue Inc.
The last stock I wrote about was about was Maple Leaf Foods Inc (TSX-MFI, OTC-MLFNF) ... learn more. The next stock I will write about will be Agnico Eagle Mines Ltd (TSX-AEM, NYSE-AEM) ... learn more on Friday, December 30, 2022 around 5 pm. Tomorrow on my other blog I will write about Sahil Bloom .... learn more on Thursday, December 29, 2022 around 5 pm.
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