Is it a good company at a reasonable price? The price is showing as expensive with the P/S Ratio test. However, others say it is cheap or reasonable. So maybe it could be considered reasonable but at the higher end of the range? It has delivered good returns to its shareholders, but going forward, dividend yields will be lower.
I do not own this stock of Richards Packaging Income Fund (TSX-RPI.UN, OTC-RPKIF). A member of one of my investment clubs suggested this stock.
When I was updating my spreadsheet, I noticed they had an earnings loss because the purchase of Clarion acquisition was subject to a contingent consideration.
If you had invested in this company in December 2011, for $1,005.00 you would have bought 134 shares at $7.50 per share. In December 2021, after 10 years you would have received $1,475.81 in dividends. The stock would be worth $8,275.84. Your total return would have been $9,751.65.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $7.50 | $1,005.00 | 134 | 10 | $1,475.81 | $8,275.84 | $9,751.65 |
The dividend yields are moderate with dividend growth low and inconsistent. The current dividend yield is moderate (2% to 4% ranges) at 2.86%. The 5 year and 10 year median dividend yields are also moderate at 3.24% and 4.94%. The historical median dividend yield is good (5% and 6% ranges) at 6.89%. The dividend growth is low (under 8% per year) at 3.68% per year over the past 5 years. Dividend increases are inconsistent. The last increase was in 2017 and it was for 18.28%. This stock used to be an income trust and as such, the original dividend yields were quite high.
The Dividend Payout Ratios (DPR) seem fine. The DPR for EPS for 2021 is non-calculable because of an earnings loss. The 5 year coverage at 67%. DPR for EPS is expected to be 61% in 2022. I have Adjusted Earnings per Share (AEPS) and its DPR for 2021 is 41% with 5 year coverage at 57%. The DPR for Cash Flow per Share (CFPS) for 2021 is 19% with 5 year coverage at 23.50%. The DPR for Free Cash Flow (FCF) for 2021 is 28% with 5 year coverage at 35%.
Debt Ratios are essentially fine, but the low Liquidity Ratio is not good. The Long Term Debt/Market Cap Ratio is low and good at 0.03. The Liquidity Ratio is low at 1.06. Even adding in Cash Flow after dividends, it is low at 1.29. I prefer this to be at 1.50 or high. It is an important ratio. The Debt Ratio is good at 1.58. The Leverage and Debt/Equity Ratios are fine at 2.73 and 1.73.
The Total Return per year is shown below for years of 5 to 17 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 | 3.68% | 23.88% | 20.03% | 3.85% |
| 2011 | 10 | 5.32% | 29.81% | 23.47% | 6.34% |
| 2006 | 15 | 1.09% | 19.79% | 14.23% | 5.57% |
| 2004 | 17 | 4.16% | 15.67% | 10.74% | 4.93% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 14.10, 16.24 and 18.99. The corresponding 10 year ratios are 13.98, 16.47 and 19.38. The corresponding historical ratios are 13.20, 15.53 and 18.19. The current P/E Ratio is 13.94 based on a stock price of $46.15 and EPS estimate for 2022 of $3.31. The current ratio is below the low of the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I got Adjusted Earnings per Share data. The 5-year low, median, and high median Price/Earnings per Share Ratios are 15.46, 17.92 and 20.37. The corresponding 10 year ratios are 14.78, 17.31 and 20.07. The current P/AEPS Ratio is 13.94 based on a Stock Price of $46.15 and AEPS estimate for 2022 of $3.31. The current ratio is below the low of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $32.04. The 10-year low, median, and high median Price/Graham Price Ratios are 1.24, 1.59 and 1.89. The current P/GP Ratio is 1.44 based on a stock price of $46.15. The current 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 3.09. The current P/B Ratio is 3.35 based on a stock price of $46.15, Book Value of $157.4M, and Book Value per Share of $13.79. The current ratio is 8% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10-year median Price/Cash Flow per Share Ratio of 9.92. The current P/CF Ratio is 11.06 based on a stock price of $46.15, last 12 months Cash Flow of $47.6M and Cash Flow per Share of $4.17. The current ratio is 12% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get an historical median dividend yield of 6.89%. The current dividend yield is 2.86% based on a stock price of $46.15 and dividends of $1.32. The current dividend yield is 58% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. A problem is that this company used to be an income trust and income trust can pay higher dividends than corporations.
I get a 10 year median dividend yield of 4.94%. The current dividend yield is 2.86% based on a stock price of $46.15 and dividends of $1.32. The current dividend yield is 42% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively expensive. A problem is that this company used to be an income trust and income trust can pay higher dividends than corporations.
The 10-year median Price/Sales (Revenue) Ratio is 0.98. The current P/S Ratio is 1.18 based on Revenue estimate for 2022 of $448M, Revenue per Share of $39.24 and a stock price of $46.15. The current ratio is 20.3% above 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
Results of stock price testing is that the stock price is probably on the expensive side. The P/S Ratio test is showing this result. The dividend yield tests are saying expensive, but they are not very good tests because the company used to be an income trust. Also, most of the other tests say it is cheap or reasonable. So, perhaps the stock price could be considered reasonable.
When I look at analysts’ recommendations, I find Buy (2) recommendations. The consensus would be a Buy. The 12 month target price is $60.00. This implies a total return of 32.87% with 30.01% from capital gains and 2.86% from dividends based on a stock price of $46.15.
There is only one recommendation on Stock Chase for 2022 and it is a Buy. Stock Chase gives this stock 4 stars out of 5. Robin Brown on Motley Fool thinks this is a good stock to buy currently. Amy Legate-Wolfe on Motley Fool also likes this stock. The company put out a Press Release on Newswire about their 2021 results. The company put out a Press Release on Newswire about their third quarter of 2022.
Simply Wall Street via Yahoo Finance talk about insider buying at this company. Simply Wall Street has 3 warning signs for this company of has a high level of debt; large one-off items impacting financial results; and profit margins (4.1%) are lower than last year (9.2%).
Richards Packaging Income Fund is involved in packaging distribution businesses. The company principally distributes plastic and glass containers and associated closures. It is used in packaging for cosmetics, healthcare, food, beverage, and other products. Geographically, it derives most of the revenue from Canada. Its web site is here Richards Packaging Income Fund.
The last stock I wrote about was about was Magna International Inc (TSX-MG, NYSE-MGA) ... learn more. The next stock I will write about will be Chartwell Retirement Residences (TSX-CSH.UN, OTC-CWSRF) ... learn more on Wednesday, December 14, 2022 around 5 pm. Tomorrow on my other blog I will write about RIF and Year End .... learn more on Tuesday, December 13, 2022 around 5 pm.
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