Sound bite for Twitter and StockTwits is: Dividend Paying Materials. Stock price is reasonable and below the median. Debt Ratios are fine with the Liquidity Ratio good. The Dividend Payout Ratios (DPR) are current good. The current dividend yield is moderate with dividend growth restarting. See my spreadsheet on Supremex Inc.
Is it a good company at a reasonable price? I still like this company. It is a good sign that they have restarted the dividends. Analysts have been quite accurate with where they expect the stock price to be next year in 2021 and 2023. They are suggesting another jump in the stock price for the next 12 months. The current stock price seems reasonable and below the median. I will, of course, be keeping the stock I own. Is there not a saying of letting your winners run.
I own this stock of Supremex Inc (TSX-SXP, OTC-SUMXF). I read about it in Money Sense article of 15 Stocks to help investors ride market swings by Michael Pe on Mar 4, 2018 . They were an envelope company, but are diversifying into packaging.
When I was updating my spreadsheet, I noticed I have done very well lately on this stock earning a Total Return of 26.65% with 23.66% from capital gains and 2.99% from dividends. They have made some acquisitions lately. The stock has been soaring lately, since the end of 2021.
This is quite a change for this stock that cut their dividends in 2020 and paid none in 2021. However, dividends were restarted in 2022 and have been increasing lately. This is one of the small cap stocks I bought with fooling around money in my TFSA. The company has generally had good growth over the past 5 and 10 years. See chart below.
| Year | Item | Tot. Growth | Per Year |
|---|---|---|---|
| 5 | Revenue Growth | 51.60% | 17.20% |
| 5 | AEPS Growth | 121.15% | 17.20% |
| 5 | Net Income Growth | 111.06% | 16.11% |
| 5 | Cash Flow Growth | 68.93% | 11.06% |
| 5 | Dividend Growth | -77.78% | -10.87% |
| 5 | Stock Price Growth | 28.60% | 5.16% |
| 10 | Revenue Growth | 106.61% | 14.28% |
| 10 | AEPS Growth | 279.88% | 14.28% |
| 10 | Net Income Growth | 239.92% | 13.02% |
| 10 | Cash Flow Growth | 96.44% | 6.99% |
| 10 | Dividend Growth | 12.50% | 1.18% |
| 10 | Stock Price Growth | 442.06% | 18.41% |
If you had invested in this company in December 2012, for $1,000.45 you would have bought 935 shares at $1.07 per share. In December 2022, after 10 years you would have received $1,626.9.90 in dividends. The stock would be worth $5,423.00. Your total return would have been $7,049.90.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $1.07 | $1,000.45 | 935 | 10 | $1,626.90 | $5,423.00 | $7,049.90 |
However, if you had invested in this company in December 2017, for $1,001.51 you would have bought 222 shares at $4.51 per share. In December 2022, after 5 years you would have received $174.27 in dividends. The stock would be worth $1,287.60. Your total return would have been $1,461.87.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $4.51 | $1,001.22 | 222 | 5 | $174.27 | $1,287.60 | $1,461.87 |
But, if you had invested in this company in December 2018, for $1,001.51 you would have bought 409 shares at $2.45 per share. In December 2022, after 4 years you would have received $214.73 in dividends. The stock would be worth $2,372.20. Your total return would have been $2,586.93.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $2.45 | $1,002.05 | 409 | 4 | $214.73 | $2,372.20 | $2,586.93 |
The current dividend yield is moderate with dividend growth restarting. The current dividend yield is moderate (2% to 4% ranges) at 2.31%. The 5 year and historical median dividend yields are high (7% and above) at 7.24% and 7.21%. The 10 year median dividend yield is good (5% to 6% ranges) at 5.88%. Dividend yield were mostly high before dividends were suspended in 2021. When dividends have been moderate to low since dividends were restarted in 2022. In 2022, the company paid 5 dividends. The last dividend increase was in 2023 and it was for 16.7%.
The Dividend Payout Ratios (DPR) are current good. The DPR for EPS for 2022 is 12% with 5 year coverage at 39%. The DPR for Adjusted Earnings per Share (AEPS) for 2022 is 12% with 5 year coverage at 40%. The DPR for Cash Flow per Share for 2022 is 8% with 5 year coverage at 16%.
Debt Ratios are fine with the Liquidity Ratio good. The Long Term Debt/Market Cap Ratio is good at 0.36. The Liquidity Ratio for 2022 is good at 2.08 and that is good as this company is a small cap. The Debt Ratio for 2022 is good at 1.91. The Leverage and Debt/Equity Ratios are fine at 2.10 and 1.10.
The Total Return per year is shown below for years of 5 to 16 to the end of 2022. 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. |
|---|---|---|---|---|---|
| 2017 | 5 | -10.87% | 8.50% | 5.16% | 3.34% |
| 2012 | 10 | 1.18% | 28.10% | 18.41% | 9.68% |
| 2007 | 15 | -13.31% | 4.77% | -0.20% | 4.97% |
| 2006 | 16 | -12.53% | 2.40% | -2.34% | 4.73% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 3.19, 4.01 and 5.45. The corresponding 10 year ratios are 4.40, 6.67 and 8.94. The corresponding historical ratios are 4.60, 6.72 and 9.25. The current P/E Ratio is 5.13 based on a stock price of $6.05 and EPS estimate FOR 2023 of $1.18. 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 have Adjusted Earnings per Share (AEPS) ratios. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 2.89, 4.49 and 6.18. The corresponding 10 year ratios are 4.52, 6.82 and 9.13. The current P/AEPS Ratio is 5.13 based on an AEPS estimate for 2023 of $1.18 and a stock price of $6.05. 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 Graham Price of $11.27. The 10-year low, median, and high median Price/Graham Price Ratios are 0.49, 0.68 and 0.84. The current P/GP Ratio is 0.54 based on a stock price of $6.05. 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 1.13. The current P/B Ratio is 1.26 based on a Book Value of $124M, Book Value per Share of $4.79 and a stock price of $6.05. The current ratio is 12.09% above the 10 year median ratios. 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 4.22. The current P/CF Ratio is 3.62 based on a stock price of $6.05, Cash Flow per Share estimate for 2023 of $1.67 and Cash Flow of $43.4M. The current ratio is 14% below the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 7.21%. The current dividend yield is 2.31% based on a stock price of $6.05 and dividends of $0.14. The current dividend yield is 68% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. The problem is that this stock used to be an Income Trust and as such had very high dividend yields.
I get an historical median dividend yield of 5.88%. The current dividend yield is 2.31% based on a stock price of $6.05 and dividends of $0.14. The current dividend yield is 60% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. The problem is that this stock used to be an Income Trust and as such had very high dividend yields.
The 10-year median Price/Sales (Revenue) Ratio is 0.48. The current P/S Ratio is current ratio is 0.45 based on a stock price of $6.05, Revenue estimate for 2023 of $346M and Revenue per Share of $13.32. The current ratio is 5% 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 dividend yield tests are no good because this company used to be an Income Trust and these companies have very high yields. All the other tests say that the stock price is reasonable and below the median except for the P/B Ratio test which says the stock price is reasonable but above the median.
When I look at analysts’ recommendations, I find Strong Buy (1) and Buy (2). The consensus would be a Strong Buy. The 12 months stock price consensus is $10.38. This implies a total return of 73.88% with 71.57% from capital gains and 2.31% from dividends based on a current stock price of $6.05.
When I look at analysts’ recommendations last year (2022), I found only a Buy (1) recommendation. The consensus would be a Buy. Yahoo Finance gives a Buy (2) recommendations. WSJ shows a 12 month stock price consensus of $6.00 from one analyst. Alpha Spread is showing 3 analysts 12 month stock price consensus of $6.12. This implies a total return of 75.21% with 72.39% from capital gains and 2.82% from dividends based on a stock price of $3.55. What happened was a move to $6.05 and a total return of 73.24% with 70.42% from capital gains and 2.82% from dividends. The analysts were fairly accurate.
When I looked at analysts’ recommendations in 2021, I found only one recommendation of Buy. The Consensus would be a buy. The 12 month stock price consensus is $3.50. This implies a total return of 50.21%, all from capital gains based on a stock price of $2.33. What happened was a move to $3.55 and a total return of 52.36% all from capital gains. The analyst was fairly accurate.
There are two analysts on Stock Chase taking about this stock and both are positive. Stock Chase gives this stock 4 stars out of 5. The site Motley Fool has nothing recent and last entry was in 2019. The company put out a press release on Global Newswire. Simply Wall Street has a report on this stock on Yahoo Finance. A few months ago, Simply Wall Street on Yahoo Finance suggested you might want to put this stock on your watch list. Simply Wall Street gives this stock 4 stars out of 5. It lists two warnings of has a high level of debt; and unstable dividend track record.
Supremex Inc is engaged in the manufacturing and marketing of envelopes and is a growing provider of paper-based packaging solutions and specialty products. Most of its revenue is derived from its business in Canada. Its web site is here Supremex Inc.
The last stock I wrote about was about was Toromont Industries Ltd (TSX-TIH, OTC-TMTNF) ... learn more. The next stock I will write about will be Leon's Furniture Ltd (TSX-LNF, OTC-LEFUF) ... learn more on Wednesday, April 19, 2023 around 5 pm. Tomorrow on my other blog I will write about Stocks with Moats.... learn more on Tuesday, April 18, 2023 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.
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