Is it a good company at a reasonable price? One problem with this small cap is that it is not traded often, but it seems to be traded at least daily. The other problem is that the dividends are being cut. If you look at long term returns, Dividend Cutters are at the bottom, after Dividend Growth, Dividend Paying, and Non-Dividend stocks. I have some 31 years of data and this company has done fine for shareholders in the past. But it does currently have problems showing up in the dividend cuts. On the other hand, the stock price is cheap. But it is cheap for a reason.
I do not own this stock of Lassonde Industries Inc (TSX-LAS.A, OTC-LSDAF). Although this stock is not on the Investment Reporter list, MPL communications does write about this stock. It has been covered several times in their Advice Hotline emails in 2010. Reports have been favorable and they suggest buying it for dividends and long term capital gains.
When I was updating my spreadsheet, I noticed that this company although has been increasing their sales, they have not been increasing their Earnings or Cash Flow over the past 5 years. They recently have been cutting their dividends. The recent series of dividend cuts started in 2019, and then they cut the dividends in 2022 and 2023. Dividends investors do not like dividend cuts and this accounts for the lower stock price. See chart below.
| Year | Item | Tot. Growth | Per Year |
|---|---|---|---|
| 5 | Revenue Growth | 40.94% | 7.10% |
| 5 | EPS Growth - AESP | -27.20% | -6.15% |
| 5 | Net Income Growth | -40.03% | -9.72% |
| 5 | Cash Flow Growth | -83.44% | -30.20% |
| 5 | Dividend Growth | 27.35% | 4.95% |
| 5 | Stock Price Growth | -56.53% | -15.35% |
| 10 | Revenue Growth | 110.42% | 7.72% |
| 10 | EPS Growth - AESP | 48.97% | 4.07% |
| 10 | Net Income Growth | 22.74% | 2.07% |
| 10 | Cash Flow Growth | 124.22% | 8.41% |
| 10 | Dividend Growth | -76.36% | -13.43% |
| 10 | Stock Price Growth | 47.88% | 3.99% |
If you had invested in this company in December 2012, for $1,053.50 you would have bought 111 shares at $75.25 per share. In December 2022, after 10 years you would have received $328.02 in dividends. The stock would be worth $1,557.92. Your total return would have been $1,885.94.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $75.25 | $1,053.50 | 14 | 10 | $328.02 | $1,557.92 | $1,885.94 |
However, if you had invested in this company in December 2017, for $1,024.08 you would have bought 4 shares at $256.02 per share. In December 2022, after 5 years you would have received $57.80 in dividends. The stock would be worth $445.12. Your total return would have been $502.92.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $256.02 | $1,024.08 | 4 | 5 | $57.80 | $445.12 | $502.92 |
The current dividend yield is low with dividends being cut. The current dividend yield is low (below 2%) at 1.77%. The 5, 10 and historical dividend yields are also low at 1.82%, 1.39% and 1.76%. The last dividend change was in 2023 and it was a dividend cut of 29%. I have 34 years of dividend data and yearly dividends have been cut 4 times and increased 19 time. Three of the cuts were recent in 2019, 2020 and 2022, but the dividends were increased in 2021.
The Dividend Payout Ratios (DPR) are fine. The DPR for 2022 for Earnings per Share (EPS) is 38% with 5 year coverage at 27%. The DPR for 2022 for Adjusted Earnings per Share (AEPS) is 32% with 5 year coverage at 27%. The DPR for 2022 for Cash Flow per Share (CFPS) is 13% with 5 year coverage at 12%. The DPR for 2022 for Free Cash Flow is negative so unhelpful, with 5 year coverage at 23%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 37.96% | 27.26% |
| AEPS | 31.80% | 27.10% |
| CFPS | 13.12% | 11.58% |
| FCF | -76.72% | 22.84% |
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio is good and low at 0.20. The Liquidity Ratio is fine at 1.53. The Debt Ratio is good at 2.41. The Leverage and Debt/Equity Ratios are good and low at 1.71 and 0.71.
| Type | Ratio '22 | Ratio Curr |
|---|---|---|
| Lg Term R | 0.20 | 0.32 |
| Intang/GW | 0.69 | 0.65 |
| Liquidity | 1.53 | 2.05 |
| Liq. + CF | 1.53 | 2.12 |
| Debt Ratio | 2.41 | 2.37 |
| Leverage | 1.71 | 1.73 |
| D/E Ratio | 0.71 | 0.73 |
The Total Return per year is shown below for years of 5 to 32 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 | 4.95% | -13.73% | -15.35% | 1.62% |
| 2012 | 10 | -2.68% | 6.52% | 3.99% | 2.53% |
| 2007 | 15 | 12.20% | 9.67% | 6.97% | 2.70% |
| 2002 | 20 | 11.15% | 13.19% | 10.06% | 3.12% |
| 1997 | 25 | 9.92% | 9.59% | 7.39% | 2.19% |
| 1992 | 30 | 9.61% | 10.71% | 8.36% | 2.35% |
| 1990 | 32 | 9.89% | 13.12% | 10.09% | 3.03% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 12.85, 16.52 and 19.77. The corresponding 10 year ratios are 15.26, 17.59 and 20.14. The corresponding historical ratios are 11.66, 13.59 and 16.01. The current P/E Ratio is 9.99 based on a stock price of $112.87 and an EPS estimate for 2023 of $11.30. The current ratio is below the low ratios of the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 12.25, 14.79 and 17.33. The corresponding 10 year ratios are 15.26, 17.59 and 19.93. The current P/AEPS Ratio is 10.01 based on a stock price of $112.87 and AEPS estimate for 2023 of $11.28. The current ratio is below the low ratios of the 10 median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $181.99. The 10-year low, median, and high median Price/Graham Price Ratios are 1.07, 1.24 and 1.07. The current P/GP Ratio is 0.62 based on a stock price of $112.87. The current ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I get a 10-year median Price/Book Value per Share Ratio of 1.95. The current P/B Ratio is 0.86 based on a stock price of $112.87, Book Value of $890M and Book Value per Share of $130.79. The current ratio is 56% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a 10-year median Price/Cash Flow per Share Ratio of 9.70. The current P/CF Ratio is 19.39 based on a stock price of $112.87, Cash Flow for the last 12 months of $40M and Cash Flow per Share of $5.82. The current ratio is 99.9% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
However, if you look at Cash Flow excluding Working Capital, you will come to a different conclusion. The 10-year median Price/Cash Flow (excluding WC) per Share Ratio is 6.97. The current P/CF Ratio is 4.74 based on a stock price of $112.87, Cash Flow excluding WC for the last 12 months of 162M, and Cash Flow per Share of $23.82. The current ratio is 32% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I published notes on Cash Flow excluding working Capital here. I also go into this in notes on Goeasy Ltd published on Wednesday, June 14, 2023.
I get an historical median dividend yield of 1.76%. The current dividend yield is 1.77% based on dividends of $2.00 and a stock price of $112.87. The current ratio is 0.7% 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 1.39%. The current dividend yield is 1.77% based on dividends of $2.00 and a stock price of $112.87. The current ratio is 27% 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 0.71. The current P/S Ratio 0.34 based on Revenue estimate for 2023 of $2,279M, Revenue per Share of $334.08 and a stock price of $112.87. The current P/S Ratio is 52% 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 median dividend yield testing is saying that the stock price is cheap and it is confirmed by the P/S Ratio test. Most of the other testing is saying the same thing.
When I look at analysts’ recommendations, I find only one Recommendation of a Hold. The consensus would be a Hold. The 12 month stock price consensus is $130.00. This implies a total return of 16.95% with 15.18% from capital gains and 1.77% from dividends. Yahoo Finance is showing analysts’ recommendations of Hold (1) and a target also of $130.00.
Last analyst’s recommendation on Stock Chase was in 2021 and it was a Hold. Stock Chase gives this stock 1 star out of 5. It has never been on the Money Sense List. Adam Othman on Motley Fool reviews this stock in May 2023. Nikhil Kumar on Motley Fool reviews this stock in 2021. The company put out a Press Release on Newswire about their 2022 results. The company put out a press release on Newswire about their first quarter of 2023 results. Simply Wall Street on Yahoo Finance reviewed this stock in 2022. Simply Wall Street gives this stock 2 stars out of 5. They list 3 warnings of earnings have declined by 3.8% per year over past 5 years; dividend of 2.57% is not well covered; and profit margins (2.6%) are lower than last year (3.7%).
Lassonde Industries Inc is engaged in the development, manufacturing, and marketing of ready-to-drink fruit and vegetable juices and drinks. It also acts as a producer of store-brand shelf-stable fruit juices and drinks in the United States and a producer of cranberry sauces. Lassonde has a presence in Canada and the United States. It earns most of the revenue in the United States. Its web site is here Lassonde Industries Inc.
The last stock I wrote about was about was Goeasy Ltd (TSX-GSY, OTC-EHMEF) ... learn more. The next stock I will write about will be Waste Connections Inc (TSX-WCN, NYSE-WCN) ... learn more on Monday, June 19, 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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