Is it a good company at a reasonable price? I think that the debt ratios point to higher risk if purchasing this company. It does have good growth. It has a long history of paying dividends. The stock price certainly is reasonable and it is probably cheap as several stock price tests point to this.
I do not own this stock of Parkland Fuel Corp (TSX-PKI, OTC-PKIUF). I decided to do a spreadsheet on this stock as it was a stock recommended by Roger Conrad in Money Show of 2013.
When I was updating my spreadsheet, I noticed that this company has great growth, but it also has a lot of debt and that would worry me if I was a shareholder. The Long Term Debt/Market Cap Ratio is 1.29 in 2022 and 1.11 currently. It means that the Long Term Debt is higher than the Market Cap or the value of the company. The Leverage and Debt/Equity Ratios are also far too high at 5.05 and 3.97. The acceptable level are ratios below 3.00 and 2.00.
| Year | Item | Tot. Growth | Per Year |
|---|---|---|---|
| 5 | Revenue Growth | 270.92% | 29.97% |
| 5 | A DCF Growth | 296.12% | 31.69% |
| 5 | AEPS Growth | 321.74% | 33.35% |
| 5 | Net Income Growth | 276.67% | 30.37% |
| 5 | Cash Flow Growth | 406.30% | 38.32% |
| 5 | Dividend Growth | -7.16% | -1.48% |
| 5 | Stock Price Growth | 11.58% | 2.22% |
| 10 | Revenue Growth | 757.89% | 23.98% |
| 10 | A DCF Growth | 167.54% | 10.34% |
| 10 | AEPS Growth | 138.52% | 9.08% |
| 10 | Net Income Growth | 265.33% | 13.83% |
| 10 | Cash Flow Growth | 872.28% | 25.54% |
| 10 | Dividend Growth | 4.61% | 0.45% |
| 10 | Stock Price Growth | 58.27% | 4.70% |
If you had invested in this company in December 2012, for $1,003.29 you would have bought 53 shares at $18.93 per share. In December 2022, after 10 years you would have received $598.82 in dividends. The stock would be worth $1,587.88. Your total return would have been $2,186.70.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $18.93 | $1,003.29 | 53 | 10 | $598.82 | $1,587.88 | $2,186.70 |
The current dividend yield is moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 4.17%. The 5, 10 and historical dividend yields are moderate at 3.22%, 3.81% and 3.33%. The dividend growth is low at 3% per year over the past 5 years. In 2022, the company changed the dividend payout period from monthly to quarterly. The last dividend increase was in 2023 and it was for 4.6%.
The Dividend Payout Ratios (DPR) are fine. The DPR for 2022 for EPS was 56% with 5 year coverage at 82%. The company prefers to use a Distributable Cash Flow (DCF) to justify dividend payouts and in 2022 the DPR for DCF was 21% with 5 year coverage at 31%. The DPR for 2022 for Adjusted Earnings per Share (AEPS) is 37% with 5 year coverage at 72%. The DPR for 2022 for Cash Flow per Share (CFPS) is 13% with 5 year coverage at 19%. The DPR for 2022 for Free Cash Flow (FCF) is 15% with 5 year coverage at 24%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 55.57% | 81.67% |
| DCF | 20.88% | 30.94% |
| AEPS | 36.67% | 72.09% |
| CFPS | 12.80% | 18.65% |
| FCF | 14.70% | 24.16% |
Some Debt Ratios are not good. The Long Term Debt/Market Cap Ratio are far too high for 2022 at 1.29. Currently they are low, but still too high at 1.11. The Liquidity Ratio is low at 1.39, but if you add in cash flow after dividends, the ratio is fine at 1.74. The Debt Ratio are low at 1.27 for 2022 and 1.29 currently. I prefer these to be at 1.50 or higher. The Leverage and Debt/Equity Ratios are also far too high at 5.05 and 3.97. The acceptable level are ratios below 3.00 and 2.00.
| Type | Ratio '22 | Ratio Curr |
|---|---|---|
| Lg Term R | 1.29 | 1.11 |
| Intang/GW | 0.73 | 0.63 |
| Liquidity | 1.39 | 1.42 |
| Liq. + CF | 1.74 | 1.78 |
| Debt Ratio | 1.27 | 1.29 |
| Leverage | 5.05 | 4.49 |
| D/E Ratio | 3.97 | 3.49 |
The Total Return per year is shown below for years of 5 to 34 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 | -1.48% | 6.41% | 2.22% | 1.20% |
| 2012 | 10 | 0.45% | 9.63% | 4.70% | 4.93% |
| 2007 | 15 | 1.28% | 10.32% | 4.21% | 6.11% |
| 2002 | 20 | 3.28% | 24.56% | 10.39% | 14.17% |
| 1997 | 25 | 18.10% | 20.59% | 10.69% | 9.90% |
| 1992 | 30 | 14.87% | 18.20% | 10.83% | 7.36% |
| 1988 | 34 | 13.01% | 13.04% | 8.33% | 4.70% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 17.50, 23.75 and 29.99. The corresponding 10 year ratios are 30.42, 35.55 and 40.68. The corresponding historical ratios are 10.80, 13.91 and 16.17. The current P/E Ratio is 12.41 based on a stock price of $32.63 and EPS estimate for 2023 of $2.63. The current P/E Ratio is below the low ratio of the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. The 10 year median ratios are high. If a company has problems, the stock price will only go so low if the company still have value. This is high some P/E Ratio get very high.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 14.51, 17.38 and 20.26. The corresponding 10 year ratios are 20.94, 27.21 and 32.38. The current P/AEPS Ratio is 13.00 based on a stock price $32.63 and AEPS estimate for 2023 of $2.51. This ratio is below the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I also have Distributable Cash Flow (DCF) data. The 5-year low, median, and high median Price/DCF per Share Ratios are 7.61, 10.67 and 12.61. The corresponding 10 year ratios are 8.77, 10.74 and 13.59. The current P/DCF Ratio is 7.94 based on a stock price $32.63 and DCF estimate for 2023 of $4.11. This 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 $31.40. The 10-year low, median, and high median Price/Graham Price Ratios are 1.30, 1.84 and 2.20. The current P/GP Ratio is 1.04 based on a stock price of $32.63. 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 2.82. The current ratio is 1.87 based on a stock price of $32.63, Book Value of $3,062M and Book Value per Share of $17.45. The current ratio is 34% 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 9.71. The current P/CF Ratio is 4.42 based on Cash Flow per Share estimate for 2023 of $7.38, Cash Flow of $1,295M, and a stock price of $32.63. The current ratio is 54% below the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 3.33%. The current dividend yield is 4.17% based on Dividends of $1.36 and a stock price of $32.63. The current ratio is 25% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 3.81%. The current dividend yield is 4.17% based on Dividends of $1.36 and a stock price of $32.63. The current ratio is 9% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10-year median Price/Sales (Revenue) Ratio is 0.33. The current P/S Ratio is 0.17 based on a stock price of $32.63, Revenue estimate for 2023 of $33,765M and Revenue per Share of $192.47. The current P/S Ratio is 49% 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 reasonable and may even be cheap. The historical dividend test says the stock price is cheap, but the 10 year dividend yield test says it is reasonable. The P/S Ratio test says the stock price is cheap. Most of the rest of the testing is showing the stock price as cheap.
When I look at analysts’ recommendations, I find Strong Buy (5), Buy (8) and Hold (1). The consensus would be a Strong Buy. The 12 months stock price consensus is $39.50. This implies a total return of 25.22% with 4.17% from dividends and 21.05% from capital gains.
There are mixed reviews on Stock Chase for the company including Buy, Hold and Do Not Buy. The negative seems to be their debt. Stock Chase gives this stock 4 stars out of 5. This company is on the Money Sense list at 96. Adam Othman on Motley Fool thinks you should buy this company for passive income. Christopher Liew on Motley Fool thinks this company is a passive income powerhouse. The company put out a press release on Newswire about their 2022 results. The company put out a press release on Newswire about their results for the first quarter of 2023.
Simply Wall Street via Yahoo Finance. Simply Wall Street listed 3 warnings of Interest payments are not well covered by earnings; large one-off items impacting financial results; and shareholders have been diluted in the past year. Note a reason a company has Adjusted Earnings per Share (AEPS) is because of large on-off items impacting financial results. Simply Wall Street gives this stock 3 stars out of 5.
Parkland Corp is a food and convenience retailer and an independent marketer, distributor, and refiner of fuel and petroleum products. Parkland delivers refined fuels, propane, and other high-quality petroleum products to motorists, businesses, consumers, and wholesale customers across the Americas. Its web site is here Parkland Fuel Corp.
The last stock I wrote about was about was Computer Modelling Group Ltd (TSX-CMG, OTC-CMDXF) ... learn more. The next stock I will write about will be Saputo Inc (TSX-SAP, OTC-SAPIF) ... learn more on Wednesday, June 28, 2023 around 5 pm. Tomorrow on my other blog I will write about My Investment Style.... learn more on Tuesday, June 27, 2023 around 5 pm.
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