Is it a good company at a reasonable price? This company has done well for its shareholders in the past. It has had a couple of bad years but analysts do think that it will recover nicely. It has been increasing its dividends every year for the past 12 years. Results of stock price testing is that the stock price is probably cheap, so it is selling at a reasonable price.
I do not own this stock of Andrew Peller Ltd (TSX-ADW.A, OTC-ADWPF). This stock was on Mike Higgs' dividend growth stock list. I owned this stock as Andres Wines Ltd between 1996 and 2000. When I held this stock, it was called Andres Wines Ltd.
When I was updating my spreadsheet, I noticed that this company has not done well over the past couple of years. They had an earnings loss in the year ending March 2023 and so I cannot calculate growth per year as excel does not handle negative figures well. (N/C means non-calculable.)
| Year | Item | Tot. Growth | Per Year |
|---|---|---|---|
| 5 | Revenue Growth | 5.01% | 0.98% |
| 5 | AEPS Growth | -103.71% | N/C |
| 5 | Net Income Growth | -111.13% | N/C |
| 5 | Cash Flow Growth | -36.75% | -8.76% |
| 5 | Dividend Growth | 39.93% | 6.95% |
| 5 | Stock Price Growth | -68.01% | -20.38% |
| 10 | Revenue Growth | 32.16% | 2.83% |
| 10 | AEPS Growth | -107.27% | N/C |
| 10 | Net Income Growth | -122.71% | N/C |
| 10 | Cash Flow Growth | 3.22% | 0.32% |
| 10 | Dividend Growth | 105.00% | 7.44% |
| 10 | Stock Price Growth | 48.22% | 4.01% |
If you had invested in this company in December 2012, for $1,003.27 you would have bought 298 shares at $3.37 per share. In December 2022, after 10 years you would have received $554.79 in dividends. The stock would be worth $1,487.85. Your total return would have been $2,041.81. This is a total return would be 8.50% per year with 4.01% from capital gains and 4.49% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $3.37 | $1,003.27 | 298 | 10 | $554.79 | $1,487.02 | $2,041.81 |
The current dividend yield is good with dividend growth low. The current dividend yield is good (5% to 6% ranges) at 5.97%. The 5, 10 and historical dividend yields are moderate (2% to 4% ranges) at 2.26%, 2.15% and 3.59%. The dividend growth is low (below 8% per year) at 7% per year over the past 5 years. The last dividend increase was in 2022 and it was for 9%.
The Dividend Payout Ratios (DPR) are awful when compared to current earnings, but coverage over the last 5 years is fine. The DPR for Earnings per Share (EPS) for 2023 is negative because of an earnings loss. The 5 year coverage is at 59% and is fine. The DPR for Adjusted Earnings per Share for 2023 of negative because of an earnings loss. The 5 year coverage is 56% and fine. The DPR for 2023 for Cash Flow per Share (CFPS) for 2022 is 24% with5 year coverage at 21.95%. The DPR for Free Cash Flow (FCF) for 2023 is negative because of a negative FCF. The 5 year coverage is 184%. A continuing problem with FCF is that few sites agree on what it is.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | -316.77% | 59.29% |
| AEPS | -984.00% | 55.53% |
| CFPS | 24.24% | 21.95% |
| FCF | -139.36% | 184.03% |
Debt Ratios are fine or I expect that they will be in the future. The Long Term Debt/Market Cap Ratios are too high at 1.03 at year end and 1.15 now. When this ratio is over 1.00, it means that the debt is higher than the stocks value. However, I expect this to change as the stock price moves up. The Liquidity Ratio is very good at 4.11 when a goo ratio is 1.50 or higher. The Debt Ratio is also good at 1.81. The Leverage and Debt/Equity Ratios are fine at 2.23 and 1.23.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 1.03 | 1.15 |
| Intang/GW | 0.48 | 0.53 |
| Liquidity | 4.11 | 4.11 |
| Liq. + CF | 4.17 | 4.17 |
| Debt Ratio | 1.81 | 1.81 |
| Leverage | 2.23 | 2.23 |
| D/E Ratio | 1.23 | 1.23 |
The Total Return per year is shown below for years of 5 to 38 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 | 6.95% | -17.99% | -20.38% | 2.39% |
| 2012 | 10 | 7.44% | 8.50% | 4.01% | 4.49% |
| 2007 | 15 | 6.18% | 7.10% | 3.16% | 3.94% |
| 2002 | 20 | 6.36% | 9.41% | 5.07% | 4.35% |
| 1997 | 25 | 5.06% | 5.79% | 2.60% | 3.19% |
| 1992 | 30 | 4.46% | 9.38% | 4.25% | 5.13% |
| 1987 | 35 | 3.81% | 9.38% | 4.23% | 5.14% |
| 1984 | 38 | 7.63% | 3.62% | 4.01% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 11.86, 19.44 and 27.49. The corresponding 10 year ratios are 11.98, 16.96 and 21.21. The corresponding historical ratios are 11.45, 13.26 and 14.76. The current P/E Ratio is 22.05 based on a stock price of $4.19 and EPS estimate for 2024 of $0.19. The current ratio is above the high of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
However, the EPS estimate for 2025 is $0.32. This give us a P/E Ratio of 13.02 and 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 go here because in 2023 the company had an earnings loss and so the estimate EPS for 2024 is low at $0.19.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 12.21, 16.56 and 23.42. The corresponding 10 year ratios are 12.79, 16.74 and 21.63. The current P/AEPS Ratio is 22.05 based on AEPS estimate for 2024 of $0.19. This ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.
With the 2025 AEPS estimate at 13.09, you have again a ratio between the median and low ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $5.01. The 10-year low, median, and high median Price/Graham Price Ratios are 0.99, 1.33 and 1.67. The current P/GP Ratio is 0.84 based on a stock price of $4.19. This 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 1.71. The current P/B Ratio is 0.71 based on a stock price of $14.19, Book Value of $253.6M and Book Value per Share of $5.87. The current ratio is 58% 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 14.51. The current P/CF Ratio is 13.16 based on Cash Flow for the last 12 months of $13.8M, Cash Flow per Share of $0.32 and a stock price of $4.19. The current ratio is 9% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 3.59%. The current dividend yield is 5.87% based on a stock price of $4.19 and dividends of $0.246. The current dividend yield is 64% above the historical dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 2.15%. The current dividend yield is 5.87% based on a stock price of $4.19 and dividends of $0.246. The current dividend yield is 173% above the historical dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10-year median Price/Sales (Revenue) Ratio is 1.05. The current P/S Ratio is 0.46 based on Revenue estimate for 2024 of $390M, Revenue per Share of $9.03 and a stock price of $4.19. The current ratio is 56% 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 dividend yield tests are saying this and it is confirmed by the P/S Ratio testing. The P/GP Ratio, P/B Ratio and P/CF Ratio tests all say stock is relatively cheap. When earnings losses are involved, the P/E Ratio tests tend not to be reliable tests.
When I look at analysts’ recommendations, I find a Strong Buy (1). The consensus would be a Strong Buy. The 12 months stock price is $8.00. This implies a total return of 96.80% with 90.93% from capital gains and 5.87% from dividends. This is what a couple of sites say. Yahoo Finance says there are only Buy (2) recommendations which gives a consensus of a Buy. The 12 month stock price consensus here is still $8.00 and a 96.80% return.
The analysts writing in 2023 on Stock Chase says that the stock was hit hard by the pandemic. Stock Chase gives this stock 3 stars out of 5. Daniel Da Costa on Motley Fool thinks you should buy this ultra cheap consumer stock. An article this year on Globe Newswire via Yahoo Finance says the company agrees with a recent Deliotte Study that Ontario’s wine industry will be key driver of economic growth and job creation for the Niagara Region. The company put out a Press Release on their fourth quarter ending March 2023.
Simply Wall Street via Yahoo Finance talk about recent insider buying. Simply Wall Street has 3 warnings on this stock of interest payments are not well covered by earnings; earnings have declined by 26.1% per year over past 5 years; and dividend of 5.99% is not well covered by earnings or cash flows. Simply Wall Street gives this stock 2 and one half stars out of 5.
Andrew Peller Ltd is a wine producing company. It is engaged in the production and marketing of wine and spirit products in Canada. The Company owns and operates over 100 well-positioned independent retail locations in Ontario under The Wine Shop, Wine Country Vintners, and Wine Country Merchants store. Its web site is here Andrew Peller Ltd .
The last stock I wrote about was about was BlackBerry Ltd (TSX-BB, NYSE-BB) ... learn more. The next stock I will write about will be Evertz Technologies Ltd (TSX-ET, OTC-EVTZF) ... learn more on Monday, August 7, 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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