Is it a good company at a reasonable price? Basically, I do not like the structure of this company and I do not feel I get enough information on Kruger Products on which KP Issue Inc is totally dependent on. Personally, I would not buy this stock. Also, I do like dividend growth companies and this company is not growing its dividends and analysts do not expect this to happen anytime soon. However, what testing I can do, does show that the stock price is relatively cheap.
I do not own this stock of KP Tissue Inc (TSX-KPT, OTC-KPTSF). This was a stock suggested by a speaker at the Ellen's Investment Club.
When I was updating my spreadsheet, I noticed there is lots of complexity in analyzing this stock and I would not buy it for that reason. I do not like this set up. KP Tissue owns a percentage of Kruger Products. The problem is that percentage changes every year. Also, the number of shares outstanding changes each year. This makes looking at this stock complex and I do not like complexity. It is obvious that Kruger Products had an earnings loss in 2022. KP Tissue has mostly negative income and negative EPS, so it should not be paying a dividend. Although it is getting extra money from Kruger Products to pay the dividends and that is why they can pay dividends. Will this continue?
The current dividend yield is high with dividend growth non-existent. The current dividend yield is high (7% and higher) at 7.96%. The 5, 10 and historical median dividend yields are good (5% to 6% ranges) at 6.72%, 5.97% and 5.97%. Dividends have been paid for 9 years. Except for the first dividend, the dividends have been flat.
The Dividend Payout is made from Investing Cash Flow. Looking at the using metrics of DPR for 2022 for Earnings per Share (EPS), the DPR for 2022 for Cash Flow per Share (CFPS) and the for 2022 for Free Cash Flow (FCF) the dividends are not covered. Mostly EPS has been negative, there is no Cash Flow from operations and little in the way of Free Cash Flow. However, from Kruger Products this company gets a Partnership Unit distribution (going into Cash Flow from Investing), and this is used to pay the dividends.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 0.00% | 0.00% |
| CFPS | 0.00% | 0.00% |
| FCF | 0.00% | 0.00% |
Debt Ratios are fine, but Kruger Products could improve. KP Tissue Inc. does not have much in the way of debt. However, it is Debt Ratios for Kruger Products that really count. They do not give full financials for Kruger Products. However, the year end and current Debt Ratios are 1.28 and 1.37. These are low and I prefer them to be at 1.50 and above. However, all their Debt Ratios since 2011 have been below 1.50.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.00 | 0.00 |
| Intang/GW | 0.00 | 0.00 |
| Liquidity | 1.21 | 1.23 |
| Liq. + CF | 0.26 | 0.26 |
| Debt Ratio | 10.64 | 9.98 |
| Leverage | 1.10 | 1.11 |
| D/E Ratio | 0.10 | 0.11 |
The Total Return per year is shown below for years of 5 to 10 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 | 0.00% | 1.07% | -4.99% | 6.07% |
| 2012 | 10 | -8.61% | -0.07% | -5.30% | 5.23% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are all negative and useless. The corresponding 10 year ratios are also negative and useless. The corresponding historical ratios are negative and useless. You cannot do P/E Ratio testing if the company has no earnings. Analyst expect a positive result in 2024
I get a Graham Price of $9.24 for 2024. This stock has had positive earnings in only 2 years of the past 10 years. Since the earnings is part of the Graham Price calculation and this calculation only works for positive earnings, there is no P/GP Ratio to compare this too. The P/GP Ratio for 2024 is 0.98, which implies that the stock price is a reasonable one.
I get a 10-year median Price/Book Value per Share Ratio of 1.03. The current P/B Ratio is 1.07 based on a stock price of $9.05, Book Value of $83.8M and a Book Value per share of $8.43. The current ratio is 4% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I also have a Book Value per Share estimate for 2023 of $8.44. This implies a Book Value of $83.9M and a P/B Ratio of 1.07 based on a stock price of $9.05. This ratio is 4% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I cannot do any Price/Cash Flow per Share Ratio testing as this stock has no operating cash Flow.
I get a 10 year and historical median dividend yield of 5.97%. The current dividend yield is $7.96% based on dividends of $0.72 and a stock price of $9.05. The current yield is 33% 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 0.08. The current P/S Ratio is 0.07 based on Revenue estimate for 2023 of $1875M, Revenue per Share of $188.32 and a stock price of $9.05. The current ratio is 43% 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 median dividend test says this. It is confirmed by the P/S Ratio test. The only other test I can do is the Price Book Value test and this says that the stock price is reasonable but above the median.
When I look at analysts’ recommendations, I find Hold (4) recommendations. The consensus would be a Hold. The 12 month stock price is $10.88 with high of $11.00 and low of $10.50. The target price of $10.88 implies a total return of 28.18% with 20.22% from capital gains and 7.96% from dividends. This is a high possible return, yet all the analysts say Hold.
There is only one recommendation on Stock Chase for 2023 and it is a Do Not Buy. The analyst is not impressed by the fundamentals and says the balance sheet has been contracting for several years. Stock Chase gives this stock 3 stars out of 5. Joey Frenette on Motley Fool likes this stock for the 7% dividend. Joey Frenette on Motley Fool says this stock is a sleeper pick for passive income. The company put out a press release on Newswire about their results for 2022. The company put out a press release on Newswire /a> about their third quarter of 2023 results.
Simply Wall Street put out a report via Yahoo Finance for this company. Simply Wall Street has two warnings on this stock of makes less than USD$1m in revenue (CA$0); and does not have a meaningful market cap (CA$90M). Simply Wall Street gives this stock 3 and one half stars out of 5.
KP Tissue Inc operates as a holding company. The firm produces, distributes, markets, and sells a range of disposable tissue products in North America. It offers bathroom and facial tissues, paper towels, paper towels, and napkins, as well as disposable wiping products and washroom dispensing systems. Its web site is here KP Tissue Inc.
The last stock I wrote about was about was Maple Leaf Foods Inc (TSX-MFI, OTC-MLFNF) ... learn more. The next stock I will write about will be Agnico Eagle Mines Ltd (TSX-AEM, NYSE-AEM) ... learn more on Wednesday, December 27, 2023 around 5 pm. Today on my other blog I will write about Stock Market Books .... learn more on Tuesday, December 26 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. I am not a licensed professional investment advisor. 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.
See my site for an index to these blog entries and for stocks followed. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
No comments:
Post a Comment