Is it a good company at a reasonable price? I agree with Money Sense in putting this stock on a list of good dividend stocks. I do think it has a future as a dividend growth stock. I am not buying it as I cannot buy all the stock I follow as I follow currently 153. Results of stock price testing is that the stock price is probably cheap.
I do not own this stock of Sleep Country Canada Holdings Inc (TSX-ZZZ, OTC-SCCAF). This is a new following for 2023. I also need to find 3 more stocks to follow because of stock I followed being taken over last year. I got this stock using the Stock Screener of G&M to look for a Canadian Dividend Paying Stock. I also noticed this stock was on the Money Sense List and the Maple Money List.
When I was updating my spreadsheet, I noticed they suspended their dividends for the second quarter of 2020 and the stock price crashed. The company was worried about covid lockdowns and they did not pay their second and third dividends in 2020 and the stock crashed. I can see a concern, no one knew what was going to happen. However, people who invest for dividends can be unforgiving to companies that cut dividends, and this is probably why this stock crashed.
If you had invested in this company in July 2015 when this company was first issued, for $1,001.30 you would have bought 62 shares at $16.15 per share. In December 2022, after 8 years you would have received $300.70 in dividends. The stock would be worth $1,424.76. Your total return would have been $1,725.48. This is a total return would be a total return of 7.63% per year with 4.51% from capital gain and 3.12% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $16.15 | $1,001.30 | 62 | 8 | $300.70 | $1,424.76 | $1,725.46 |
The current dividend yield is moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 3.59%. The 5, 7 year median dividend yields are also moderate at 2.56% and 2.30%. the dividend increases have been low (below 8%) at 4.9% per year over the past 5 years.
The Dividend Payout Ratios (DPR) are fine. The DPR for 2022 for Earnings per Share (EPS) are too high with current DPR at 8512% but with 5 year coverage at 264%, but the DPR for AEPS and CFPS are what matters here. The DPR for 2022 for Adjusted Earnings per Share (AEPS) is good at 30% with 5 year coverage at 33%. The DPR for 2022 for Cash Flow per Share (CFPS) is good with current DPR 16% and with 5 year coverage at 19%. The DPR for 2022 for Free Cash Flow (FCF) is too fine at 67% with 5 year coverage at 22%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 8512.00% | 264.44% |
| AEPS | 29.89% | 32.74% |
| CFPS | 16.15% | 17.74% |
| FCF | 66.83% | 22.48% |
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2022 is good at 0.12 and currently at 0.15. The Liquidity Ratio for 2022 is low at 1.05 and 0.90 currently. If you added in Cash Flow after dividends, the ratios are better at 1.74 and 1.40. I prefer this ratio to be 1.50 or higher. The Debt Ratio for 2022 is good at 1.70 and 1.69 currently. The Leverage and Debt/Equity Ratios for 2022 are fine at 2.48 and 1.46 and currently at 2.48 and 1.47
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.12 | 0.15 |
| Intang/GW | 0.61 | 0.62 |
| Liquidity | 1.05 | 0.90 |
| Liq. + CF | 1.74 | 1.40 |
| Debt Ratio | 1.70 | 1.69 |
| Leverage | 2.48 | 2.48 |
| D/E Ratio | 1.46 | 1.47 |
The Total Return per year is shown below for years of 5 to 8 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 | 4.94% | -4.76% | -7.21% | 2.45% |
| 2014 | 8 | 7.09% | 7.63% | 4.51% | 3.12% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 10.84, 13.43 and 16.09. The corresponding 8 year ratios are 11.30, 13.70 and 16.61. The current P/E Ratio is 9.85 based on a stock price of $25.80 and EPS estimate for 2023 of $2.62. The current ratio is below the low ratios of the 8 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I also have Adjusted Earnings per Share (AEPS). The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 9.77, 12.58 and 14.19. The corresponding 8 year ratios are 11.16, 14.40 and 17.21. The current P/E Ratio is 12.34 based on a stock price of $25.80 and EPS estimate for 2023 of $2.09. The current ratio is between the low ratio and median ratio of the of the 8 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $24.40. The 8-year low, median, and high median Price/Graham Price Ratios are 1.02, 1.30 and 1.60. The current P/GP Ratio is 1.06 based on a stock price of $25.80. The current ratio is between the low ratio and median ratio of the of the 8 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an 8-year median Price/Book Value per Share Ratio of 2.74. The current P/B Ratio is 2.04 based on a stock price of $25.80, Book Value of $439M and Book Value per Share $12.66. The current ratio is 26% below the 8 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I also I have a Book Value per Share estimate of $12.30 for 2023. This implies a P/B Ratio is 2.10 based on a stock price of $25.80 and Book Value of $426M. The current ratio is 23% below the 8 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get an 8-year median Price/Cash Flow per Share Ratio of 7.86. The current ratio is 6.97 based on a stock price of $25.80, Cash Flow per Share estimate of $3.70 and Cash Flow $128M. The current ratio is 11% below the 8 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an 8 year and historical median dividend yield of 2.30%. The current dividend yield is 3.59% based on dividends of $0.93 and a stock price of $25.80. The current yield is 56% above the 8 year and historical median dividend yield. This stock price testing suggests that the stock price is cheap.
The 8-year median Price/Sales (Revenue) Ratio is 1.33. The current P/S Ratio is 0.96 based on Revenue estimate of $927M, Revenue per Share of $26.76 and a stock price of $25.80. The current ratio is 28% below the 8 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 testing says that the stock price is relatively cheap. This is confirmed by the P/S Ratio test. The other tests are saying that the stock price is either cheap or reasonable and below the median
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (3) and Hold (2). The consensus is Strong Buy. The 12 month stock price is $27.17 with a high of $29.00 and low of $24.00. The stock price of $27.17 implies a total return of $8.98% with 5.31% from capital gains and 3.67% from dividends.
The latest recommendation on Stock Chase was in 2021 and it was a Do Not Buy. Stock Chase gives this stock 1 star out of 5. This stock is on the Money Sense and Maple Money dividend stock lists. Amy Legate-Wolfe on Motley Fool says this is a favourite stock. Aditya Raghunath on Motley Fool thinks this stock is cheap and now is the time to buy. The company put out a press release on Newswire about their annual results for 2022. The company put out a press release on Newswire about their third quarter of 2023 results.
Simply Wall Street via Yahoo Finance says this stock is selling close to its fair value of $27.62. Simply Wall Street gives this stock 3 and one half stars out of 5. They have two warnings of unstable dividend track record; and significant insider selling over the past 3 months.
Sleep Country Canada Holdings Inc is engaged in the retail of mattresses. It operates in the retail marketplace, offering mattresses and bedding-related products. The company operates in three segments Sleep Country/Dormez-vous, Endy, and Hush. The company operates only in Canada. Its web site is here Sleep Country Canada Holdings Inc.
The last stock I wrote about was about was Agnico Eagle Mines Ltd (TSX-AEM, NYSE-AEM) ... learn more. The next stock I will write about will be Metro Inc (TSX-MRU, OTC-MTRAF) ... learn more on Tuesday, January 2, 2024 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