Is it a good company at a reasonable price? I do not like the balance sheet for Pizza Pizza Ltd, but the companies are very intertwined, so that the financials could be fine. This stock has never been well followed as I could only ever find one analyst recommendations and that recommendation is a Hold and I can see why. It is one of the few stocks left with monthly dividends and this can be attractive to some investors. The stock price is testing as reasonable.
I do not own this stock of Pizza Pizza Royalty Corp (TSX-PZA, OTC-PZRIF). A number of people have recommended this stock, so I decided to take a look at it. It was on once on John Heinzl's Dividend Hog Portfolio, but has been taken off.
When I was updating my spreadsheet, I noticed what I do not like about this company is the complexity. I must look at both the Pizza Pizza Royalty Corp (PPRC) and Pizza Pizza Limited (PPL). The Pizza Pizza Royalty Corp (PPRC) is the one on the stock market. When you have a great deal of complexity, it is much easier to miss things. It is also easier for the company to do things that you may not like, and it is easy for you to miss something that might be important.
If you had invested in this company in December 2013, for $1,010.80 you would have bought 76 shares at $13.30 per share. In December 2023, after 10 years you would have received $613.07 in dividends. The stock would be worth $1,118.72. Your total return would have been $1,118.72. This would be a total return of 6.86% per year with 1.02% from capital gain and 5.84% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $13.30 | $1,010.80 | 76 | 10 | $613.07 | $1,118.72 | $1,731.79 |
The current dividend yield is high with dividend growth low. The current dividend yield is high (7% and above) at 7.02%. The 5 and 10 year median dividend yields are good (5% to 6% ranges) at 6.45% and 6.15%. The historical median dividend yield is high at 7.18%. The dividend growth is low (below 8% per year) at 0.6% per year over the past 5 years.
Dividends have fluctuation on this stock. Over the past 17 years they have gone up 10 times and down 4 times. Dividends were decreased in 2020, and then in 2022 and 2023 they were increased. The last dividend increase was in 2023 and it was for 3.3%. It is not on any of the dividend stock lists that I follow.
The Dividend Payout Ratios (DPR) are high, but that is basically what they earn money to do, pay dividends. The DPR for 2023 for Earnings per Share (EPS) is high at 92% with 5 year coverage at 93%. The DPR for 2023 for Adjusted Earnings per Share (AEPS) is high at 91% with 5 year coverage at 28%. The DPR for 2023 for Cash Flow per Share (CFPS) is high at 68% with 5 year coverage at 69%. The DPR for 2023 for Free Cash Flow (FCF) is good at 99% with 5 year coverage at 97%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 91.67% | 93.48% |
| AEPS | 89.89% | 90.75% |
| CFPS | 68.29% | 69.42% |
| FCF | 99.29% | 96.86% |
Debt Ratios are good for Pizza Pizza Royality Corp. The Long Term Debt/Market Cap Ratio for 2023 is good at 0.13 and currently at 0.14. The Liquidity Ratio for 2023 is good at 2.91 and 3.09 currently. The Debt Ratio for 2023 is good at 4.86 and 5.01 currently. The Leverage and Debt/Equity Ratios for 2023 are good at 1.77 and 0.36 and currently at 1.81 and 0.36.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term | 0.13 | 0.14 |
| Intang/GW | 0.98 | 1.12 |
| Liquidity | 2.91 | 3.09 |
| Liq. + CF | 5.16 | 5.65 |
| Debt Ratio | 4.86 | 5.01 |
| Leverage | 1.77 | 1.81 |
| D/E Ratio | 0.36 | 0.36 |
Debt Ratios are good for Pizza Pizza Ltd are not good, especially the Liquidity Ratios. The Long Term Debt/Market Cap Ratio for 2023 is high at 0.74 and currently at 0.73. The Liquidity Ratio for 2023 is awful at 0.70 and 0.65 currently. If you added in Cash Flow after dividends, the ratios are still awful at 0.96 and currently at 0.65. The Debt Ratio for 2023 is low at 1.24 and 1.24 currently. The Leverage and Debt/Equity Ratios for 2023 are not good at 2.98 and 2.52 and currently at 2.84 and 2.86.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term | 0.74 | 0.73 |
| Intang/GW | 0.00 | 0.00 |
| Liquidity | 0.70 | 0.65 |
| Liq. + CF | 0.76 | 0.65 |
| Debt Ratio | 1.24 | 1.25 |
| Leverage | 2.98 | 2.84 |
| D/E Ratio | 2.52 | 2.86 |
The Total Return per year is shown below for years of 5 to 18 to the end of 2023. 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. |
|---|---|---|---|---|---|
| 2018 | 5 | 0.56% | 17.74% | 10.46% | 7.27% |
| 2013 | 10 | 1.44% | 6.86% | 1.02% | 5.84% |
| 2008 | 15 | -0.30% | 16.16% | 6.05% | 10.12% |
| 2005 | 18 | 0.78% | 9.37% | 2.17% | 7.20% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 12.32, 14.36 and 16.02. The corresponding 10 year ratios are 13.52, 14.91 and 16.75. The corresponding historical ratios are 12.85, 14.83 and 16.57. The current P/E Ratio is 13.51 based on a stock price of $13.24 and EPS estimate for 2024 of $0.98. The current ratio is below the low ratio 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 11.81, 13.76 and 15.71. The corresponding 10 year ratios are 13.21, 14.57 and 15.93. The current P/AEPS ratio is 13.24 based on a stock price of $13.24 and AEPS estimate for 2024 of $1.00. The current 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 $13.78. The 10-year low, median, and high median Price/Graham Price Ratios are 0.91, 1.01 and 1.11. The current P/GP Ratio is 0.96 based on a stock price of $13.24. 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 10-year median Price/Book Value per Share Ratio of 1.55. The current P/B Ratio is 1.57 based on a Book Value of $207.9M, Book Value per Share of $8.45 and a stock price of $13.24. The current ratio is 1.4% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10-year median Price/Cash Flow per Share Ratio of 11.09. The current P/CF Ratio is 10.27 based on Cash Flow for the last 12 months of $31.7M, Cash Flow per Share of $1.29 and a stock price of $13.24. The current ratio is 7% 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 7.18%. The current dividend yield is 7.02% based on a stock price of $13.24 and dividends of $0.93. The current ratio is 2% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10 year median dividend yield of 6.15%. The current dividend yield is 7.02% based on a stock price of $13.24 and dividends of $0.93. The current ratio is 14% above the 10 year 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 0.56. The current P/S Ratio is 0.50 based on Royality System Sales estimate for 2024 of $650M, Revenue per Share of $26.39 and a stock price of $13.24. The ratio is 10% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
Results of stock price testing is that the stock price is probably reasonable. The dividend yield tests are saying this. What I fine interesting is that the historical median dividend yield is higher than the current yield. However, dividends have been inconsistent, as they have gone down as well as up. The P/S Ratio testing is saying the stock price is reasonable. Most of the other testing is saying the same thing. The interesting thing about the P/E Ratio and P/AEPS Ratio tests is how close the low, median, and high ratios are.
When I look at analysts’ recommendations, I find a Hold (1) recommendation. This stock is not followed much. The consensus 12 month stock price $14.00, based on one value of $14.00. This implies a total return of 12.76% with 5.74% from capital gains and 7.02% from dividends.
There are two Buy recommendations on Stock Chase for this stock. The most recent one, says Buy on Weakness. Stock Chase gives this stock 4 stars out of 5. Rajiv Nanjapla on Motley Fool says this is a stock to help you earn monthly dividends. Joey Frenette on Motley Fool says this stock is great for passive income. The company put out a Press Release on their fourth quarter of 2023 results. The company via Newwsire put out a press release on their first quarter of 2024.
Simply Wall Street has no report out on this stock. Simply Wall Street gives this stock 3 and one half stars out of 5. They have one warning of dividend of 7.02% is not well covered by earnings or cash flows.
Pizza Pizza Royalty Corp through its subsidiary, Pizza Pizza Royalty Limited Partnership, owns and franchises quick-service restaurants under the Pizza Pizza and Pizza 73 brands. It receives the benefit of Pizza Pizza Royalty and Pizza 73 Royalty payable by PPL under the Pizza Pizza License and Royalty Agreement and the Pizza 73 License and Royalty Agreement, respectively, as well as royalty payments under the international agreement, indirectly through its interests in the partnership. Its web site is here Pizza Pizza Royalty Corp.
The last stock I wrote about was about was Canadian Utilities Ltd (TSX-CU, OTC-CDUAF) ... learn more. The next stock I will write about will be HLS Therapeutics Inc (TSX-HLS, OTC-HLTRF) ... learn more on Monday, May 27, 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.
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