Is it a good company at a reasonable price? I know that this company has not been doing well for a few years, but the stock price is up 16% year to date. Also, EPS is expected to rise 159% in 2025 from 2024 and more importantly, the AEPS is expected to rise 19% in 2025 from 2024. I have not lost faith that this stock will produce a reasonable return for me over time. I currently plan to hold what stock I hold now. Because I live off my dividends, I generally do not have much money to buy stocks, and so I will not be buying more.
I own this stock of Saputo Inc (TSX-SAP, OTC-SAPIF). This was a stock on Mike Higgs' Canadian Dividend Growth Stock list and on the dividend lists that I followed. I bought this stock first in 2006 for my RRSP account. Because I am now taking money from my RRSP accounts, I have been selling this stock because of the low dividend. I still like this stock so I have been buying it in my TFSA. The company has the financial year ending in March 31 each year, so I am looking to March 2024 year end.
When I was updating my spreadsheet, I noticed I have made a total return on this stock of 15.3% per year. I have it in various accounts and in some accounts, I have made a good return and some I have not. I have bought this stock over time, and I have also made some sales of it. I have also moved some it this stock from my RRPS account to my trading account. For example, I have made 16.75% per year in my RRSP Account and I have a loss of 3% per year in my Trading Account.
If you had invested in this company in December 2013, for $1,016.19 you would have bought 42 shares at $24.20 per share. In December 2023, after 10 years you would have received $270.48 in dividends. The stock would be worth $1,126.86. Your total return would have been $1,397.34. This would be a total return of 3.56% per year with 1.04% from capital gain and 2.52% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $24.20 | $1,016.19 | 42 | 10 | $270.48 | $1,126.86 | $1,397.34 |
The current dividend yield is moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 2.38%. The 5 year median dividend yield is moderate at 2.05%. The 10 year and historical median dividend yields are low (below 2%) at 1.59% and 1.74%. The dividends increases are low (below 8% per year) at 2.2% per year for the past 5 years. The last dividend increase was in 2024 and it was for 2.8%.
The Dividend Payout Ratios (DPR) are fine. The DPR for 2023 for Earnings per Share (EPS) is too high at 116% with 5 year coverage at 62%. However, the DPR for AEPS is more important. The DPR for 2023 for Adjusted Earnings per Share (AEPS) is good at 48% with 5 year coverage at 45%. The DPR for 2023 for Cash Flow per Share (CFPS) is good at 20% with 5 year coverage at 21%. The DPR for 2023 for Free Cash Flow (FCF) is fine at 58% with 5 year coverage at 59%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 115.87% | 61.50% |
| AEPS | 47.40% | 45.11% |
| CFPS | 19.98% | 20.76% |
| FCF | 57.68% | 58.52% |
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2023 is good at 0.24 and currently at 0.20. The Liquidity Ratio for 2023 is good at 1.54 and 1.54 currently. The Debt Ratio for 2023 is good at 1.98 and 1.98 currently. The Leverage and Debt/Equity Ratios for 2023 are fine at 2.02 and 1.02 and currently at 2.02 and 1.02.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.24 | 0.20 |
| Intang/GW | 0.38 | 0.32 |
| Liquidity | 1.54 | 1.54 |
| Liq. + CF | 1.82 | 1.91 |
| Debt Ratio | 1.98 | 1.98 |
| Leverage | 2.02 | 2.02 |
| D/E Ratio | 1.02 | 1.02 |
The Total Return per year is shown below for years of 5 to 27 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 | 2.19% | -5.13% | -7.24% | 2.11% |
| 2013 | 10 | 14.74% | 3.56% | 1.04% | 2.52% |
| 2008 | 15 | 6.86% | 9.22% | 6.07% | 3.15% |
| 2003 | 20 | 9.45% | 9.12% | 6.22% | 2.90% |
| 1998 | 25 | 13.62% | 11.20% | 8.19% | 3.01% |
| 1996 | 27 | 12.55% | 9.54% | 7.06% | 2.48% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 26.12, 28.91 and 31.69. The corresponding 10 year ratios are 19.48, 23.33 and 26.79. The corresponding historical ratios are 17.14, 19.59 and 21.78. The current P/E Ratio is 16.81 based on a stock price of $31.13 and EPS estimate for 2025 of $1.63. 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 also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 16.99, 20.38 and 23.79. The corresponding 10 year ratios are 19.68, 22.79 and 25.91. The current P/AEPS Ratio is 16.92 based on a stock price of $31.13 and AEPS estimate for 2025 of $1.84. 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 get a Graham Price of $26.23. The 10-year low, median, and high median Price/Graham Price Ratios are 1.50, 1.78 and 2.06. The current P/GP Ratio is 1.19 based on a stock price of $31.13. 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 2.80. The current P/B Ratio is 1.87 based on a stock price of $31.13, Book Value of $7,050M and Book Value per Share of $16.61. The current ratio is 33% 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 16.41. The current P/CF Ratio is 9.02 based on Cash Flow per Share estimate for 2025 of $3.45, Cash Flow of $1,464M and a stock price of $31.13. The current ratio is 45% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 1.74%. The current dividend yield is 2.38% based on a stock price of $31.13 and dividends of $0.74. The current dividend yield is 37% 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 1.59%. The current dividend yield is 2.38% based on a stock price of $31.13 and dividends of $0.74. The current dividend yield is 49% 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 1.17. The current P/S Ratio is 0.73 based on Revenue estimate for 2025 of $18,109M, Revenue per Share of $42.68 and a stock price of $31.13. The current ratio is 38% 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 testing is saying that the stock price is relatively cheap. This is confirmed by the P/S Ratio test. All the other tests are saying the same thing.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (4), Hold (1) and Underperform (2). The consensus would be a Buy. The 12 month stock price consensus is $33.75 with a high of $39.00 and Low of $24.50. The current consensus of $33.75 implies a total return of 10.79% with 8.42% from capital gains and 2.38% from dividends based on a current stock price of $31.13.
There are 5 entries on Stock Chase with a couple of Holds and a couple of Do Not Buy. However, the corresponding comments are not really negative. Stock Chase gives this stock 3 stars out of 5. Kay Ng on Motley Fool thinks you should be this stock as the dividends will be raised this year. Aditya Raghunath on Motley Fool thinks this stock is undervalued and sells over $30 a share. The company put out a Press Release about their fourth quarter ending in 2024.
Simply Wall Street via Yahoo Finance talks about who owns this company. Simply Wall Street has 4 warnings on this company of has a high level of debt; dividend of 2.39% is not well covered by earnings; large one-off items impacting financial results; and profit margins (1.5%) are lower than last year (3.5%). Simply Wall Street gives this stock 2 and one half stars out of 5.
Saputo is a global dairy processor domiciled in Canada with operations in the United States, the UK, and other international markets. It sells cheese, cream, fluid milk, and other dairy products. Saputo also competes in foodservice and industrials, which houses its ingredients business. Its web site is here Saputo Inc.
The last stock I wrote about was about was Parkland Fuel Corp (TSX-PKI, OTC-PKIUF) ... more. The next stock I will write about will be Empire Company Ltd (TSX-EMP.A, OTC-EMLAF) ... learn more on Monday, July 1, 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