Is it a good company at a reasonable price? This is a consumer stock and a diversified portfolio should include one or more consumer stocks. A lot of people think that this is a great buy at present, but others are more cautious. Mostly, this company has given good returns to its shareholders, depending on when it was bought. A good reason to do your buying of stocks over time and not one big purchase. My testing is showing the stock price as relatively cheap.
I do not own this stock of Premium Brands Holdings Corp (TSX-PBH, OTC-PRBZF). I was looking for another stock to follow and I found this is one of the top stocks in TD Bank's Canadian Equity Fund.
When I was updating my spreadsheet, I noticed that they do not give you the number of outstanding shares except in the millions and I find this annoying. What shareholders earn seems to be rather volatile, with total return for 10 years at 19.86, but for 25 years at 7.66%.
If you had invested in this company in December 2013, for $1,020.15 you would have bought 45 shares at $22.67 per share. In December 2023, after 10 years you would have received $903.15 in dividends. The stock would be worth $4,231.35. Your total return would have been $5,134.50. This would be a total return of 19.86% per year with 15.26% from capital gain and 4.57% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $22.67 | $1,020.15 | 45 | 10 | $903.15 | $4,231.35 | $5,134.50 |
The current dividend yield is moderate with dividend growth moderate. The current dividend yield is moderate (2% to 4% ranges) at 3.54%. The 5 and 10 year median dividend yields are also moderate at 2.66% and 2.68%. The historical median dividend yield is good (5% to 6% ranges) at 5.12% because this company used to be an income trust company. The dividend increases are moderate (8% to 14% per year) at 10.3% per year over the past 5 years. The last dividend increase was in 2024 for it was for 10.4%. It is on the Money Sense list.
The Dividend Payout Ratios (DPR) are fine for AEPS and CFPS. The DPR for 2023 for Earnings per Share (EPS) is too high at 143% with 5 year coverage at 95%. The DPR for 2023 for Free Cash Flow (FCF- Company’s calculation) is fine at 75% with 5 year coverage at 65%. The DPR for 2023 for Adjusted Earnings per Share (AEPS) is fine at 28% with 5 year coverage at 28%. The DPR for 2023 for Cash Flow per Share (CFPS) is fine at 41% with 5 year coverage at 137%. The DPR for 2023 for Free Cash Flow (FCF - MS) far too high at 396% with 5 year coverage at 1580%. The FCF calculation here has lots of negative FCF and that is why the high ratios.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 142.65% | 94.89% |
| FCF Co. | 52.81% | 44.83% |
| AEPS | 74.69% | 64.56% |
| CFPS | 41.35% | 36.61% |
| FCF | 395.29% | 1580.42% |
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2023 is good at 0.36 and currently at 0.35. The Liquidity Ratio for 2023 is good at 2.08 and 2.49 currently. The Debt Ratio for 2023 is good at 1.77 and 1.79 currently. The Leverage and Debt/Equity Ratios for 2023 are fine at 2.92 and 1.65 and currently at 2.88 and 1.61.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.36 | 0.35 |
| Intang/GW | 0.33 | 0.21 |
| Liquidity | 2.08 | 2.49 |
| Liq. + CF | 2.55 | 2.77 |
| Debt Ratio | 1.77 | 1.79 |
| Leverage | 2.92 | 2.88 |
| D/E Ratio | 1.65 | 1.61 |
The Total Return per year is shown below for years of 5 to 28 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 | 10.28% | 7.69% | 4.67% | 3.03% |
| 2013 | 10 | 9.51% | 19.86% | 15.29% | 4.57% |
| 2008 | 15 | 5.90% | 25.94% | 17.87% | 8.06% |
| 2003 | 20 | 5.36% | 19.09% | 12.70% | 6.38% |
| 1998 | 25 | 7.66% | 5.58% | 2.08% | |
| 1995 | 28 | 13.26% | 10.33% | 2.93% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 30.24, 38.97 and 44.91. The corresponding 10 year ratios are 29.92, 37.51 and 43.38. The corresponding historical ratios are 19.15, 22.65 and 25.65. The current P/E Ratio is 29.30 based on a stock price of $96.11 and EPS estimate for 2024 of $3.28. The current ratio is below the low ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap. The ratios are rather high, but this happens when a company is earning less, the Price for the stock will only go so low.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 20.87, 25.348 and 29.59. The corresponding 10 year ratios are 19.98, 25.05 and 29.19. The current ratio is 19.57 based on a stock price of $96.11 and AEPS estimate for 2024 of $4.91. The current ratio is below the low ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I also have Free Cash Flow per Share (FCF) data from the company. The 5-year low, median, and high median Price/Free Cash Flow per Share Ratios are 14.25, 17.21 and 19.79. The corresponding 10 year ratios are 13.27, 17.10 and 19.76. The current ratio is 17.60 based on stock price of $96.11 and FCF for 2024 of $5.46. 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.
I get a Graham Price of $70.09. The 10-year low, median, and high median Price/Graham Price Ratios are 1.09, 1.42 and 1.70. The current ratio is 1.37 based on a stock price of $96.11. 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 2.82. The current P/B Ratio is 2.40 based on a Book Value of $1,784M, Book Value per Share of $39.98 and a stock price of $96.11. The current ratio is 15% below the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I also have Book Value per Share estimate for 2024 of $40.30. This implies a ratio of 2.38 based on a stock price of $96.11 and Book Value of $1799M. This ratio is 15% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10-year median Price/Cash Flow per Share Ratio of 21.35. The current P/CF Ratio is 15.38 based on Cash Flow per Share estimate for 2024 of $6.25, Cash Flow of $278.9M and a stock price of $96.11. The current ratio is 28% 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 5.50%. The current dividend yield is 3.54% based on a stock price of $96.11 and dividends of $3.40. The current dividend yield is 36% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. However, this company used to be an income trust which can have very high dividends. So, I will look at the 10 year median dividend yield tests as the valid one.
I get a 10 year median dividend yield of 2.68%. The current dividend yield is 3.54% based on a stock price of $96.11 and dividends of $3.40. The current dividend yield is 32% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
The 10-year median Price/Sales (Revenue) Ratio is 0.86. The current P/S Ratio is 0.64 based on Revenue estimate for 2024 of $6,689M, Revenue per Share of $149.88 and a stock price of $96.11. The current ratio is 26% 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 10 year dividend yield test says this and it is confirmed by the P/S Ratio test. Most of the rest of the testing is saying the stock price is cheap or reasonable.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (4) and Hold (3). The consensus would be a Buy. The 12 months stock price consensus is $112.20, with a high of $130.00 and low of $101.00. The consensus price of $112.20 implies a total return of 20.28% with 16.74% from capital gains and 3.54% from dividends based on a stock price of $96.11.
There are 2 entries on Stock Chase for 2024, with a buy and a wait (not right time to buy). Stock Chase gives this stock 4 stars out of 5. Amy Legate-Wolfe on Motley Fool says to buy this cheap hold forever stock. Kay Ng on Motley Fool says consumer stocks are part of a diversified portfolio and this is a good stock to consider now. The company put out a press release via Newswire about their results for 2023. The company put out a press release via Newswire about their first quarter of 2024.
Simply Wall Street via Yahoo Finance reviews this company. They have 3 warnings of interest payments are not well covered by earnings; dividend of 3.61% is not well covered by earnings or cash flows; and profit margins (1.5%) are lower than last year (2.3%). Simply Wall Street gives this stock 2 and one half stars out of 5.
Premium Brands Holdings Corp is engaged in specialty food manufacturing, premium food distribution, and wholesale businesses with operations in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Nevada, and Washington State. Its web site is here Premium Brands Holdings Corp.
The last stock I wrote about was about was Empire Company Ltd (TSX-EMP.A, OTC-EMLAF) ... learn more. The next stock I will write about will be Jamieson Wellness Inc (TSX-JWEL, OTC-JWLLF) ... learn more on Friday, July 5, 2024 around 5 pm. Tomorrow on my other blog I will write about Something to Buy July 2024.... learn more on Thursday, July 4, 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.
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