Is it a good company at a reasonable price? This Income Fund is dependent on one client, The Keg Restaurant and little in the way of financial information beyond Revenue, is given for the Keg. I see this as a problem. It is also not followed by analysts as there are no analyst recommendations and no analysts estimates. This is a big negative to me.
I do not own this stock of Keg Royalties Income Fund (TSX-KEG.UN, OTC-KRIUF). This was a stock suggested by one of my readers. I like dinning at The Keg. I find the food very good. At stock forums I viewed, investors liked this company as it is guaranteed 4% of the sales at Keg restaurants as income to the fund. So, I decided to take a look at it.
When I was updating my spreadsheet, I noticed that they had larger earnings this year than in other years because they had a Fair Value Gain on Exchangeable Partnership Units. Other years there were Fair Value Losses on Exchangeable Partnership Units.
If you had invested in this company in December 2013, for $1,002.84 you would have bought 61 shares at $16.44 per share. In December 2023, after 10 years you would have received $626.63 in dividends. The stock would be worth $849.73. Your total return would have been $1,476.36. This would be a total return of 5.04% per year with 1.64% from capital loss and 6.69% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $16.44 | $1,002.84 | 61 | 10 | $626.63 | $849.73 | $1,476.36 |
The current dividend yield is high with dividend growth suspended. The current dividend yield is high (7% and above) at 7.48%. The 5 and 10 year median dividend is good (5% to 6% ranges) at 6.89% and 5.89%. The historical median dividend yield is high at 7.08%. They cut the dividend in 2020, but it is now back to what it was in 2019. The was no increase in 2023 and so far in 2024. There were increases in 2021 and 2022 to get dividend back to where it was in 2019.
For Dividend Payout Ratios (DPR) this company probably can afford to payout all they get in, but no more and current ones are under 100%. The DPR for 2023 for Earnings per Share (EPS) is high at 99% with 5 year coverage far too high at 165%. The DPR for 2023 for Distributable Cash Flow (DCF) is high at 98% with 5 year coverage is far too high at 102%. The DPR for 2023 for Cash Flow per Share (CFPS) is fine at 48% with 5 year coverage at 50%. The DPR for 2023 for Free Cash Flow (FCF) is too high at 99% with 5 year coverage also too high at 100%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 98.80% | 164.97% |
| DCF | 97.98% | 102.35% |
| CFPS | 48.33% | 50.35% |
| FCF | 99.38% | 99.99% |
Debt Ratios are probably fine. The Long Term Debt/Market Cap Ratio for 2023 is fine at 0.93 and currently at 0.89. The Liquidity Ratio for 2023 is good at 1.51 and low at 0.04 currently (due to reclassifying liabilities). If you added in Cash Flow after dividends, the ratios are fine at 1.53 and low at 0.14. The Debt Ratio for 2023 is good at 1.69 and 1.64 currently. The Leverage and Debt/Equity Ratios for 2023 are fine at 2.44 and 1.44 and currently at 2.55 and 1.55.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.93 | 0.89 |
| Intang/GW | 0.75 | 0.76 |
| Liquidity | 1.51 | 0.04 |
| Liq. + CF | 4.32 | 0.14 |
| Debt Ratio | 1.69 | 1.64 |
| Leverage | 2.44 | 2.55 |
| D/E Ratio | 1.44 | 1.55 |
The Total Return per year is shown below for years of 5 to 21 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 | 0.00% | 3.54% | -2.84% | 6.38% |
| 2013 | 10 | 1.69% | 5.04% | -1.64% | 6.69% |
| 2008 | 15 | -0.76% | 18.14% | 5.05% | 13.09% |
| 2003 | 20 | 0.25% | 11.88% | 1.77% | 10.11% |
| 2001 | 21 | 3.60% | 10.89% | 1.52% | 9.37% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 10.16, 14.43 and 15.53. The corresponding 10 year ratios are 15.13, 18.49, and 20.93. The corresponding historical ratios are 10.98, 13.11 and 14.42. The current P/E Ratio is 23.89 based on a stock price of $15.05 and EPS for the last 12 months of $0.63. This P/E Ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $11.26. The 10-year low, median, and high median Price/Graham Price Ratios are 1.18, 1.38 and 1.56. The current P/GP Ratio is 1.34 based on a stock price of $15.05. 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 1.96. The current ratio is 1.68 based on a Book Value of $101.6M, Book Value per Share of $8.95 and a stock price of $15.05. The current ratio is 14% 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 8.54. The current P/CF Ratio is 6.14 based on Cash Flow for the last 12 months of $27.8M, Cash Flow per Share of $2.45 and a stock price of $15.05. The current ratio is 37% 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 7.08%. The current dividend yield is 7.54% based on dividends of $1.135 and a stock price of $15.05. The current dividend is 7% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median dividend yield of 5.89%. The current dividend yield is 7.54% based on dividends of $1.135 and a stock price of $15.05. The current dividend is 28% 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 0.36. The current P/S Ratio is 0.23 based on Revenue for the last 12 months of $734M, Revenue per Share of $64.64 and a stock price of $15.05. The current ratio is 35% 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 but with a caution. Both the 10 year median dividend yield test and the P/S Ratio test says that the stock price is cheap. The P/E test says the stock is expensive, but the rest says cheap to reasonable. I am using values from the last 12 months to the third quarter. There are no estimates by any analysts. There is no recommendation by any analyst. This is very unusual. You have to wonder why this stock is not being followed by anyone.
When I look at analysts’ recommendations, I find that there are 0 analysts following this stock. I looked at a number of sites and none have any analysts’ recommendations.
There is only one analyst on Stock Chase for 2024 and it was a past pick and the analysts also recommends a trailing stop at $13.50. Stock Chase gives this stock 4 stars out of 5. Aditya Raghunath on Motley Fool likes this stock for its dividend. Amy Legate-Wolfe on Motley Fool likes it for a passive dividend stock. The company put out a Press Release on their fourth quarter of 2023. The company put out a Press Release about their third quarter of 2024.
A site I have not been to before called Sure Dividend put out a report on this stock in October 2024. Simply Wall Street via Yahoo Finance reviews this stock. Simply Wall Street put out 4 warnings of earnings have declined by 10.6% per year over past 5 years; interest payments are not well covered by earnings; dividend of 7.49% is not well covered by earnings; and profit margins (13.5%) are lower than last year (69%).
Simply Wall Street gives 4 warnings about this stock of earnings have declined by 10.6% per year over past 5 years; interest payments are not well covered by earnings; dividend of 7.48% is not well covered by earnings; and profit margins (13.5%) are lower than last year (69%). Simply Wall Street does not show stars for this stock.
The Keg Royalties Income Fund is a Canada-based company. The organization works in the Restaurant business sector. Its primary activity is operating and franchising keg steakhouses and bar restaurants in Canada and the United States. The target market of this company is those people who want a higher-end casual dining experience. Its web site is here Keg Royalties Income Fund.
The last stock I wrote about was about was Wild Brain Ltd (TSX-WILD, OTC-WLDBF) ... learn more. The next stock I will write about will be Stantec Inc (TSX-STN, NYSE-STN) ... learn more on Friday, November 29, 2024 around 5 pm. Tomorrow on my other blog I will write about Nature Briefing.... learn more on Thursday, November 28, 2024 around 5 pm.
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