Thoughts on Andrew Peller?

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Hello,

Just wondering what your thoughts are on Andrew Peller (ADW.A.TO) at the current price and with the state of COVID? The dividend yield isn’t too impressive but is it safe at least? Is the outlook good for the company?

Thanks

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Asked on January 9, 2021 10:30 am
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Of note, I'm a shareholder of Andrew Peller. Although, I bought the stock at much more expensive levels (in the $13 range.)

The dividend shows no signs of an impending cut, or even a slowing of growth. The company has a payout ratio of 28% of trailing 12 month earnings and even better, 18.90% of free cash flows. I fully expect the company to continue paying, and increasing the dividend in the future.

The company has a very solid balance sheet, with a current ratio of nearly 2 (indicated it can cover its short term cash obligations handily).

They've had some pretty solid growth all things considered in 2020. Revenue has stayed relatively flat, but they've driven strong earnings growth. The company states that although consumer sales were way higher in 2020, it was offset by the lack of restaurant and commercial sales due to the shutdowns.

To be honest, the company is fairly attractive right now as a defensive option. COVID has caused it to struggle in the commercial sales aspect, but if we were to strip that out, Andrew Peller performs well in poor economies (as you can see by increasing consumer sales despite the economic conditions this year).

It's cheap. In fact, if we look to historical numbers, it's very cheap. It is trading at a 52% discount to its typical trailing price to earnings, a 16% discount to its typical price to sales and a 35% discount to its typical forward price to earnings (all over the last 5 years.)

Don't expect to see huge growth out of the company moving forward in terms of revenue and earnings. However, could be a strong value play right now. And, it's one you can be patient with as it provides a pretty decent dividend and a 15 year growth streak.

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Posted by Dan Kent
Answered on January 9, 2021 6:43 pm