The Company in a Nutshell
- LAS is a rare Canadian opportunity in the consumer staple sector.
- Its focus on “healthier” beverages ensures future growth in the years to come.
- LAS turned 100 years old in 2018. Yet, it’s still managed by the Lassonde family and successfully grown through acquisitions over the past decades.
- Download PDF format (Last reviewed: Nov 11th 2019)
|PRO Rating||3||Dividend Yield||1.64%|
|Dividend Safety||3||Dividend Growth Since||N/A|
|DDM Valuation||-32.88%||Dividend Frequency||Quarterly|
Lassonde Industries, Inc is a Canadian company, engaged in the development, manufacturing and marketing of ready-to-drink fruit and vegetable juices and drinks. It also acts as a producer of store brand shelf-stable fruit juices and drinks in the United States and a major producer of cranberry sauces. The company operates through the single segment being the Development, manufacturing, and marketing of ready-to-drink fruit and vegetable juices and drinks and of specialty food products. Lassonde has its presence in Canada and the United States. It earns the majority of the revenue the United States.
|General Information||GE Data|
|Expected Earnings Date||N/A|
|Next ex-dvd date||N/A|
Lassonde’s wide variety of brands enables it to occupy an important space in grocery stores. There aren’t many consumer products in Canada with such great metrics. LAS will continue to surf on many healthy products and to generate enough cash flow for future acquisitions. LAS recently completed a cost reduction program which should result in margin expansion. Lassonde shares price tumbled during the second half of 2018. Earnings are under lots of pressure. Higher transportations cost in the U.S. is hurting the company’s margins. Revenue growth has been mostly supported by currency tailwinds and the acquisition of OBB. This looks like a great opportunity, but shareholders must remain patient.
|5-Yr Rev. Growth:||7.28%|
|5-Yr EPS Growth:||9.89%|
|5-Yr Div Growth:||10.29%|
Lassonde is battling against major brands, such as Minute Maid (Coca-Cola), with larger budgets. This could affect its sales over the long run as it can’t really compete fairly with them. The fact LAS.A has entered more significantly into the US market shows management isn’t afraid of competing, but this confidence could penalize them if it becomes arrogance. Higher transportation costs will hurt Lassonde’s margin and make them less competitive. Since the dividend is paid according to EPS fluctuations, it will fluctuate each year.
|Financial Debt to EBITDA (TTM)||1.87|
|Current Ratio (Quarterly)||1.64|
|Free Cash Flow (Quarterly)($B)||0.065|
Dividend Growth Perspective
After additional digging, I realized that on page 12 of their latest Annual Management’s Discussion and Analysis, it states the company aims at paying 25% of its EPS from last year in dividend. What I considered to be a general rule, more like a goal, was in fact a rule set in stone. This is why the company reduced its dividend to respect the 25% of 2018 EPS. What seems to be continuous dividend increases over the past 10 years was in fact a variable dividend paid in line with EPS fluctuations.
|Payout Ratio (%)||25.04%|
|Cash Payout Ratio (%)||17.88%|
|Enter Expected Dividend Growth Rate Years 1-10:||8.00%|
|Enter Expected Terminal Dividend Growth Rate:||6.00%|
|Calculated Intrinsic Value OUTPUT 15-Cell Matrix||Metric2||Metric3||Metric4|
|Discount Rate (Horizontal)||Discount Rate (Horizontal)||Discount Rate (Horizontal)|
|Margin of Safety||8.00%||9.00%||10.00%|
|Market Cap ($)||1B|
|Price to Book Ratio||1.48|
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- Dividend triangle chart is updated every 6 months.
- All other metrics are updated every 5 minutes (price) or weekly.
- The PDF format includes only comments (no metrics) and are reviewed every 6 months.