
TSE:SPB
This summary was created by AI, based on 4 opinions in the last 12 months.
Superior Plus Corp (SPB-T) operates primarily in the energy sector, dealing with propane and other fuels in Canada and the US, which are highly dependent on weather conditions. The company faces significant volatility, particularly in its propane segment, resulting in a challenging earnings environment. Recent earnings reports have disappointed investors, leading to an 18% drop in stock price and raising questions about management credibility. While the company diversifies its portfolio with a recent acquisition in compressed natural gas and renewable natural gas, it has struggled with operational efficiency and has revised its growth outlook from a projected 10% increase in the US to a decrease of 5%. Over the long term, shareholder returns have been minimal, suggesting that investors might be sacrificing capital appreciation for dividend income, presently yielding around 2.5%.
Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. The revenues were ahead of estimates by 14%. EPS was 40 cents, beating the estimated 33 cents. Q4 showed some income declines however. The acquisition plan backed by Brookfield has not changed. The dip is a buying opportunity. Unlock Premium - Try 5i Free
The company has good businesses. Their problem was the balance sheet. They will be 3 times debt-to-EBITDA. They have more funds for M&A, which could help them make some interesting acquisitions. He likes the distribution and the management team. They just partnered with Brookfield, which gives a strong vote of confidence. Its valuation is reasonable. Not the first place he would put capital, but you would do well if you already own it.
Recently reported earnings for SPB set a first quarter record as the Certarus acquisition is accretive to earnings. The company increased earnings guidance for the year. Net cash flow per share was up 250%. It trades at 16x earnings and under 2x book value and pays a great yield. We recommend a stop-loss at $9, looking to achieve $13 -- upside potential of 23%. Yield 7.0%
(Analysts’ price target is $13.10)