Superior Plus Corp T.SPB

5i Research comments

[Specific]

• Superior Plus Corp. (SPB)

Q: Can you please provide your current assessment of Superior Propane (SPB)? I have been invested for about 3 years and am down close to 50% and it continues to follow its trend of decreasing stock price ever since I owned it. Did I miss one of your fundamental reasons to sell and do I now consider holding for purposes of income, if you think it has hit a floor and has no further growth prospect? Thanks again - John C

Upvote7

 October 17, 2024

 

5i Research Answer:

SPB has been very disappointing. We do wonder if Brookfield is going to backstop it with a takeover at some point. 12-month operating cash flow was $312M and dividends were $147M. From an operational standpoint the dividend looks OK. But the company did spend $172M on fixed and other assets in the last 12 months, so free cash flow is low. With a 9.7% yield, investors are concerned on the dividend. The dividend was cut in 2011, but has not been cut since; it was last raised in 2014. Earnings and acquisitions will remain the catalysts here. Consensus calls for EPS to more than double in 2025. For that reason, we would still give it a HOLD, but would put it 'on watch' to ensure execution of this expected growth. Its last quarter was not great and it has missed estimates in six of the past seven quarters, and this is one of its issues with investors, of course. It is hard to call a floor, but if there is no change the dividend we would expect some yield buyers to start supporting it soon. 

• Superior Plus Corp. (SPB)

Q: Do you think spb has bottomed, or do you speculate that further downside will prevail due to tax loss selling?

I have a half position near current sp. What do you think about adding a little bit now, or wait for a further dip in the next 2 months, or simply just hold.

Thank you

Undo Upvote2

 October 17, 2024

 

5i Research Answer:

We have SPB comments posted from this morning. It may see some tax loss selling, but we think yield buyers should start to support it soon, so the bottom could be near. We would just HOLD for now.