Supremex Inc T.SXP

Cheapness

[HermannHaller]

I think everyone has forgotten about this stock. Compared to this day in 2019:

Stock price today $2.26, stock price then $2.53

Current run rate operating cash flow $26 million, cash flow in 2019 was $19.5 million

Debt ratio today 1.7x, debt ratio in 2019 was 3.2x.

They need some new analyst coverage and a dividend to get people's attention. If they reinstated the old dividend, which I think they can afford to do, the yield today would be 11.5%.

[hawkowl1]

Hermann excellent post but you forgot to account for how many shares  SXP had issued in 2019 Shares outstanding have dropped considerably.. Yet share price is stagnant and well below true value . I am also very dissapointed board has chosen not to reinstate dividend.   Not sure why Zucker fund is so passive with this investment. Unless they prefer not to have a dividend if they are

[DanielDarden123]

Many consider this to be a value trap without realizing that they are the dominant provider in Canada, and accordingly, have pricing power. That explains the increasing cash flow and improvement in the balance sheet. Investors will hesitate to buy until it is clear that the deep value is unwarranted and will buy at a higher level when they are more comfortable. The wait can be frustrating but

[DanielDarden123]

Looks like some investors are more comfortable now and prefer to buy at higher levels. There are regrets for not buying lower but this concept is not new. Deep value has always required much patience. 

[DanielDarden123]

Looks like this is now being viewed as a growth stock rather than a value trap. It’s amazing how sentiment changes when the price goes up! And it is still cheap.

[HermannHaller]

They did 52c EPS in the first six months, and based on the positive outlook, you have to assume something higher than $1 EPS for the year. So what multiple do you want to put on that? Revenue growth, good balance sheet, buying back shares, growing dividend...why can't this trade at 10x earnings or higher?

[bucheroncapital]

They are cheap right now, the dividend and buy back are important for investors but they are reducing debt and talking of some acquisitions the market is fragmented let us be patient but with the actual earnings a price of $6-$7 would be just normal ! Bought my holding a while ago love the DRIP that is tied to the dividend ! 

[mrmoribund]

At the current valuation I would prefer that they continue to NOT pay a dividend and instead continue to buy back shares at full throttle. That said, I don't need cash from this anytime soon and I'm happy to let the intrinsic value increases from every share bought back play out over time, which it inevitably should. But I can see where the current no-dividend path would be frustrating

[hawkowl1]

Oh well how is buying back shares working out? Stock keeps drifting lower. I also have a large position in High Artic Energy services.. It declared a special .20 cent dividend.  Look at current share price and volume. HWO has traditionally paid a generous dividend but stopped when Covid hit... SXP had a history of paying a dividend ..financially it was never in dire straights with covid

[hawkowl1]

Only reason I continue to own SXP is due to Jerry Zucker fund..Its logical for them to buy out company ..And only reason why I started buying  SXP.

[2young2invest]

Jerry Zucker fund, I'm wondering what is taking them so long...

[mrmoribund]

Far more likely is they ultimately sell the company at a big premium to the current share price. If they continue to demonstrate apparently reliable solid cash flows private equity will come calling if they haven't already. Supremex is currently producing $1.20 plus per share in EBITDA. So it's selling for less than 2x EBITDA. Plus they're buying back shares. If they continue to

[nic_jordan]

Quite frankly, I consider that anything less than full reinstatement of the dividend at this point would be unacceptable. This suspension was understood to be temporary to soften the financial blow due to the then begining coronavirus pandemic. Economy is now back on the reboud. One and a half year has been long enough.  Cheers! Nick

[bucheroncapital]

For my part I don't support the reinstaement of any dividend , would like to see more buyback ! But I agree the covid criss is lees and less of a reason !

[nic_jordan]

Well I agree about the buyback. I can't understand why they don't reach their allowed maximum of 12877 shares bought back every damn trading day. There is a risk in letting the share price being this undervalued for so long. (And I would argue that it hasn't been undervalued only for a few weeks or months. It has been for several years !) That risk is that they might succomb to any low

[Capharnaum]

I don't think reinstating the dividend would increase the share price. The share price was already at this place (and lower) before the dividend cut. They need to pursue in updating their activities and having strong cashflows help with that.

[nic_jordan]

At the current stock price, the 0.065$ quarterly dividend would represent an over 10% annual yield. In today's yield starved market, I am pretty sure many would take notice.