Improved efficiency has jump-started earnings for Canada’s largest food processor, but it has also inflated its price-to-earnings ratio.
MAPLE LEAF FOODS INC. (Toronto symbol MFI; www.mapleleaffoods.com) is Canada’s largest food processor. It mainly sells its products, including fresh and prepared meats and poultry, under the Maple Leaf and Schneider brands.
The company continues to benefit from the success of its multi-year restructuring plan; that has significantly reduced operating costs by shifting meat production to newer, more-efficient plants.
In the three months ended June 30, 2016, Maple Leaf’s sales rose 4.1%, to $854.6 million from $820.8 million a year earlier. It earned $31.4 million, or $0.23 a share, in the quarter. That’s a big improvement over the $7.5 million, or $0.05, it lost last year. Without restructuring costs, earnings per share jumped 146.2%, to $0.32 from $0.13.
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Maple Leaf’s gross profit margin (gross profits as a percentage of sales) jumped to 10.3% in the latest quarter from 6.0% a year earlier.
As of June 30, 2016, the company held cash of $312.7 million, or $2.32 a share, and its total debt was just $10.5 million.
Maple Leaf aims to spur its sales with new products. Those could include vegetable-based foods; that market is projected to grow 5% annually.
The company’s shares have gained 44% in the past year. They now trade at 24.6 times the $1.26 a share Maple Leaf will probably earn in 2016. Its $0.36 dividend yields 1.2%.
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This stock is pure Canadiana. I look forward to seeing it as a buy, but agree it’s a little dear at this price.