The Canadian food processing stocks on our list are trading at a lower EV/EBITDA multiple than their international counterparts
SmallCapPower | December 14, 2016: EV/EBITDA ratio is a measure of how much an investor is paying for each $1 of cash flow, or earnings before interest, tax, depreciation and amortization (EBITDA). EBITDA is a good measure to use when comparing international companies because it doesn’t include taxes, which differ among various countries and can skew net income. Amongst a group of international food processing stocks with similar market capitalizations ($25mm to $2billion), the median EV/EBITDA ratio was 11.9x. Thus, the names on our list today are trading well below that level, and could be considered undervalued.
Input Capital Corp. (CVE:INP) – $2.05
Input Capital Corp. (Input) is an agricultural commodity streaming company that focuses on canola crop in Canadian agriculture. Input enters into multi-year streaming contracts with family farms across western Canada, and generates revenue by selling the canola received to grain handling companies and canola crushing plants located across Alberta, Saskatchewan and Manitoba. Input’s streaming portfolio includes approximately 90 geographically diversified streams. It has over 75 canola streams with farms in Saskatchewan, over 10 in Alberta and approximately five in Manitoba.
- Market Cap: $166.82(mm)
- Enterprise Value (CAD, Millions): $153.51
- EBITDA (LTM, CAD, Millions): $24.21
- EV/ EBITDA: 6.3x
Lassonde Industries Inc. (TSE:LAS.A) – $207.19
Lassonde Industries Inc. develops, manufactures and markets a range of ready-to-drink fruit and vegetable juices and drinks. The Company is a producer of store brand shelf-stable fruit juices and drinks in the United States and a producer of cranberry sauces. The Company operates in two market segments: the retail segment and the food service segment. The retail segment consists of sales to food retailers and wholesalers, such as supermarket chains, independent grocers, superstores, warehouse clubs and pharmacy chains. The food service segment consists of sales to restaurants, hotels, hospitals, schools and wholesalers serving these institutions.
- Market Cap: $670.32(mm)
- Enterprise Value (CAD, Millions): $1,242.75
- EBITDA (LTM, CAD, Millions): $170.24
- EV/ EBITDA: 7.3x
Rogers Sugar Inc. (TSE:RSI) – $6.65
Rogers Sugar Inc. holds all of the common shares of Lantic Inc. (Lantic). Lantic is engaged in sugar business and operates as a refiner, processor, distributor and marketer of sugar products in Canada. As a sugar processor in Western Canada, Lantic supplies over 90% of the demand for refined sugar in that region. Lantic has two cane sugar processing facilities: one in Montreal, Quebec, and one in Vancouver, British Columbia. Lantic’s sugar products are marketed primarily under the Rogers trade name in Western Canada, and under the Lantic trade name in Eastern Canada. The Company offers granulated, icing, cube, yellow and brown sugars, liquid sugars, Stevia, plantation raw sugar, jam and jelly, dry blending products and specialty syrups.
- Market Cap: $624.10(mm)
- Enterprise Value (CAD, Millions): $942.50
- EBITDA (LTM, CAD, Millions): $110.94
- EV/ EBITDA: 8.5x
Ten Peaks Coffee Company Inc. (TSE:TPK) – $5.88
Ten Peaks Coffee Company Inc. is a specialty coffee company that operates through two subsidiaries, Swiss Water Decaffeinated Coffee Company, Inc. (SWDCC) and Seaforth Supply Chain Solutions Inc. (Seaforth). SWDCC is a green coffee decaffeinator located in Burnaby, British Columbia. SWDCC employs the SWISS WATER Process to decaffeinate green coffee, which are sold to specialty roaster retailers, specialty coffee importers and commercial coffee roasters. Seaforth provides a range of green coffee logistics services, including devanning coffee received from origin; inspecting, weighing and sampling coffees, and storing, handling and preparing green coffee for outbound shipments.
- Market Cap: $53.15(mm)
- Enterprise Value (CAD, Millions): $55.33
- EBITDA (LTM, CAD, Millions): $6.00
- EV/ EBITDA: 9.2x