MAPLE LEAF FOODS INC. $11 (Toronto symbol MFI; Conservative Growth Portfolio, Consumer sector; Shares outstanding: 139.5 million; Market cap: $1.5 billion; Price-to-sales ratio: 0.3; Dividend yield: 1.5%; TSINetwork Rating: Average; www.mapleleaf.ca) is Canada’s largest foodprocessing company. It mainly makes its products, which include fresh and prepared meats and poultry, under the Maple Leaf and Schneider brands. Through 90.0%-owned Canada Bread (see right), the company also makes fresh and frozen bread, pastries and pasta.
Maple Leaf continues to restructure its operations, including simplifying its product lines and increasing its focus on its most profitable foods. The company is also installing a new computer system that will give its managers more timely information and help them make better decisions.
These measures should raise Maple Leaf’s gross margin (gross profits as a percentage of sales) from 7.7% in the past 12 months, to 12.5% in 2015.
If you disregard restructuring costs, Maple Leaf’s earnings fell 38.9% in the latest quarter, to $0.11 from $0.18. The drop was largely due to higher costs for ingredients, such as wheat and corn. The company has raised its prices to offset these expenses. That helped push up its sales by 1.1%, to $1.16 billion from $1.15 billion.
The stock trades at 11.5 times Maple Leaf’s likely 2012 earnings of $0.96 a share. The $0.16 dividend yields 1.5%.
Maple Leaf Foods is a buy.
