Saputo needs a new catalyst

Article Excerpt

SAPUTO INC. $41 is still a hold. Canada’s leading dairy producer (Toronto symbol SAP; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 407.7 million; Market cap: $16.7 billion; Price-to-sales ratio: 1.2; Dividend yield: 1.7%; TSINetwork Rating: Average; www.saputo.com) continues to face growing competition from plant-based products such as almond milk. As a result, it will now close its facilities in Trenton, Ontario, and Saint John, New Brunswick. The company will shift their operations to its other Canadian plants. If you exclude closure costs and other unusual items, Saputo’s earnings in its fiscal 2020 third quarter, ended December 31, 2019, rose 13.6%, to $0.50 a share from $0.44 a year earlier. As well, sales gained 8.8%, to $3.89 billion from $3.58 billion. Those gains are partly due to recent acquisitions, including the October 2019 purchase of the specialty cheese business of Australia’s Lion-Dairy & Drinks. Higher cheese prices factored into those gains. gains…

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