Earlier this week I added to my KHC
position, nearly doubling its size. I initially bought 50 shares back in
April and have wanted to further grow the size of this position but have been
patiently waiting for the price to retreat below $60. Shortly after their
earnings release, I thought that my opportunity might not come again as
speculation arose that KHC might be a potential suiter for an acquisition of
Campbell's Soup Co (CPB), which I also happen to own. This speculation
combined with the KHC beating analysts' expectations for Q2 earnings led to a
one day jump in price, amounting to an +9% increase in stock price on August
3rd. However, as the past few weeks have shown, this valuation jump did
not last. Details on the purchase along with the updated valuation
metrics can be seen below.
Purchased: 40 shares x $58.90 = $2,356 (+$0 trade commission)
Dividend Income: $100 annually ($2.50/annually; paid quarterly in Mar, Jun,
Sep, and Dec)
TTM and Forward P/E ratio: TTM 6.81 and Forward P/E 15.81 vs. S&P 24.05
Debt to capital < 50%: Yes, 30%
Interest coverage ratio of at least
3:1: Yes, 5.5x
S&P and/or Moody's credit rating
of BBB+/Baa1 or better: No, BBB
Current dividend yield > 1.5x
S&P yield: Yes, 4.2% vs. S&P 1.82%
Payout ratio < 60% (or <85%
for utilities): No, 67% based on forward P/E
expectations
Dividend King or CCC classification: Challenger (5+ years of annual dividend increases)
Commentary: My initial purchase of KHC can be found here.
No comments:
Post a Comment