Q: After the earnings miss and the big reduction in share price, is this a buy now? Is the dividend safe?
5i Research Answer:
It was a very ugly quarter, with a 67% 'miss' on EPS and an 11% miss on revenue. Guidance was scaled back and both volume and margins declined in the propane division. SPB also plans to spend $50M more on its capex and technology than previously planned. It got hit with multiple broker downgrades. Revenue fell 6% and there seems to be no catalyst for pricing improvement in the next few quarters. 12-month payout ratio is in the 65% range. The next two quarters (winter) are absolutely key here but the dividend is likely secure, for now. But we would not want to buy this today going into year end.