Some investors rely on dividends for growing their wealth,how to test a 4-wire o2 sensor with a multimeter and if you're one of those dividend sleuths, you might be intrigued to know that
WirTek A/S
(
CPH:WIRTEK
) is about to go ex-dividend in just 4 days. Ex-dividend means that investors that purchase the stock on or after the 6th of April will not receive this dividend, which will be paid on the 8th of April.
The upcoming dividend for WirTek is ø0.16 per share, increased from last year's total dividends per share of ø0.11. Dividends are an important source of income to many shareholders, but the health of the business is crucial to maintaining those dividends. So we need to investigate whether WirTek can afford its dividend, and if the dividend could grow.
Check out our latest analysis for WirTek
If a company pays out more in dividends than it earned, then the dividend might become unsustainable - hardly an ideal situation. WirTek distributed an unsustainably high 118% of its profit as dividends to shareholders last year. Without extenuating circumstances, we'd consider the dividend at risk of a cut.
Click
here to see how much of its profit WirTek paid out over the last 12 months.
CPSE:WIRTEK Historical Dividend Yield April 1st 2020
Have Earnings And Dividends Been Growing?
Companies that aren't growing their earnings can still be valuable, but it is even more important to assess the sustainability of the dividend if it looks like the company will struggle to grow. If earnings decline and the company is forced to cut its dividend, investors could watch the value of their investment go up in smoke. That explains why we're not overly excited about WirTek's flat earnings over the past five years. We'd take that over an earnings decline any day, but in the long run, the best dividend stocks all grow their earnings per share.
The main way most investors will assess a company's dividend prospects is by checking the historical rate of dividend growth. In the last six years, WirTek has lifted its dividend by approximately 3.4% a year on average.
Final Takeaway
Has WirTek got what it takes to maintain its dividend payments? Earnings per share have been effectively flat, which is a bit of a concern given the company is paying out 118% of its profit as dividends, which we feel is uncomfortably high. Overall it doesn't look like the most suitable dividend stock for a long-term buy and hold investor.
Having said that, if you're looking at this stock without much concern for the dividend, you should still be familiar of the risks involved with WirTek. Every company has risks, and we've spotted
6 warning signs for WirTek
(of which 1 is concerning!) you should know about.
Story continues
If you're in the market for dividend stocks, we recommend
checking our list of top dividend stocks with a greater than 2% yield and an upcoming dividend.
If you spot an error that warrants correction, please contact the editor at
. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.
View comments
顶: 6929踩: 79
【how to test a 4-wire o2 sensor with a multimeter】Don't Buy WirTek A/S (CPH:WIRTEK) For Its Next Dividend Without Doing These Checks
人参与 | 时间:2024-09-29 12:18:52
相关文章
- Clarivate Analytics Plc (CCC) Q1 Earnings and Revenues Miss Estimates
- AstraZeneca's COVID-19 Vaccine Trial Delays May Worsen As FDA Widens Investigation
- Why SkiStar AB (publ)'s (STO:SKIS B) High P/E Ratio Isn't Necessarily A Bad Thing
- CanWel Building Materials Group (TSE:CWX) Shareholders Have Felt Some Pain With A 19% Loss On Their Investment
- 5%, led by a 17% increase in average ticket and a slight decline in traffic. Growth in the quarter reflected the impact of households stocking up on essentials like paper goods and cleaning supplies as the pandemic became a nationwide concern, along with strength in discretionary categories as the quarter came to a close and stimulus dollars and tax refunds were disbursed.
As shown below, the results in the quarter materially changed the trend in two-year stacked comps for each of the banners, along with a significant acceleration for consolidated comps.
The increase in consolidated comps was the primary driver of an 8% increase in revenues to $6.3 billion. The company ended the quarter with 15,370 locations, up less than 1% year-over-year. This reflects a 7% increase in Dollar Tree units, offset by a 4% decline in Family Dollar units.
The top-line results at each banner flowed through to their respective income statements, with Dollar Tree gross margins and operating margins declining year-over-year while Family Dollar gross margins and operating margins expanded year-over-year. On a consolidated basis, gross margins contracted by 120 basis points in the quarter to 28.5%, reflective of a shift to lower-margin consumables, tariff costs and the impact of markdowns from the Easter headwinds at the Dollar Tree banner. The company saw slight operating leverage on SG&A from higher comps, with the net result being an 80 basis point contraction in operating margins to 5.8%, with operating income declining 5% to $366 million. This is not adjusted for $73 million of pandemic-related costs, such as PPE supplies.
In the first quarter, the company opened 85 stores (net of closures) and completed 220 Family Dollar renovations to the H2 format. Importantly, comps at renovated Family Dollar stores continue to outpace the chain average by more than 10%. On the call, management indicated that they plan on reducing both the number of new store openings (from 550 to 500) and the number of H2 renovations (from 1,250 to 750) in 2020.
Personally, given the fact that Family Dollar is seeing material benefits to its business from the pandemic with new or lapsed customers coming into its stores, I think the company should try to get more aggressive with its renovation plans, not less. On the other hand, you could argue that renovations cause short-term disruptions and limit their ability to fully capitalize on the business momentum they are currently experiencing.
As a result of fewer new stores and remodels, management now expects 2020 capital expenditures to total $1.0 billion compared to previous guidance of $1.2 billion. In addition, the company has temporarily suspended share repurchases. At quarter's end, the company had $1.8 billion in cash on its balance sheet compared to $4.3 billion in total debt.
Conclusion
In recent years, Dollar Tree has been a tale of two cities. While its namesake banner has generally delivered impressive financial results, Family Dollar has been a persistent underperformer. This quarter, those results flipped, and given what we've seen in the weeks since quarter's end, there's a decent possibility that we will see something similar in the coming months. As the CEO noted, the second quarter is off to a very good start at Family Dollar.
Here's the important question: how useful is that information is in terms of making future predictions about the business? Will recent success at Family Dollar translate into long-term success for the banner? The optimistic take is that new or lapsed customers, especially those visiting the renovated stores, could become recurring business for the banner. The pessimistic take is that they have experienced short-term success out of necessity as people went to any store that was open to try and find essentials like toilet paper and hand sanitizer that were largely out of stock throughout the retail landscape. From that view, many of these customers could abandon the retailer when life returns to normal. As Philbin noted on the conference call, early on [during the pandemic], folks needed us. Will people still shop as much at Family Dollar when it's no longer a necessity?
Personally, I do not place too much weight on the recent results. I will need to see incremental data points that indicate that Family Dollar has truly won sustained business from these new customers. While I still believe that the Dollar Tree banner is a well-positioned retailer with attractive unit returns, I'm not yet willing to say the same thing for Family Dollar. For that reason, along with the recent run-up in the stock price, I plan on staying on the sidelines for now.
Disclosure: None
Read more here:
Under Armour: A Tough Start to 2020
Walmart: Continued Omni-Channel Progress
Match: An Impressive Start to 2020
Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.
This article first appeared on
GuruFocus
.
Warning! GuruFocus has detected 4 Warning Signs with DLTR. Click here to check it out.
DLTR 30-Year Financial Data
The intrinsic value of DLTR
Peter Lynch Chart of DLTR
View comments
- Kratos Defense (KTOS) to Post Q1 Earnings: What's in Store?
- This Broker Just Slashed Their Freelance.com SA (EPA:ALFRE) Earnings Forecasts
- CanWel Building Materials Group (TSE:CWX) Shareholders Have Felt Some Pain With A 19% Loss On Their Investment
- Calculating The Intrinsic Value Of FFI Holdings Limited (ASX:FFI)
- ServiceNow (NOW) Set to Acquire AI-Focused Startup Element AI
评论专区