Lancaster Colony Corporation - A Speculative Analysis (NYSE: LANC)

Introduction: Welcome back to my weekly stock analysis. Disclaimer: I am not invested in this one. Lancaster Colony Corporation (NYSE: LANC) Sector: Packaged Foods (Consumer Defensive) Company Strengths & Risks: LANC is a specialty food product manufacturer. They are the parent company for the T. Marzetti Company. Some of the included brands include Marzetti, New York Brand Bakery, Sister Schubert’s, and Reames. Lanc boasts consecutive quarterly dividends since 1963. Strengths: - 58 years dividend growth - Rising revenue - Miniscule debt Risks: - Low yield - High PE ratio - Inflation, supply chain issues - Boring stock Financial History and numbers LANC: Numbers from Seeking Alpha as of Feb 07, 2022 Numbers from Macro Trends as of Feb 07, 2022 Stock LANC P/E Ratio 28.21 Stock price $153.73 Current Annual Payout/Share $3.2 Yield 2.08% 5 Yr Div Growth Rate 8.27% 3 Yr Div Growth Rate 7.57% 1 Yr Div Growth Rate 7.02% Years Of Growth 58 Current Payout Ratio 63.35% Free Cash Flow / Share -0.0673 Revenue (ttm) 1.510B Debt / Equity Ratio 0.01764705882352941 Debt / EBITDA 0.06726457399103139 EPS 5.45 ROI 16.70% ROA 11.40% LANC presents itself as the unassuming consumer staples stock. LANC has a high PE ratio, low yield and low debt ratios. They have a high payout ratio but have 58 years of dividend growth. The returns ratios are good, and the dividend growth rates are acceptable. I don't expect this to change regardless of market conditions. I will now use the 3 year dividend growth rate to project further. Year LANC 2022 3.44 2023 3.70 2024 3.98 2025 4.28 For another way, let's use historical payout ratio to project out. YEAR LANC EPS estimate 2021 4.96 EPS estimate 2022 4.64 2021 dividend 3.14 2022 dividend 2.94 Final Thoughts: I feel like I need to take off the analysis hat for a second and talk as a general consumer. I am fairly bullish in Chick-fil-A and Buffalo Wild Wings and am fairly certain that consumer sentiment will remain fairly bullish with regards to those 2 chains. I’ll give you a guess as to which company licenses the sauces. Alright analysis hat back on- I need to address some of the negatives. The negative free cash flow is pretty common among consumer stocks. The lack of debt surprises me. It seems so easy to get and leverage debt as a food producer. For LANC to not add more cheap debt- it could be a positive or negative. It would be a mistake to not mention the effects of supply chain and inflation concerns. Import and export restrictions are an obvious concern. But one also has to remember that at a certain price, people will not want to purchase these products. LANC does not have the benefit of price gouging. Unfortunately, I do not think these concerns will end until covid round 750 ends. Not to mention rising packaging costs don't help LANC. Lastly, I don't expect LANC to be talked about much, if at all. I don't expect much volatility, just staying at the same range. Weekly price estimate for a future date, via consulting the crystal ball: Predicted price for LANC for Jun 20, 2022: $162.92. There is no factual basis that I will give. I hope someone out there found this post interesting. Please supplement this with your own research. Thank you for reading, please give me feedback so that I can increase my standards for future analysis posts. If I have made a mistake, please correct me. Or if you have one that you want an analysis on, I might pick a comment to do an analysis of if I don't have any spice stored for the week.

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Lancaster Colony Corporation - A Speculative Analysis (NYSE: LANC)

bullish

Introduction:

Welcome back to my weekly stock analysis. Disclaimer: I am not invested in this one.

Lancaster Colony Corporation (NYSE: LANC)

Sector: Packaged Foods (Consumer Defensive)

Company Strengths & Risks:

LANC is a specialty food product manufacturer. They are the parent company for the T. Marzetti Company. Some of the included brands include Marzetti, New York Brand Bakery, Sister Schubert's, and Reames. Lanc boasts consecutive quarterly dividends since 1963.

Strengths: - 58 years dividend growth - Rising revenue - Miniscule debt

Risks: - Low yield - High PE ratio - Inflation, supply chain issues - Boring stock

Financial History and numbers

LANC: Numbers from Seeking Alpha as of Feb 07, 2022

Numbers from Macro Trends as of Feb 07, 2022

Stock LANC
P/E Ratio 28.21
Stock price $153.73
Current Annual Payout/Share $3.2
Yield 2.08%
5 Yr Div Growth Rate 8.27%
3 Yr Div Growth Rate 7.57%
1 Yr Div Growth Rate 7.02%
Years Of Growth 58
Current Payout Ratio 63.35%
Free Cash Flow / Share -0.0673
Revenue (ttm) 1.510B
Debt / Equity Ratio 0.01764705882352941
Debt / EBITDA 0.06726457399103139
EPS 5.45
ROI 16.70%
ROA 11.40%

LANC presents itself as the unassuming consumer staples stock. LANC has a high PE ratio, low yield and low debt ratios. They have a high payout ratio but have 58 years of dividend growth. The returns ratios are good, and the dividend growth rates are acceptable. I don't expect this to change regardless of market conditions.

I will now use the 3 year dividend growth rate to project further.

Year LANC
2022 3.44
2023 3.70
2024 3.98
2025 4.28

For another way, let's use historical payout ratio to project out.

YEAR LANC
EPS estimate 2021 4.96
EPS estimate 2022 4.64
2021 dividend 3.14
2022 dividend 2.94

Final Thoughts:

I feel like I need to take off the analysis hat for a second and talk as a general consumer. I am fairly bullish in Chick-fil-A and Buffalo Wild Wings and am fairly certain that consumer sentiment will remain fairly bullish with regards to those 2 chains. I'll give you a guess as to which company licenses the sauces.

Alright analysis hat back on- I need to address some of the negatives. The negative free cash flow is pretty common among consumer stocks. The lack of debt surprises me. It seems so easy to get and leverage debt as a food producer. For LANC to not add more cheap debt- it could be a positive or negative.

It would be a mistake to not mention the effects of supply chain and inflation concerns. Import and export restrictions are an obvious concern. But one also has to remember that at a certain price, people will not want to purchase these products. LANC does not have the benefit of price gouging. Unfortunately, I do not think these concerns will end until covid round 750 ends. Not to mention rising packaging costs don't help LANC.

Lastly, I don't expect LANC to be talked about much, if at all. I don't expect much volatility, just staying at the same range.

Weekly price estimate for a future date, via consulting the crystal ball: Predicted price for LANC for Jun 20, 2022: $162.92. There is no factual basis that I will give.

I hope someone out there found this post interesting. Please supplement this with your own research.

Thank you for reading, please give me feedback so that I can increase my standards for future analysis posts. If I have made a mistake, please correct me. Or if you have one that you want an analysis on, I might pick a comment to do an analysis of if I don't have any spice stored for the week.

read-time
3 min
162.92
Target Price
7/ 10
Confidence
2-6 Months
Timeframe
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