TSX:KBL

Stock Analysis Report

Executive Summary

K-Bro Linen Inc., together with its subsidiaries, engages in the processing, management, and distribution of general linen and operating room linen to healthcare institutions, hotels, and other commercial accounts in Canada.

Rewards

Trading at 39.4% below its fair value

Earnings are forecast to grow 17.27% per year

Earnings grew by 154.9% over the past year

Risk Analysis

Dividend of 2.94% is not well covered by earnings

Shareholders have been diluted in the past year



Snowflake Analysis

Proven track record with adequate balance sheet.

Share Price & News

How has K-Bro Linen's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: KBL has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-0.5%

KBL

2.7%

CA Commercial Services

1.2%

CA Market


1 Year Return

13.7%

KBL

29.7%

CA Commercial Services

9.6%

CA Market

Return vs Industry: KBL underperformed the Canadian Commercial Services industry which returned 25.4% over the past year.

Return vs Market: KBL exceeded the Canadian Market which returned 10.4% over the past year.


Shareholder returns

KBLIndustryMarket
7 Day-0.5%2.7%1.2%
30 Day-1.9%4.8%2.6%
90 Day11.5%13.8%6.0%
1 Year17.3%13.7%32.7%29.7%13.1%9.6%
3 Year8.6%-1.1%47.5%38.3%17.1%6.4%
5 Year1.7%-12.1%102.2%74.7%36.1%16.0%

Price Volatility Vs. Market

How volatile is K-Bro Linen's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is K-Bro Linen undervalued compared to its fair value and its price relative to the market?

38.7%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: KBL (CA$40.76) is trading below our estimate of fair value (CA$67.22)

Significantly Below Fair Value: KBL is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: KBL is poor value based on its PE Ratio (43.8x) compared to the Commercial Services industry average (16.6x).

PE vs Market: KBL is poor value based on its PE Ratio (43.8x) compared to the Canadian market (15.8x).


Price to Earnings Growth Ratio

PEG Ratio: KBL is poor value based on its PEG Ratio (2.5x)


Price to Book Ratio

PB vs Industry: KBL is overvalued based on its PB Ratio (2.2x) compared to the CA Commercial Services industry average (1.4x).


Next Steps

Future Growth

How is K-Bro Linen forecast to perform in the next 1 to 3 years based on estimates from 6 analysts?

17.3%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: KBL's forecast earnings growth (17.3% per year) is above the savings rate (1.4%).

Earnings vs Market: KBL's earnings (17.3% per year) are forecast to grow faster than the Canadian market (10.3% per year).

High Growth Earnings: KBL's earnings are forecast to grow, but not significantly.

Revenue vs Market: KBL's revenue (2.5% per year) is forecast to grow slower than the Canadian market (5% per year).

High Growth Revenue: KBL's revenue (2.5% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: Insufficient data to determine if KBL's Return on Equity is forecast to be high in 3 years time


Next Steps

Past Performance

How has K-Bro Linen performed over the past 5 years?

-16.8%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: KBL has high quality earnings.

Growing Profit Margin: KBL's current net profit margins (3.9%) are higher than last year (1.7%).


Past Earnings Growth Analysis

Earnings Trend: KBL's earnings have declined by -16.8% per year over the past 5 years.

Accelerating Growth: KBL's earnings growth over the past year (154.9%) exceeds its 5-year average (-16.8% per year).

Earnings vs Industry: KBL earnings growth over the past year (154.9%) exceeded the Commercial Services industry 17.6%.


Return on Equity

High ROE: KBL's Return on Equity (5.1%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is K-Bro Linen's financial position?


Financial Position Analysis

Short Term Liabilities: KBL's short term assets (CA$70.9M) exceed its short term liabilities (CA$40.7M).

Long Term Liabilities: KBL's short term assets (CA$70.9M) do not cover its long term liabilities (CA$119.1M).


Debt to Equity History and Analysis

Debt Level: KBL's debt to equity ratio (34.2%) is considered satisfactory.

Reducing Debt: KBL's debt to equity ratio has increased from 28.8% to 34.2% over the past 5 years.

Debt Coverage: KBL's debt is well covered by operating cash flow (60.8%).

Interest Coverage: KBL's interest payments on its debt are well covered by EBIT (3.4x coverage).


Balance Sheet

Inventory Level: KBL has a high level of physical assets or inventory.

Debt Coverage by Assets: KBL's debt is covered by short term assets (assets are 1.1x debt).


Next Steps

Dividend

What is K-Bro Linen's current dividend yield, its reliability and sustainability?

2.90%

Current Dividend Yield


Dividend Yield vs Market

company2.9%marketbottom25%1.9%markettop25%5.4%industryaverage1.8%forecastin3Years2.9%

Current dividend yield vs market & industry

Notable Dividend: KBL's dividend (2.94%) is higher than the bottom 25% of dividend payers in the Canadian market (1.88%).

High Dividend: KBL's dividend (2.94%) is low compared to the top 25% of dividend payers in the Canadian market (5.48%).


Stability and Growth of Payments

Stable Dividend: KBL's dividend payments have been volatile in the past 10 years.

Growing Dividend: KBL's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its high payout ratio (129%), KBL's dividend payments are not well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: Insufficient data to determine if a dividend will be paid in 3 years and that it will be covered by earnings.


Next Steps

Management

What is the CEO of K-Bro Linen's salary, the management and board of directors tenure and is there insider trading?

17.5yrs

Average management tenure


CEO

Linda McCurdy (51yo)

20yrs

Tenure

CA$1,917,005

Compensation

Ms. Linda Jane McCurdy, MBA has been the Chief Executive Officer and President at K-Bro Linen Inc., since January 2000. Ms. McCurdy joined K-Bro in May 1998 as Chief Financial Officer. She has been Chief E ...


CEO Compensation Analysis

Compensation vs Market: Linda's total compensation ($USD1.47M) is above average for companies of similar size in the Canadian market ($USD1.00M).

Compensation vs Earnings: Linda's compensation has been consistent with company performance over the past year.


Management Age and Tenure

17.5yrs

Average Tenure

Experienced Management: KBL's management team is seasoned and experienced (17.5 years average tenure).


Board Age and Tenure

15.1yrs

Average Tenure

66yo

Average Age

Experienced Board: KBL's board of directors are seasoned and experienced ( 15.1 years average tenure).


Insider Trading

Insider Buying: KBL insiders have only sold shares in the past 3 months.


Recent Insider Transactions

SellCA$187,87523 Dec 19
Jerry Ostrzyzek
EntityIndividual
Shares4,500
Max PriceCA$41.75
SellCA$43,55620 Dec 19
Jeffrey Gannon
EntityIndividual
Role
Other Key Executive
General Manager of Calgary Plant
Shares1,043
Max PriceCA$41.76
SellCA$33,12405 Dec 19
Ryo Utahara
EntityIndividual
Shares825
Max PriceCA$40.15
SellCA$27,76525 Mar 19
Ryo Utahara
EntityIndividual
Shares750
Max PriceCA$37.02

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 2.1%.


Management Team

  • Kristie Plaquin

    Chief Financial Officer

    • Tenure: 5.4yrs
    • Compensation: CA$560.57k
  • Linda McCurdy (51yo)

    President

    • Tenure: 20yrs
    • Compensation: CA$1.92m
  • Ron Graham

    General Manager of Vancouver Plant

    • Tenure: 18yrs
    • Compensation: CA$278.27k
  • Jeff Gannon

    General Manager of Calgary Plant

    • Tenure: 17yrs
    • Compensation: CA$266.07k
  • Sean Curtis

    Senior VP & COO

    • Tenure: 21yrs
    • Compensation: CA$932.66k
  • Kevin Stephenson

    General Manager of Toronto

    • Tenure: 14yrs
    • Compensation: CA$290.01k
  • Timothy Bruns

    President of Unitrin Specialty

    • Sean Jackson

      General Manager of Regina

      • Jessica Lévesque

        Director Général of Quebec

        • Michael Jones

          Managing Director of Fishers Services Limited

          • Compensation: CA$420.34k

        Board Members

        • Matt Hills (59yo)

          Director

          • Tenure: 15.1yrs
          • Compensation: CA$217.80k
        • Mike Percy (71yo)

          Independent Director

          • Tenure: 4.6yrs
          • Compensation: CA$86.05k
        • Steve Matyas (66yo)

          Independent Director

          • Tenure: 15.1yrs
          • Compensation: CA$91.05k
        • Ross Smith (80yo)

          Independent Chairman of the Board

          • Compensation: CA$126.05k
        • Linda McCurdy (51yo)

          President

          • Tenure: 20yrs
          • Compensation: CA$1.92m

        Company Information

        K-Bro Linen Inc.'s company bio, employee growth, exchange listings and data sources


        Key Information

        • Name: K-Bro Linen Inc.
        • Ticker: KBL
        • Exchange: TSX
        • Founded: 1954
        • Industry: Diversified Support Services
        • Sector: Commercial Services
        • Market Cap: CA$434.311m
        • Shares outstanding: 10.51m
        • Website: https://www.k-brolinen.com

        Number of Employees


        Location

        • K-Bro Linen Inc.
        • 14903-137 Avenue NW
        • Edmonton
        • Alberta
        • T5V 1R9
        • Canada

        Listings

        TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
        KBLTSX (The Toronto Stock Exchange)YesCommon SharesCACADFeb 2005
        KBRL.FOTCPK (Pink Sheets LLC)YesCommon SharesUSUSDFeb 2005

        Biography

        K-Bro Linen Inc., together with its subsidiaries, engages in the processing, management, and distribution of general linen and operating room linen to healthcare institutions, hotels, and other commercial accounts in Canada. The company also offers other services, including bulk dock-to-dock, exchange cart preparation, delivery of carts, surgical linen, distribution and control of employee uniforms, personal clothing, customer reporting, customer service visiting, and textile procurement services. K-Bro Linen Inc. was founded in 1954 and is headquartered in Edmonton, Canada. 


        Company Analysis and Financial Data Status

        All financial data provided by Standard & Poor's Capital IQ.
        DataLast Updated (UTC time)
        Company Analysis2020/01/17 02:10
        End of Day Share Price2020/01/16 00:00
        Earnings2019/09/30
        Annual Earnings2018/12/31


        Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.