Diversified Royalty (TSX:DIV) - Share price, News & Analysis

DIV fundamental analysis
Snowflake Score
Valuation	2/6
Future Growth	1/6
Past Performance	5/6
Financial Health	2/6
Dividends	2/6

DIV Stock Overview

Diversified Royalty Corp., a multi-royalty corporation, engages in the acquisition of royalties from multi-location businesses and franchisors in North America.

Rewards

Trading at 45.1% below our estimate of its fair value

Revenue is forecast to grow 8.21% per year

Earnings grew by 266.3% over the past year

Risk Analysis

Debt is not well covered by operating cash flow

Dividend of 8.46% is not well covered by earnings or forecast to be in the next 3 years

Diversified Royalty Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Diversified Royalty
Historical stock prices
Current Share Price	CA$2.60
52 Week High	CA$3.39
52 Week Low	CA$2.51
Beta	1.76
1 Month Change	-5.46%
3 Month Change	-20.73%
1 Year Change	-2.62%
3 Year Change	-15.58%
5 Year Change	0.39%
Change since IPO	73.33%

Recent News & Updates

Jun 07

Diversified Royalty (TSE:DIV) Has Re-Affirmed Its Dividend Of CA$0.018

The board of Diversified Royalty Corp. ( TSE:DIV ) has announced that it will pay a dividend of CA$0.018 per share on...

Shareholder Returns

	DIV	CA Specialty Retail	CA Market
7D	1.2%	5.0%	0.3%
1Y	-2.6%	-20.0%	-4.1%

Return vs Industry: DIV exceeded the Canadian Specialty Retail industry which returned -23.1% over the past year.

Return vs Market: DIV exceeded the Canadian Market which returned -5.7% over the past year.

Price Volatility

Is DIV's price volatile compared to industry and market?
DIV volatility
DIV Average Weekly Movement	4.3%
Specialty Retail Industry Average Movement	6.4%
Market Average Movement	9.9%
10% most volatile stocks in CA Market	17.2%
10% least volatile stocks in CA Market	4.3%

Stable Share Price: DIV is less volatile than 75% of Canadian stocks over the past 3 months, typically moving +/- 4% a week.

Volatility Over Time: DIV's weekly volatility (4%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1992	38	Sean Morrison	https://www.diversifiedroyaltycorp.com

Diversified Royalty Corp., a multi-royalty corporation, engages in the acquisition of royalties from multi-location businesses and franchisors in North America. The company owns the Mr. Lube, AIR MILES, Sutton, Mr. Mikes, Nurse Next Door, and Oxford Learning Centres trademarks. The company was formerly known as BENEV Capital Inc. and changed its name to Diversified Royalty Corp. in September 2014.

Diversified Royalty Fundamentals Summary

How do Diversified Royalty's earnings and revenue compare to its market cap?
DIV fundamental statistics
Market Cap	CA$317.89m
Earnings (TTM)	CA$25.58m
Revenue (TTM)	CA$39.41m

12.6x

P/E Ratio

8.2x

P/S Ratio

Is DIV overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
DIV income statement (TTM)
Revenue	CA$39.41m
Cost of Revenue	CA$2.19m
Gross Profit	CA$37.22m
Other Expenses	CA$11.64m
Earnings	CA$25.58m

Last Reported Earnings

Mar 31, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	0.21
Gross Margin	94.44%
Net Profit Margin	64.90%
Debt/Equity Ratio	111.5%

How did DIV perform over the long term?

See historical performance and comparison

Dividends

8.5%

Current Dividend Yield

101%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is DIV undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

2/6

Valuation Score 2/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
PEG Ratio

Key Valuation Metric

Which metric is best to use when looking at relative valuation for DIV?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for DIV. This is calculated by dividing DIV's market cap by their current preferred multiple.
What is DIV's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	CA$317.89m

DIV key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	12.1x
Enterprise Value/EBITDA	13.6x
PEG Ratio	n/a

Price to Earnings Ratio vs Peers

How does DIV's PE Ratio compare to its peers?

DIV PE Ratio vs Peers

The above table shows the PE ratio for DIV vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	6.5x

Forward PE

Price-To-Earnings vs Peers: DIV is expensive based on its Price-To-Earnings Ratio (12.6x) compared to the peer average (6.5x).

Price to Earnings Ratio vs Industry

How does DIV's PE Ratio compare vs other companies in the Specialty Retail Industry?

Price-To-Earnings vs Industry: DIV is expensive based on its Price-To-Earnings Ratio (12.6x) compared to the Canadian Specialty Retail industry average (7.7x)

Price to Earnings Ratio vs Fair Ratio

What is DIV's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

DIV PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	12.6x
Fair PE Ratio	n/a

Price-To-Earnings vs Fair Ratio: Insufficient data to calculate DIV's Price-To-Earnings Fair Ratio for valuation analysis.

Share Price vs Fair Value

What is the Fair Price of DIV when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: DIV (CA$2.6) is trading below our estimate of fair value (CA$4.73)

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

Price to Earnings Growth Ratio

PEG Ratio: Insufficient data to calculate DIV's PEG Ratio to determine if it is good value.

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Future Growth

How is Diversified Royalty forecast to perform in the next 1 to 3 years based on estimates from 3 analysts?

Future Growth Score

1/6

Future Growth Score 1/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

8.2%

Forecasted annual revenue growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: Insufficient data to determine if DIV's forecast earnings growth is above the savings rate (1.6%).

Earnings vs Market: Insufficient data to determine if DIV's earnings are forecast to grow faster than the Canadian market

High Growth Earnings: Insufficient data to determine if DIV's earnings are expected to grow significantly over the next 3 years.

Revenue vs Market: DIV's revenue (8.2% per year) is forecast to grow faster than the Canadian market (6.6% per year).

High Growth Revenue: DIV's revenue (8.2% 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 DIV's Return on Equity is forecast to be high in 3 years time

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Past Performance

How has Diversified Royalty performed over the past 5 years?

Past Performance Score

5/6

Past Performance Score 5/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

0.8%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: DIV has high quality earnings.

Growing Profit Margin: DIV's current net profit margins (64.9%) are higher than last year (22.6%).

Past Earnings Growth Analysis

Earnings Trend: DIV's earnings have grown by 0.8% per year over the past 5 years.

Accelerating Growth: DIV's earnings growth over the past year (266.3%) exceeds its 5-year average (0.8% per year).

Earnings vs Industry: DIV earnings growth over the past year (266.3%) exceeded the Specialty Retail industry 47.3%.

Return on Equity

High ROE: DIV's Return on Equity (13.2%) is considered low.

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Financial Health

How is Diversified Royalty's financial position?

Financial Health Score

2/6

Financial Health Score 2/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: DIV's short term assets (CA$64.8M) exceed its short term liabilities (CA$60.6M).

Long Term Liabilities: DIV's short term assets (CA$64.8M) do not cover its long term liabilities (CA$177.1M).

Debt to Equity History and Analysis

Debt Level: DIV's net debt to equity ratio (80.7%) is considered high.

Reducing Debt: DIV's debt to equity ratio has increased from 19.9% to 111.5% over the past 5 years.

Debt Coverage: DIV's debt is not well covered by operating cash flow (13%).

Interest Coverage: DIV's interest payments on its debt are well covered by EBIT (3.7x coverage).

Balance Sheet

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Dividend

What is Diversified Royalty current dividend yield, its reliability and sustainability?

Dividend Score

2/6

Dividend Score 2/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

8.46%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: DIV's dividend (8.46%) is higher than the bottom 25% of dividend payers in the Canadian market (2.08%).

High Dividend: DIV's dividend (8.46%) is in the top 25% of dividend payers in the Canadian market (5.35%)

Stability and Growth of Payments

Stable Dividend: Whilst dividend payments have been stable, DIV has been paying a dividend for less than 10 years.

Growing Dividend: DIV's dividend payments have increased, but the company has only paid a dividend for 8 years.

Earnings Payout to Shareholders

Earnings Coverage: With its high payout ratio (100.7%), DIV's dividend payments are not well covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its high cash payout ratio (245.9%), DIV's dividend payments are not well covered by cash flows.

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Management

How experienced are the management team and are they aligned to shareholders interests?

5.6yrs

Average board tenure

CEO

Sean Morrison (51 yo)

8.83yrs

Tenure

CA$1,765,130

Compensation

Mr. Sean Morrison, CA has been the Chief Executive Officer and President at Diversified Royalty Corp. since August 06, 2013. Mr. Morrison has been the Chief Executive Officer and President of BENEV Capital...

CEO Compensation Analysis

Compensation vs Market: Sean's total compensation ($USD1.37M) is above average for companies of similar size in the Canadian market ($USD747.26K).

Compensation vs Earnings: Sean's compensation has increased by more than 20% in the past year.

Board Members

Experienced Board: DIV's board of directors are considered experienced (5.6 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/06/24 00:00
End of Day Share Price	2022/06/24 00:00
Earnings	2022/03/31
Annual Earnings	2021/12/31