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Published: February 26, 2010
There are more than 4.5 million hotel rooms
in the United States. When you stay at any one of these rooms
you can usually expect -- no matter how many stars are next to
the hotel's name -- a bed, a bathroom, a television, and a
Gideon's Bible.
While Gideon does distribute to these hotels, it's just a small
portion of its network. Gideon's International translates the
bibles into more than 80 languages and distributes it to more
than 190 countries. In 2007 alone Gideon passed out about 77
million bibles. And since it first started giving them away more
than 100 years ago, about 1.5 billion have been distributed.
I found a way to collect dividends on Gideon's.
Not on the distribution, of course; that's done by a non-profit
religious organization. But the manufacturing is done by a
public company listed on the Nasdaq stock exchange.
Founded in 1824, Courier Corporation (Nasdaq: CRRC) has
been printing Gideon's Bibles since 1938. Courier has been on an
upswing since the beginning of 2010, but it's still undervalued.
Courier had a disappointing year in 2009, with revenues
shrinking to $248 million from $280 million and net losses
widening to -$3 million from -$0.3 million the year before. But
these negative numbers don't tell the whole story. In 2009,
Courier’s net numbers included non-cash
impairment charges of $16 million and restructuring charges
of $5 million. Excluding these non-recurring items, net income
was $10.2 million. In fact, Courier was cash-flow positive in
2009.
And the company's situation has been steadily improving since
last March, which was the last time it reported quarterly net
losses. In the quarter ending December 2009, revenue at Courier
increased +6% year over year to $63.1 million. Net income for
the period also rose, to $2.8 million from $0.7 million year
over year. Analysts at Ferris Baker Watts expect that Courier's
earnings per share will increase in 2010 to $0.97.
In 2009, the company's shares fell by about -15%. However,
they've started to make up some ground this year. While the S&P
has been about flat, Courier's shares have advanced 10% since
January. The current price of about $15.40 is still a good
margin off the share's 52-week high of $18.41.
Courier currently pays a $0.21 per share quarterly dividend, and
with recent share prices, this payout equates to a dividend
yield about 5.5%. This is still about twice the company's 5-year
average yield of 2.8%. In addition, the company has hiked its
dividend fourteen times in the past fifteen years, for a total
increase of +1000%, or +35% per year. The dividend appears
fairly secure as net income of $2.8 million in the most recent
quarter covered dividends paid of $2.5 million for a 90% payout
ratio.
While the company does publish books, manufacturing -- for
itself and other publishers -- provides the bulk of its revenue,
more than 80% in its most recent quarter. In fact, Courier is
North America’s third largest book manufacturer and has a
customer list that includes McGraw-Hill (NYSE: MHP),
Random House, and of course Gideon's International.
Courier has a market capitalization of $170 million but only $8
million of debt -- just 5% of shareholder equity. This low debt
level should allow the company flexibility going forward and is
a huge competitive advantage if uncertainty in the capital
markets persists. The company also has listed about a half
million dollars in cash on hand as of December 2009.
Courier has shrewdly made improvements and investments that will
pay off in this new, lower revenue environment. Last year the
company completed several equipment upgrades at two of its
printing plants, which should reduce capital expenditures going
forward and, Courier believes, increase competitiveness and
efficiency. It's also implemented cost-cutting measures during
2009, including a staff reduction of about 12%.
As a small company on the rebound, Courier provides excellent
upside potential. Its current dividend is robust and has a
history of excellent growth.
-- Anthony Haddad
Staff Writer
StreetAuthority |
