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A Close Look At Riverstone Holdings Limited’s Dividend, Growth, And Valuations

Credit: Rvierstone Holdings Limited

Rubber gloves maker Riverstone Holdings Limited (SGX: AP4) has been a solid winner in Singapore’s stock market. Since its listing in November 2006, its share price has climbed by 465% in total, roundly trouncing the Straits Times Index’s (SGX: ^STI) measly 3% return over the same period.

Here are three important aspects about Riverstone’s business fundamentals, namely, its dividend, growth, as well as valuation.

Dividend

Riverstone currently has a share price of S$0.89. With its trailing dividend per share of 6.55 sen, the company thus has a yield of around 2.5%. This is lower than the SPDR STI ETF’s (SGX: ES3) yield of 3.2%; the SPDR STI ETF is an exchange-traded fund that tracks the fundamentals of the Straits Times Index.

Let’s now look for clues on how sustainable Riverstone’s dividend might be. There are two ratios that can give us an idea on this matter: the debt-to-shareholders’-equity ratio and the pay-out ratio. The former measures how levered a company is while the latter measures a company’s dividend as a percentage of its earnings.

In general, the lower the ratios are, the better it could be. But, it should be noted that the two ratios are not the only things investors should look at when studying a company’s dividend.

Riverstone has zero borrowings at the moment, so its debt-to-shareholders’-equity ratio would also be zero. Meanwhile, its pay-out ratio is just 37% given its trailing earnings of 17.5 sen.

Growth

Here’s a table showing how Riverstone’s revenue and earnings per share have grown from 2011 to 2015:

Riverstone growth numbers table
Source: S&P Global Market Intelligence

You can observe that Riverstone has more than doubled its revenue for the timeframe we are looking at. The bottom-line looks even better as the earnings per share has jumped by 179%.

Valuation

Riverstone’s current share price gives it a price-to-earnings ratio of 15, which is higher than the SPDR STI ETF’s PE of 12.

For more perspective on Riverstone’s valuation, here’s how its PE ratio has changed over the past five years:

Riverstone's PE ratio since 17 August 2011
Source: S&P Global Market Intelligence

The gloves maker has seen its PE ratio fall hard since the middle of 2015. But, its current valuation is still near the higher end of where it has been since 17 August 2011.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.