Tootsie Roll Industries Inc (NYSE: TR)

Sector: Consumer Defensive Industry: Confectioners CIK: 0000098677
Market Cap 3.42 Bn
P/B 4.84
P/E 50.54
P/S 6.56
ROIC (Qtr) 8.47
Div Yield % 0.88
Rev 1y % (Qtr) 3.00
Total Debt (Qtr) 14.16 Mn
Debt/Equity (Qtr) 0.02
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About

Investment thesis

Bull case

  • Strong operating cash flow of 126.08M provides robust 8.90x coverage of total debt 14.16M, indicating excellent debt servicing capability and financial flexibility.
  • Healthy cash reserves of 79.29M provide 35.32x coverage of short-term debt 2.25M, demonstrating strong liquidity position and minimal refinancing risk.
  • Strong tangible asset base of 980.30M provides 69.23x coverage of total debt 14.16M, indicating robust asset backing and low credit risk.
  • Robust free cash flow of 100.08M exceeds capital expenditure of 26M by 3.85x, indicating strong organic growth funding capability.
  • Long-term investments of 436.53M provide solid 36.64x coverage of long-term debt 11.91M, indicating strategic financial planning.

Bear case

  • Operating cash flow of 126.08M barely covers its investment activities of (95.51M), with a coverage ratio of -1.32, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 126.08M provides thin coverage of dividend payments of (25.95M) with a -4.86 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Free cash flow of 100.08M represents just -1299.68x of debt issuance (77000), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • Long-term investments of 436.53M represent a high 1.90x of fixed assets 230.02M, indicating potential overexposure to financial assets versus operational capabilities.
  • Operating cash flow of 126.08M shows concerning coverage of minority interest expenses of (46000), which is -2740.76x, suggesting complex corporate structure risks.

Peer comparison

Companies in the Confectioners
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 MDLZ Mondelez International, Inc. 77.63 Bn 31.67 2.01 21.80 Bn
2 HSY Hershey Co 43.45 Bn 49.19 3.72 5.40 Bn
3 TR Tootsie Roll Industries Inc 3.42 Bn 50.54 6.56 0.01 Bn
4 RMCF Rocky Mountain Chocolate Factory, Inc. 0.02 Bn -4.81 0.66 0.01 Bn
5 SOWG Sow Good Inc. 0.00 Bn -0.23 0.68 0.00 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 2.69 1.95
EV to Cash from Ops. EV/CFO 34.67 -14.42
EV to Debt EV to Debt 233.65 50.96
EV to EBIT EV/EBIT 33.73 17.24
EV to EBITDA EV/EBITDA 30.60 12.10
EV to Free Cash Flow [EV/FCF] EV/FCF 39.92 16.09
EV to Market Cap EV to Market Cap 0.97 1.87
EV to Revenue EV/Rev 6.35 3.41
Price to Book Value [P/B] P/B 4.84 4.14
Price to Earnings [P/E] P/E 50.54 25.27
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 3.61 1.08
Dividend Payout Ratio % Div Payout % (Qtr) 27.50 50.60
Dividend per Basic Share Div per Share (Qtr) 0.36 1.28
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 26.00 29.78
Interest Coverage Interest Coverage 0.00 -3.81
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -22.36 21.87
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -13.90 -13.09
Dividend Growth (1y) % Div 1y % (Qtr) 2.88 -2.75
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 0.05 -160.96
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 15.16 -90.21
EBIT Growth (1y) % EBIT 1y % (Qtr) 17.67 -143.34
EBT Growth (1y) % EBT 1y % (Qtr) 17.67 -253.26
EPS Growth (1y) % EPS 1y % (Qtr) 0.78 -132.50
FCF Growth (1y) % FCF 1y % (Qtr) -3.64 20.09
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 7.16 -36.86
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.59 0.74
Cash Payout Ratio Cash Payout (Qtr) 0.17 0.20
Cash Ratio Cash Ratio (Qtr) 0.74 0.28
Current Ratio Curr Ratio (Qtr) 2.83 2.07
Debt to Equity Ratio Debt/Equity (Qtr) 0.02 0.75
Interest Cover Ratio Interest Cover Ratio 0.00 -3.81
Times Interest Earned Times Interest Earned 0.00 -3.81
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 22.00 -41.04
EBIT Margin % EBIT Margin % (Qtr) 19.44 -52.72
EBT Margin % EBT Margin % (Qtr) 19.44 -55.42
Gross Margin % Gross Margin % (Qtr) 36.20 -0.86
Net Profit Margin % Net Margin % (Qtr) 12.90 -57.48