Entering text into the input field will update the search result below

High Liner Foods: Finding Value In Fish Sticks

J Cooper profile picture
J Cooper


  • Stable business with slowly-increasing revenues.
  • Poor execution in 2017 has hindered margins and share prices.
  • High Liner's stock price has suffered, with its dividend yield at its highest-ever level.
  • I value shares at ~ C$13.50/share in one year, which would represent 28% upside, including dividends.

** High Liner Foods is publicly-traded on the Toronto Stock Exchange under the symbol HLF. However, its financial reporting is done in US dollars. All figures in this article are listed in US dollars unless otherwise noted.


High Liner Foods (TSE:HLF; OTC:OTCPK:HLNFF) is a small-cap Canadian food-processing company that focuses on frozen fish products. Its 2017 execution was spotty, marred by production challenges and a recall in the busy Lent season. The year also included worse-than-anticipated results from its May 2017 Rubicon acquisition.

Perhaps, as a result, High Liner's share price has dropped from $26 CAD in September 2016 to a close of $11.03 CAD on March 5, 2018. Forward dividend yields have swelled to ~ 5.3% (based on $0.145 CAD/quarter dividends), the highest yield in the company's 15-year dividend history.

Despite this, High Liner's business model and positioning in the market are unchanged. It is the leader in its segment in Canada and second in volume in the United States. Margins (especially gross and EBITDA) fell in 2017 due in part to production challenges that are unlikely to recur. Revenues are stable and slowly growing - CAD adjusted revenues rose 3.0% in 2017 and USD adjusted revenues rose 1.3%.

At its current price, HLF offers attractive value on a stable food service brand, despite potential headwinds in the form of shifting consumer preferences and rising seafood costs. I value shares at ~ C$13.50/share in one year, for 28% gains, including dividends.


High Liner Foods is a Canadian food-processing company that specializes in processed frozen seafood. Its most recent quarterly report states:

We are the leading North American processor and marketer of value-added (i.e. processed) frozen seafood, producing a wide range of products from breaded and battered items to seafood entrées, that are sold to North American food retailers

This article was written by

J Cooper profile picture
I used to run a Marketplace service called The Growth Operation.  That service has subsequently been moved to Julian Lin, who is highly-skilled in analyzing and evaluating the cannabis investing marketplace.Julian has renamed the service to The Weed Investors, and it promises to continue to be a great resource and community for investors interested in this growing sector.  I am a contributor to Julian's The Weed Investors community.Thank you to each and everyone who previously subscribed to The Growth Operation.  I appreciate all of your support.-J. Cooper

Analyst’s Disclosure: I am/we are long HLF.TO. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (31)

Down yet again today. No end in sight for this decline. CEO has purchased 20,000 shares in the open market since Feb 27th.
J Cooper profile picture
It's up today, but I don't plan to pay too much attention to day-to-day prices. As others have noted, it's fairly thinly-traded, with average volume of 84,000 on Yahoo. I expect that will lead to a bit more short-term volatility than might otherwise be present.

The CEO purchasing shares sounds promising - let's hope he's correct to do so.
Shares too thinly traded.
The conclusion states:

"Shares have been battered over the past 1.5 years".

Perhaps they should stick to only battering their fish.
Good article and comments but think I'm missing something. Declining EBITDA and a mountain of debt in a low margin business spells disaster. Not a target for being acquired for the same reason.
J Cooper profile picture
That is a reasonable concern. I expect EBITDA to rise next year, though, and the mountain of debt is largely from Rubicon. I agree they'll have to bring down their debt.
onec007 profile picture
High Liner debt has always fluctuated which is highly dependent on acquisitions. The recall is behind them and hopefully they will be able to book some recoveries from the incident in the quarters to come. The issue is now:
1. production efficiency (operations) which they have addressed and are continuing to work on
2. Rubicon's integration.

I too believe that they will bring down their debt levels this year and should see it more aligned with historical levels in the future. I still believe that another acquisition is on the table (Clover Leaf).
Orphan Brigade profile picture
The Clearwater fiasco are you speaking of the take away in the clam business?
User 47803322 profile picture
Yes the virtual seizure and distribution to another group by our lovely socialist government politburo.
Orphan Brigade profile picture
Ah, that what I figured. So they hand over the business to people that have no experience or expertise in the area in the expectation that somehow this will result in self-sufficiently ?
User 47803322 profile picture
Couple of points that I think are important: Rubicon: The direct sourcing is not from one of the major customers, it is THE major customer = Sam's Club, so that is a huge dent. The other is the return of the CEO from 1992-2015 (Henry Demone) who came back onside in August '17 and replaced Keith Decker who was only CEO for two years. I think that's a solid move but some of the pounding they are getting is simply sympathy selling over the Clearwater fiasco. Even though I am -25% I bought for the long term and with a low payout ratio I am content to wait.
J Cooper profile picture
Thanks for the notes. For those who subscribe to PRO, there's a good article on HLF.TO from another author that talks about management in some detail.

I'm planning to hold this long term.
Orphan Brigade profile picture
That is a big drop. I have just started looking at these companies as they have taken quite a hit recently...trying to figure out if they are a bargain or are they continuing with their downward momentum. I also found a Norwegian company called Griego Seafood. (I think that's how it's spelled) Take a look at them. They also have operations in Canada,to what extent I don't know. They are a little hard to find any information on....
J Cooper profile picture
I'll take a look, although a big part of the attraction to HLF.TO for me is that they are Canadian. I don't have any particular patriotism, but it means their dividends are taxed more favorably in Canada for me as I hold this in a taxable account.
Orphan Brigade profile picture
I wonder how they tax Americans. I believe Canada get their slice of the pie but we can amend our axes with a write off for any gains or dividends..
J Cooper profile picture
I'm guessing there's a foreign withholding tax, but then you get a tax credit for paying foreign taxes from the IRS. It might work out to be basically a wash, but I'm not a tax guy, so I wouldn't take my word.
Looks like it;s down again today. Trying to get in but this is the proverbial falling knife. The 5 year chart shows a decline from $23 to under $10 then back to $26 and now well under $11. What caused the intial plunge 2.5 years ago? Where is the bottom for this

Also, not sure if HLF is in the clam market but this surely isn't helping competitor Clearwater

Orphan Brigade profile picture
I saw that article and looks like Clearwater got bent over in that deal. Especially after dumping all that money into developing that cash cow. PC strikes again. They have a good chance at winning that lawsuit, how can you just rip a business out from underneath a company in the interest of political correctness...I thought Canada was a little more capitalist minded than that..
J Cooper profile picture
I don't think clams are a big part of their business, although they sell some clam products.

Orphan Brigade profile picture
No, but they are with Clearwater, they took a hit in those little money makers..
vc7416 profile picture
Maybe I missed it in the article, but does HLF deal in only wild caught or farmed products??
Orphan Brigade profile picture
I think they have both..
J Cooper profile picture
They do both. They don't have any fishing operations but purchase both types of fish from suppliers.
Orphan Brigade profile picture
Good article thanks for writing. I have noticed a lot of these Canadian Seafood companies have very low daily volume and the PPS doesn't move much up or down..Just wondering your take on that. Any input would be greatly appreciated...
J Cooper profile picture
Orphan, do you mean on Canadian exchanges or the OTC US versions? I can't imagine a lot of traders are day-trading frozen fish companies, in general.
Orphan Brigade profile picture
Really, either one. I look at them on TD and the volume is minimal with sometimes the bid/ask at goose eggs...
Orphan Brigade profile picture
Jonathan, if you may take a look at Grieg Seafood out of Norway, they have operations in Canada and seem to be a fairly stable organization but have a lot of debt. Pays a nice dividend and not outrageously expensive...Have you heard of them ?
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.