Is Intertape Polymer Group (TSX:ITP) Really a Bargain?

An investment in Intertape Polymer Group (TSX:ITP) can deliver some impressive upside, but how long will it take?

| More on:
The Motley Fool

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Intertape Polymer Group (TSX:ITP) stock is trading a good 26% lower than its 52-week high and near its 52-week low. So, bargain hunters might be interested in the stock right now.

Is the stock really a bargain?

At about $18.24 per share, Intertape trades at a P/E of about 12.8, while the company is estimated to grow its earnings per share by more than 7% on average through 2019.

At Thomson Reuters Corp., the 12-month consensus target on Intertape is US$19.40 per share, which represents roughly 38% near-term upside potential (based on a currency exchange of US$1 to CAD$1.30).

Additionally, Intertape has long-term double-digit growth potential. So, an investment in Intertape today can deliver some impressive price appreciation in the next few years while offering a 4% yield.

packaged boxes

Technically

Intertape has some support at the $17-per-share mark. If the stock falls below that point, investors should wait for the stock to show a bottom or consolidate before buying.

What does Intertape do?

Intertape operates in the specialty packaging industry. It develops, manufactures, and sells a variety of paper- and film-based pressure-sensitive and water-activated tapes, specialized films, and woven coated fabrics for industrial and retail use.

Its core market is in North America. So, it’s not surprising that most of its manufacturing facilities are in North America, while it has one each in Europe and Asia. Last year, it generated revenue of about US$898 million and net income of nearly US$64 million, leading to a net margin of roughly 7.1%.

Recent results

In the first quarter, Intertape increased its revenue by 14.5% to US$237.2 million primarily due to the Cantech acquisition and an increase in average selling price. Its gross margin decreased 2.4% to 21.3%. However, excluding the impact of a non-recurring expense, it would have only declined 1%.

The company’s adjusted earnings before interest, taxes, depreciation, and amortization were essentially flat. It would have increased 7% if not for the impact of the non-recurring item.

Profitability

Intertape’s return on asset (ROA) and return on equity (ROE) have been more than 5% and 15%, respectively, since 2012. For the trailing 12 months, its ROA and ROE were +9% and +25%, respectively. So, it looks like management has been investing in the right places.

Dividend

Intertape offers a 4% yield. Its payout ratio is estimated to be about 50% this year. So, its dividend is safe. Notably, the company pays a U.S. dollar-denominated dividend, which will fluctuate with the strength of the U.S. dollar against the Canadian dollar. However, its dividends are still designated as eligible dividends for favourable taxation compared to your job’s income.

Investor takeaway

Intertape looks like a bargain for a long-term investment (think three or more years). Instead of thinking that it’ll deliver 38% upside in the next 12 months, it’s more conservative to think that it can deliver an annualized rate of return of about 13% over the next three years, plus or minus 2% as a margin for error and to account for currency exchange fluctuations.

Should you invest $1,000 in Intertape Polymer Group right now?

Before you buy stock in Intertape Polymer Group, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the Top Stocks for 2025 and Beyond for investors to buy now… and Intertape Polymer Group wasn’t one of them. The Top Stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $20,697.16!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 29 percentage points since 2013*.

See the Top Stocks * Returns as of 3/20/25

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Kay Ng has no position in any of the stocks mentioned.

Confidently Navigate Market Volatility: Claim Your Free Report!

Feeling uneasy about the ups and downs of the stock market lately? You’re not alone. At The Motley Fool Canada, we get it — and we’re here to help. We’ve crafted an essential guide designed to help you through these uncertain times: "5-Step Checklist: How to Prepare Your Portfolio for Volatility."

Don't miss out on this opportunity for peace of mind. Just click below to learn how to receive your complimentary report today!

Get Our Free Report Today

More on Dividend Stocks

calculate and analyze stock
Dividend Stocks

Here’s How Many Shares of Brookfield Renewable You Should Own to Get $500 in Quarterly Dividends

If you want some dividends on deck, then consider this energy producer, which could provide that and more.

Read more »

TFSA (Tax free savings account) acronym on wooden cubes on the background of stacks of coins
Dividend Stocks

Here’s Exactly How $15,000 in a TFSA Could Grow Into $215,000

If you're looking to grow your $15,000 investment into $200,000, here's exactly how to get it done.

Read more »

A worker gives a business presentation.
Dividend Stocks

Navigating Economic Headwinds and Buying the Dip

If you're looking to get in on the markets, but fearful of the market dip, then here's how to navigate…

Read more »

Canadian Dollars bills
Dividend Stocks

A 10% Dividend Stock Paying Cash Every Month

This dividend stock doesn't only offer a massive income, but a variety of investments during this volatile period.

Read more »

TFSA (Tax-Free Savings Account) on wooden blocks and Canadian one hundred dollar bills.
Dividend Stocks

Income-generating Stocks That Could Accelerate Your TFSA Growth in 2025

Generate tax-free passive income in your TFSA with these two stocks and grow your wealth.

Read more »

woman looks out at horizon
Dividend Stocks

How I’d Invest $8,500 in Canadian Financial Services to Create a Wealth Legacy

Canada’s financial services sector can help you create a wealth legacy from a less than $10,000 investment.

Read more »

Person holding a smartphone with a stock chart on screen
Dividend Stocks

Is BCE Stock a Buy for its Dividend Yield?

BCE stock looks pretty appealing with a 12% dividend yield, but there's more to consider.

Read more »

Blocks conceptualizing Canada's Tax Free Savings Account
Dividend Stocks

TFSA: Invest $15,000 in This TSX Stock and Create $962.55 in Annual Passive Income

If there's one TSX stock to buy right now, it's this long-term hold that's been around for over 100 years!

Read more »