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Crown Crafts: Improvements Happening, But Caution Required (NASDAQ:CRWS)

Crown Craft (CRWS) came through a screen we ran where the objective was to find dividend-paying companies trading at low valuations. Crown Craft at present is trading with a P/E of 8.7 and is paying a forward dividend of $0.32, which currently equates to a yield of 5.61%. Being well above average, the dividend is a great place to start when researching the company. The reason being that the sustainability of dividend encompasses the income statement, cash flow statement as well as the balance sheet.

Suffice it to say, the holy grail of value investing is to buy companies that are undervalued and which also return plenty of the company’s cash flow to shareholders. We state this because dividends have accounted for almost half of the gains of the S&P 500 over the past century.

In saying this, Crown Craft’s dividend of $0.32 per share has been at this level since 2013, so growth has been pretty much non-existent. Although the yield looks favourable as mentioned above, the lack of growth will certainty detract some investors. The reasons being that growth:

  1. Fosters confidence for future growth
  2. Protects against inflation
  3. Enables shareholders get a slice of the earnings pot.

To see if the lack of dividend growth is growth-related, we go to the company’s income statement. Although net income and EPS have grown since 2013, operating income as well as top line sales have actually fallen during this period. The float has more or less remained the same, but it is clear that the dividend has not been raised due to the clear trend of poor EBIT growth.

Despite the lack of growth, Crown Craft has been able to generate solid cash flows, which have paid for the dividend in recent times. The trailing cash flow payout ratio comes in at

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California nursing homes required to report COVID-19 cases

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Katie Finn stays in virtual contact with her grandmother in nursing home.

Palm Springs Desert Sun

Plagued by some of the worst COVID-19 outbreaks, skilled nursing facilities in California will now be expected to do more to prevent the spread of infectious diseases from spreading thanks to a bill signed by Gov. Gavin Newsom on Tuesday. 

AB-2644, which was introduced by Assemblymember Jim Wood, D-Santa Rosa, in February, aims to protect residents as well as health care workers by requiring additional staffing and increasing reporting requirements. It requires each facility to have a full-time staff member, or the equivalent, dedicated to infection prevention and control.

It also requires facilities to report each disease-related death to the California Department of Public Health within 24 hours, and requires the state tomake the total number of deaths available on its website weekly. 

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“The close living quarters in these facilities makes residents and health care workers extremely vulnerable to infectious diseases and we know that the use of best practices for infection control can reduce their chances of becoming ill and they deserve that protection,” Wood said in a statement earlier this summer. 

Skilled nursing facilities were already required to adopt and implement an antimicrobial stewardship policy in line with guidelines developed by the U.S. Centers for Disease Control and Prevention, the federal Centers for Medicare and Medicaid Services, or other specified professional organizations, according to the legislative counsel’s digest.

But

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