Is it a good company at a reasonable price? The dividends are extremely low and I do not know why they bother to pay them. I do not buy dividend stocks when the dividend yield is lower than 1%. It takes too long to get a decent dividend yield on your original purchase. See the chart with a paragraph on this below. I would worry about the amount of debt this company has. I also do not like the fact that the book value has been negative. This stock is just off its recent high. My current stock price testing is showing that the stock is relatively expensive.
I do not own this stock of Dollarama Inc (TSX-DOL, OTC-DLMAF). I belong to an investment club and this was a stock I volunteered to look at. I had, of course, heard of this stock before and people have mentioned that it is doing very well for shareholders.
When I was updating my spreadsheet, I noticed that the Chairman of this company has sold almost half his shares. He had shares worth $17.4M last year and shares worth $9.8M this year. Prior to last year the Chairman was accumulating shares. Company is still growing strongly. See chart below. Debt is still very high with Leverage at 5.46 and Debt to Equity (D/E Ratio) at 4.46. Good ratios are less than 2.00 and 1.00 with acceptable ratios less than 3.00 and 2.00 respectively. Still these ratios are not as bad as last year when they were at 13.82 and 12.82. Dividends are hardly noticeable at 0.31%.
This company has a financial year ending February 1 each year, so I am reviewing the annual report dated February 1, 2025. The company is currently in its 2026 financial year.
If you had invested in this company in December 2014, for $1,009.80 you would have bought 51 shares at $19.80 per share. In December 2024, after 10 years you would have received $103.45 in dividends. The stock would be worth $7,174.28. Your total return would have been $7,257.73. This would be a total return of 22.06% per year with 21.63% from capital gain and 0.43% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $19.80 | $1,009.80 | 51 | 10 | $103.45 | $7,154.28 | $7,257.73 |
In the chart below, I am showing 5 and 10 year total growth and per year growth in columns 3 and 4. Column 5 shows growth expected over 12 months to the second quarter in 2025 and expected growth over this year. You can see that all growth is still good between the 10 year growth and 5 year growth.
| Yr | Item | Tot. Gwth | Per Year | Gwth | Coverage |
|---|---|---|---|---|---|
| 5 | Revenue Growth | 69.33% | 11.11% | 4.30% | <-12 mths |
| 5 | EPS Growth | 133.71% | 18.50% | 8.41% | <-12 mths |
| 5 | Net Income Growth | 107.17% | 15.68% | 8.00% | <-12 mths |
| 5 | Cash Flow Growth | 124.45% | 17.55% | 2.35% | <-12 mths |
| 5 | Dividend Growth | 97.05% | 14.53% | 18.05% | <-12 mths |
| 5 | Stock Price Growth | 214.32% | 25.74% | 30.43% | <-12 mths |
| 10 | Revenue Growth | 175.15% | 10.65% | 25.21% | <-this year |
| 10 | EPS Growth | 464.71% | 18.90% | 24.66% | <-this year |
| 10 | Net Income Growth | 295.57% | 14.74% | 9.02% | <-this year |
| 10 | Cash Flow Growth | 362.00% | 16.54% | 7.92% | <-this year |
| 10 | Dividend Growth | 235.61% | 12.87% | 20.70% | <-this year |
| 10 | Stock Price Growth | 608.48% | 21.63% | 41.72% | <-this year |
The dividends are very low, so if you buy this stock what sort of dividends would you get in the future? This chart is an attempt to show this. If dividends continue to increase by 14.53% as they have in the past 5 years, what you would get in dividends in 5, 10 and 15 years is shown in the Dividends Paid (Div Pd) column. The next column shows what your yield on the current stock price of $184.16 would be. The last column shows the percentage of your stock’s price would be covered by dividends in 5, 10 and 15 years.
| Div Pd | Div Yield | Years | At IRR | Div Cov |
|---|---|---|---|---|
| $0.83 | 0.45% | 5 | 14.53% | 1.53% |
| $1.64 | 0.89% | 10 | 14.53% | 4.11% |
| $3.24 | 1.76% | 15 | 14.53% | 9.17% |
The current dividend yield is low with dividend growth moderate. The current dividend yield is low (below 2%) at the very low rate of 0.23%. The 5, 10 and historical median dividend yields are also low at 0.30%, 0.35% and 0.39%. The dividend growth is moderated (8% to 14% ranges) at 14.5% per year over the past 5 years. The last dividend increase was in 2025 and it was for 17.9%.
The Dividend Payout Ratios (DPR) are good. The DPR for 2024 for Earnings per Share (EPS) is good at 8% with 5 year coverage at 8%. The DPR for 2024 for Cash Flow per Share (CFPS) is good at 6% with 5 year coverage at 6%. The DPR for 2024 for Free Cash Flow (FCF) is good at 9% with 5 year coverage at 8%. The FCF for 2024 varies from $1,110M to $1,397M.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 8.34% | 8.19% |
| CFPS | 5.93% | 5.57% |
| FCF | 8.84% | 8.27% |
Debt Ratios shows debt is too high. The Long Term Debt/Market Cap Ratio for 2024 is good at 0.05 and currently at 0.04. The Liquidity Ratio for 2024 is low at 1.18 and 1.24 currently. If you added in Cash Flow after dividends, the ratios are fine at 2.71 and currently at 2.32. The Debt Ratio for 2024 is low at 1.22 and 1.23 currently. The Leverage and Debt/Equity Ratios for 2024 are far too high at 5.46 and 4.46 and currently at 5.28 and 4.28. For these ratios good is low than 2.00 and 1.00 and fine is lower than 3.00 and 2.00. I guess a consolidation is that these ratios are better than they have been in a while.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.05 | 0.04 |
| Intang/GW | 0.02 | 0.02 |
| Liquidity | 1.18 | 1.24 |
| Liq. + CF | 2.71 | 2.32 |
| Debt Ratio | 1.22 | 1.23 |
| Leverage | 5.46 | 5.28 |
| D/E Ratio | 4.46 | 4.28 |
The Total Return per year is shown below for years of 5 to 16 to the end of 2024. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2019 | 5 | 11.31% | 26.07% | 24.08% | 33.00% |
| 2014 | 10 | 11.73% | 22.06% | 20.57% | 0.43% |
| 2009 | 15 | 14.56% | 28.04% | 27.36% | 0.68% |
| 2008 | 16 | 14.56% | 27.37% | 26.76% | 0.60% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 21.65, 25.92 and 30.39. The corresponding 10 year ratios are 20.37, 25.46 and 30.68. The corresponding historical ratios are 19.28, 24.60 and 31.71. The current ratio is 40.17 based on a stock price of $184.16 and EPS estimate for 2026 of 4.59. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $23.31. The 10-year low, median, and high median Price/Graham Price Ratios are 7.77, 9.37, and 10.98. The current ratio is 7.90 based on a stock price of $184.16. The current ratio is between the low and median ratios of the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The P/GP Ratio are really high. Normally you expect ratios from around 0.80 to 1.20. The P/GP Ratios are really high because of a very low Book Value per Share. Also, I had to fudge a few of the calculations as the formula cannot handle a negative book value. So, there are lots of problems with this test.
I get a 10-year median Price/Book Value per Share Ratio of 24.71. The current ratio is 34.95 based on a stock price of $184.16, Book Value of $1,456M, and Book Value per Share of $5.27. The current ratio is 41% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. The P/B Ratios are very high. I good ratio is consider to be around 1.50.
I also have a Book Value per Share estimate for 2026 of $6.50. This implies a ratio of 28.35 based on a stock price of $184.16 and Book Value of $1,795M. This ratio is 15% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10-year median Price/Cash Flow per Share Ratio of 20.44. The current ratio is 28.69 based on Cash Flow per Share estimate for 2026 of $6.42, Cash Flow of $1,774M and a stock price of $184.16. The current ratio is 40% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 0.39%. The current dividend yield is 0.23% based on dividends of $0.4232 and a stock price of $184.16. The current dividend yield is 34% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median dividend yield of 0.35%. The current dividend yield is 0.23% based on dividends of $0.4232 and a stock price of $184.16. The current dividend yield is 41% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10-year median Price/Sales (Revenue) Ratio is 3.78. The current ratio is 7.08 based on a stock price of $184.16, Revenue estimate for 2026 of $7,189M and Revenue per Share of $26.01. The current ratio is 87% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
Results of stock price testing is that the stock price is probably expensive. The dividend yield testing is saying that. It is confirmed by the P/S Ratio test. Most of my testing is saying that the stock price is expensive, but a couple say reasonable. There are problems with a number of my tests.
When I look at analysts’ recommendations, I find Strong Buy (5), Buy (4), Hold (6), and Sell (1). The consensus is a Strong Buy. The 12 month stock price consensus is $198.81 with a high of $223.00 and low of $125.00. The consensus stock price of $198.81 implies a total return of 8.18% with 7.96% from capital gains and 0.23% from dividends based on a current stock price of $184.16.
There are a variety of opinions on Stock Chase. One analyst gives it a partial sell because Canada is saturated with stores and he will have to expand abroad and they can be problematic. Some still like it, of course. Amy Legate-Wolfe on Motley Fool says to buy as it will quietly compound its growth. Robin Brown on Motley Fool says this stock can help you battle inflation. The company put out a press release via Newswire about its fourth quarter dated February 2, 2025. The company put out a press release via Newswire about their first quarter of 2026 dated May 4, 2025.
Simply Wall Street via Yahoo Finance reviews this stocks and talks about how great it has been in the past. They have one warning of has a high level of debt.
Dollarama is Canada's largest dollar store chain that sells a broad range of everyday consumables and household items at low fixed price points. It also holds a 60% stake in South American value retailer Dollarcity, which operates stores across Colombia, Guatemala, El Salvador, Peru, and Mexico. It also owns Australian retail chain The Reject Shop. Its web site is here Dollarama Inc.
The last stock I wrote about was about was Ovintiv Inc (TSX-OVV, NYSE-OVV) ... learn more. The next stock I will write about will be Trigon Metals Inc (TSX-TM, OTC-PNTZF) ... learn more on Monday, October 27, 2025 around 5 pm.
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