Friday, September 5, 2008

Leon’s Furniture 2

As I said yesterday, I have not made much on this stock (TSX-LNF), but I still have high hopes for it. There are few analysts following this stock, as it is not a very big company. However, I feel that it is a worthy investment. As far as I can see, there seems to be only one analyst following this stock, although this is hard to tell. The one analyst I found has a hold rating on this stock. I do not know why. Perhaps waiting to see sentiment if towards this stock will change. The stock peaked in the early part of this year and has only gone down since.

This stock is under the Consumer Staple Index. This index has not done as well as the TSX Index over the past year or even past 5 years. You have to go back to the last 10 years to find the Consumer Staple Sub-Index doing as well or better than the TSX Index. Leon’s over the past 1, 3 and 5 years has done about as well as the TSX Index. Over the past 10 years, this stock has done better than both the TSX Index and the TSX Consumer Staple Sub-Index.

I invest for the long term and I think this stock is fine. The one thing I think is very positive is there is insider buying on this stock. The buying is by the Leon family. This stock is a small one, with the Leon family owing some 68% of the outstanding stock. I do not necessarily find a family owned stock a negative, but I know that others do. If like family owned stock that pass on reasonable returns to minority shareholders and I think Leon’s does this.

Other positives are the yield at 2.28% is higher than the 5 year average of 2.05%, the P/E at 13.8% is lower than the 5 year average of 15.3%, and the increase in EPS is expect to be above the 5 year average of 10%. A negative is that although there is a special dividend declared for this year, the company has not raised the regular dividend rate. Also, the Accrual Ratio is too high with the June 2008 Quarterly Report. Any Accrual Ratio above 5% is high.

This company sells home furnishings, appliances and electronics through a chain of retail facilities and franchises located in Canada. Its web site is See my spreadsheets on this company at I have reloaded my spreadsheet with figures from the June 2008 Quarterly Report.

I have updated it with the figures from the June 08 quarterly report.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at for a list of the stocks for which I have put up spreadsheets on my web site.

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