Thursday, September 4, 2008

Now for something Good and Cheap in Price, Leon’s Furniture

This stock is cheap in that that price per share is low. If you do not have much money to spend buying shares, consider Leon’s where the current share price is $12.17 (TSX-LNF). This stock is not on anyone’s list of best dividend paying stocks for TSX; however, I think it is a good stock. I first bought this stock in June of 2006 and since then I have made some 6.2% per year, including dividends. This is, of course, not great, but considering we are currently in a bear market, this is not bad.

The following values are all for the last 5 years to December 31, 2007, which is the last annual statement date. The Revenues have increased at 7.2% per year, and this is not bad. The increase in Earnings per Share (EPS) has not been bad at 10.6% per year. The increase in dividends has been a very good number at 18.7% per year for the regular dividend. The closing price has increased at the rate of 13.1% per year. This is different from my figures above, as my figures in the first paragraph are from Quicken and they are figures from purchase date to the present date.

The Current Asset/ Current Liability Ratio at 1.9 is very good. The leverage (Asset/Book Value) is also good 1.47. The Return on Equity (ROE) is good at 18.2% for 2007 and this is slightly higher than the 5 year average of 18.1%. The Accrual Ratio is not good at 7.1%, but when the financial cash flow is included, it is at a better, neutral figure of 1.7%. Dividends have raised the 5 year average return by over 2% per year.

I still expect to do well in this stock over the long term. I will therefore, not be selling it because of the current decline in price. Leon has a habit of every few years of declaring a special dividend. They have already declared a special dividend of $.12 per share in May of this year. I know that some people have been confused by their special dividend, thinking that Leon is being inconsistent in the dividend declaration.

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

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 web site.

No comments:

Post a Comment