Wednesday, November 5, 2008

Forzani Group

I am reviewing this stock (TSX-FGL) today, as it is one that has recently been recommended as a value buy. I have not been following this stock, so I have built a spreadsheet on it to see if it is indeed a good buy. One thing about this stock is that it has just started paying dividends; the first one was due to be paid in February of this year. So, this might be a stock I would be interested in. However, it is not possible to see how this will work out, but it shows faith in the stock by those running this company.

If you had invested in this stock at any time over the past 5 years, you would have lost money in it because of the current stock price. However, we are in a severe bear market, and the stock price has more to do with that then anything else. Once we get past this bear market I am sure this will not be the case.

Looking at the fundamentals, this stock has not done badly in growing the revenues and Earnings per Share (EPS) on this stock. However, the increase in Cash Flow has been much better. The increase in Cash Flow, in fact, has been great, as it has been growing at the rate of 36% per year over the last 5 years. The Current Asset/Current Debt Ratio is a bit low at 1.38, but the Asset/Debt ratio is fine at 1.89. The Accrual Ratio is good in that it is negative. The Return on Equity (ROE) is not bad at 13%. Also, the book value has been growing at a healthy 10% over the last 5 years.

There is not in the way of negative comments I can make on this stock besides the Current Asset/Current Debt ratio being below a more desirable ratio of 1.5. This is not a great time to be heavily into debt.

The Forzani Group is a retailer of sporting goods, offering an assortment of brand-name and private-brand products through stores under the corporate and franchise banners. Their corporate banners include Sport Chek, Sport Mart, Coast Mountain Sports, National Sports, Athletes World and Hockey Experts. The franchise banners include Sports Experts, Intersport, Atmosphere, Nevada Bob’s Golf, Hockey Experts, Fitness Source, Pegasus, RnR, S3, Tech Shop and Econosports. Its web site is See my spreadsheet 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 my web site.

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