Friday, June 5, 2009

Calloway REIT 2

I am continuing my review this stock (TSX-CWT.UN) today. I did a spreadsheet on this stock as it is on the Dividend Achievers list at I am gradually doing spreadsheets on all the companies on this list. I do not own stock in this company. You cannot expect all stocks on such lists to be great companies for investment. Personally, I do not like this stock.

I first looked at Insider Buying and Selling on this stock. There is very little of both, but with slightly more Buying than Selling. I do not think we learn anything from this. I always like to look at this because sometimes this is the place to see good or bad news early.

Even though the yield is almost 11% compared to the 5 year average of 7.5%, most analyst have given a recommendation of Hold on this stock. Also, the 5 year average was pushed up because the yield for 2008 was 13.6% but most the yields for the last 5 years were around 6%. The P/E ratio at 14.7 is not bad. I would not want to compare it to the 5 year average, as even the 5 year average low was 44.

Over the last few years, the P/E went very high. This is because the stock price soared in 2006 and in 2007. The stock price also went way above the Graham Price. However, at least at the current time, the Graham Price and the stock price are closer, but with the Graham price at about $11.50 and the current price at $14, the stock price is still almost 18% higher than the Graham Price. The only good ratio, in connection with a good buying price I see is that the Price/Book Value ratio is .95 is lower than the 10 year average of 1.20.

Looking at the Charts, this stock has done as well as the REIT index over the past 1 to 5 years. I know that the charts show that this stock has done much better over the last 10 years, but I do not think that stock prices over 5 years out are reliable. None of the charts seems to have noticed the 2 for 1 consolidation of February 2002. They seem to have picked up the larger consolidation in November 2002, but I did not feel that the stock prices more than 5 years out were reliable. (I have shown these in light purple on my spreadsheet because I am just not sure of them.)

In looking at analysts recommendations, I see a few Buys and a few Reduce calls, but most of the calls are for a Hold. The consensus recommendation is a Hold. (See my site for information on analyst ratings.)

Calloway REIT is the largest owner of large-format unenclosed retail properties in Canada. 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.

1 comment:

  1. P/E and P/Book are not metrics one uses to analyze the relative value of REITs. Firstly, with regard to P/E, REITs earnings are irrelevant at best -if not miniscule. Given the nature of Real Estate, they claim vast amounts of depreciation expense which lowers earnings. The metric that REIT analysts use is Price to FFO or Funds From Operations -equivalent to Free Cash Flow, net earnings + all non-cash expenses such as Depreciation.