Tuesday, January 26, 2010

Reitmans (Canada) Ltd

Unlike the stock I talked about yesterday, this is a good dividend paying stock. This stock is very well though of by analysts that follow Canadian dividend paying conservative stock. This stock was on the lists Dividend Aristocrats list at www.tmxmoney.com/en/individual.html (see indices) until recently. I notice that it is still on the Dividend Achievers at www.indxis.com/DividendAchievers.html . Since the company has not raised their dividend as usual this past year, it is probably only a matter of time before its removal from this list also.

Not withstanding the above, this stock has a good record of dividend increases. The 5 year and 10 year growth in dividends stand at 46% per year and 27% per year. I do not think that dividend increases with continue at this pace. The payout ratio from cash flow was just below 40% in 2009 and is expected to be almost 38% this year. Note that this company’s year end is the end of January of each year.

Under this stock, the growth in earnings, dividends, total return and book value have all been great. The 5 and 10 year growth in revenue has not been as good as it was 4% per year and 8.5% per year respectively. The other less than stellar growth is in Cash Flow. Here the 10 year growth is very good, but the 5 year growth is only 3% per year. This stock has been hit by the recent recession.

This stock always seems to have a strong balance sheet. The Liquidity ratio is 4.20, where anything over 1.50 is great. The Asset/Liability Ratio is also high at 5.23. Here again, anything over 1.50 is great. When you look at the Return on Equity, this company has also done well. The 5 year average ROE for the year ending January 31, 2009 was 20%. Last year the ROE was 16% and this year, so far, it is almost 14%. This is not bad considering this is retail and we are coming out of a recession. The Accrual Ratio was high at just over 4% at the end of January 2009, but the current one is negative, so this is a good change.

I do not own this stock, but if I was looking for a retail stock, this is certainly one I would consider.

Reitmans (Canada) Limited operates a network of clothing stores specializing in women's & men's fashions and accessories. The company operates stores under the names Reitmans, Smart Set, Pennington Superstores, RW & Co., Thyme Maternity, Addition-Elle, and Cassis. Sherlex Investments Inc 50% (Reitman family. Its web site is www.reitmans.ca. See my spreadsheet at www.spbrunner.com/stocks/ret.htm.

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 www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets. Also, look at other investing notes on my website at www.spbrunner.com/investing.html.

1 comment:

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