Shoppers Drug Mart

I bought this stock (TSX-SC) for my TFSA, so I did a purchase in January 2009 and in January 2010. To date, I have lost some 21% per year. This is not a stunning performance. After I had purchased this stock, analysts seem to have come up with all sort of negative things. One problem is the Ontario change in how much pharmacies can charge for generic drugs. One analyst recently said that Shoppers was ringing up as sales, items bought with Optimum points. This will not affect earnings, but can certainly make sales look better than they are. I just have that feeling that this investment may not turn out to be one of my better investments. Or, maybe I just bought this stock at the wrong time.

First, what gives me a bad first impression is that when you look at the investor section on their site, you cannot access anything. Either you get the PDF document is damaged and cannot be shown or you get a 10 second time out from their servers. Although, I found you if you open Adobe Reader ahead of looking at their statements, you can sometimes get something (and sometimes not). The next thing to address is that I cannot seem to get much stock data prior to 2001. This company went public in its present form in 2001.

A lot of the growth figures are not bad. Take for example dividend growth. Dividends were started in 2005 and over the past 4 years has increase at the rate of over 21% per year. They increased their dividends in 2010, of which I might say, many companies did not do. If you had held this company for the past 5 years, you would have made about 7 to 8% per year return. The 10 year figure is better at 12 to 13% per year.

Cash flow and revenues, two items that must have growth for a company to have growth, have not fared badly over the last while. The 5 and 10 year growth figures for revenue per share have grown by almost 8% per year and 11% per year, respectively. The 5 and 9 year growth figures for cash flow have been 8.8% per year and 16.5% per year, respectively. I guess the main thing is that this stock has taken a beating since the end of 2009 and the stock price is down some 24%. Over the same period, the TSX is down just over 2%.

The next thing to talk about is Liquidity and Asset/Liability Ratios. These ratios are quite good, as the current ones are 1.71 and 2.43 respectively. Any time these ratios are over 1.50, they are good ratios. The last thing to talk about is Return on Equity. The ROE at the end of 2009 was 15.3% and the 5 year average is 15.7%. Both these figures are very good.

Tomorrow, I will take a look at what the analysts say on this stock and look at spreadsheet ratios in connection with the stock price.

Shoppers Drug Mart Corp. is a licensor of Shoppers Drug Mart in Canada and Pharmaprix in Quebec. The company owns and operates Shoppers Home Health Care stores. It also owns MediSystem Technologies Inc. and the new Murale Stores. Its web site is here Shoppers. See my spreadsheet at sc.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 for stocks followed and investment notes. Follow me on twitter.