Tuesday, December 14, 2010

Reitmans (Canada) Ltd 2

Reitmans (TSX-RET.A) is a stock I follow but do not own. I was looking at this stock to buy after selling RIM. This stock has a financial year ending at the end of January of each year. I have updated my spreadsheet for January 31, 2010 financial year. I have also updated it for the 2nd quarterly reported dated July 31, 2010.

When I look at insider trading, I find that all the insider buying and insider selling is being done by officers and directors of the company. Of course, the CEO is a Reitman and this family does own half of this company. There is insider selling of $2.1M and insider buying of around $.3M giving a net selling of $1.8M. Reitmans have been buying back non-voting A shares for cancellation. The good thing I find and it expresses confidence in the company, is the raising of the dividends this year after two years of the same level of dividends.

The 5 year median low P/E Ratio is 9.7 and 5 year median high P/E Ratio is 15.6. The current P/E based on earnings estimates is 12.9, so it is a reasonable one, but not a low one. When I look at the Graham Price, I find a current one of $15.65. The stock price of $18.00 is 15% above this. The Graham Price is depressed currently because of lack of earnings increases. However, the stock price has been at or below the Graham Price during the financial year at some point most years.

When I look at the Price/Book Value Ratio, I get a current one of 2.31 and a 10 year average of 2.03. So the current P/B Ratio is about 14% above the 10 year average. The only valuation that shows a good current stock price is the dividend yield. The current yield is 4.4% and the 5 year average is 3.9%. However, the 10 year average high dividend yield at 4.8% is better than the current one. So the yield is better than average, but not better than the 10 year high.

When I look at analysts recommendations, I see Strong Buy, Buy and Hold recommendations. I can find no other. The consensus recommendation would be a Buy. (See my site for information on analyst ratings.) Analysts think the company is well managed and like the lack of debt. Others think that the retail trade is a tough business to make money in and so do not like any retail stock.

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, R. W. & Co., Thyme Maternity, Addition-Elle, and Cassis. Sherlex Investments Inc (Reitman family) owns 50% of this company. Its web site is here Reitmans. See my spreadsheet at 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 for stocks followed and investment notes. Follow me on twitter.

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