Wednesday, September 28, 2011

Andrew Peller Ltd 2

I do not own this stock (TSX-ADW.A). ). I owned it as Andres Wines from 1996 to 2000, and made a total return of 5.4% per year. All my return on this stock was dividends. If I had continued to hold it until today I would have made an annual return close to 15%. At the time I did not see it going anywhere and dividends were rather flat. Over the past few years they have been raising the dividend often, but not yearly.

When I look at insider trading, I find little insider buying and little insider seller. Although there is net insider buying, it is small at less than .1% of market cap. Some 41% of outstanding Class A stock is owned by insiders and some 78% of Class B stock is owned by insiders.

Both Class A and Class B stock is traded on the TSX. Class B stock has a slightly lower dividend than the Class A stock. I am following Class A stock. Class A stock is non-voting shares, and Class B stock is voting. A very small amount of Class A stock (.54%) is owned by 3 institutions and they increased their holdings by 2% over the past 3 months.

I get a 5 year low median Price/Earnings Ratio of 10.46 and a 5 year median high P/E Ratio of 13.62. The current one of 11.78 is close to the median P/E Ratio and therefore reasonable. The current P/E ratio is based on 12 months’ earnings to June 30, 2011.

I get a Graham Price of $11.81, based on last 12 months earnings and the current stock price of $9.85 is 24% below this. The median difference between the Graham Price and stock price is the stock price is 19% lower. By this measure, the current price is reasonable.

I get a 10 year median Price/Book Value Ratio of 1.25 and a currently one of 1.10. The current one is 88% of the 10 year median ratio and points to a current reasonable price. The current dividend yield is 3.94% and the 5 year median is 3.58%. By this measure the stock price is also reasonable. The 10 year median high dividend yield is 4%, so this makes the current stock price reasonable rather than great.

Few analysts follow this thinly traded stock. Last year one thought that its top price should be $10. That is if it reaches $10, sell. Another analyst thought that the stock was underpriced when the Price/Book Value ratio was 1.15. That is price was only 15% book value. Currently the Price/Book Value is lower at 1.10. Also, he thought that return in the future would be 5% capital gain, plus dividend. Another analyst commented that the company had a high level of debt compared to cash flow and that this was negative.

This blog, which talks about investing in booze stocks, mentions Andrew Peller. This older report from 4 Nov 2010, also mentions Andrew Peller. This article talks about new Ontario tax and Andrew Peller.

I have diversified into retail stocks and I will continue to track this one.

Andrew Peller Limited (the “Company”) is a leading producer and marketer of quality wines in Canada. With wineries in British Columbia, Ontario and Nova Scotia, the Company markets wines produced from grapes grown in Ontario’s Niagara Peninsula, British Columbia’s Okanagan and Similkameen Valleys and vineyards around the world. They also market craft beer under the Granville Island brand. The Company produces and markets consumer-made wine kit products through Winexpert and Vineco International Products. The Company’s products are sold predominantly in Canada. Class A shares are non-voting. Its web site is here Andrew Peller. See my spreadsheet at adw.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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