Thursday, June 21, 2012

Reitmans (Canada) Ltd.

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I do not own this stock (TSX-RET.A). I have been following this stock for some time. It is one that I picked up off of a list of good companies to invest in by The Investment Reporter. This is a MPL publication. See their site. This is a great newsletter for an investor just starting out.

This is great Canadian dividend paying stock. Their 5 year median dividend yield is 5%. The 5 and 10 years growth in dividends is at 6.6% and 23% per year. Dividend increases have really slowed down lately. They, as have all retail companies, have been hit by the latest recession. They also did not increase their dividends in the financial year ending in January 2012. The last dividend increase in 2011 was an 11% increase.

Dividend Payout Ratios are good with 5 year median Ratios of 60.47% for earnings and 35.14% for cash flow. The DPRs peaked in 2012 at 111% for earnings and 54% for cash flow. The DPR for earnings is expected to be around 90% for 2013. (The financial years end in January each year so the last financial report was dated January 2012.)

The total returns over the past 5 years were a negative 4.83% per year. This was ameliorated by dividends of 3.85% per year. The capital loss was at 8.68%. However, the 10 year returns are quite good at 23% per year, with dividends accounting for 6.62% of the return per year and 29% of the total returns per year. The capital gain was 16.46% per year.

On this stock, all the 10 year growth rates are much better than the 5 year growth rates. Unfortunately, this is true of a lot of our companies. The last 5 years have been tough ones for a lot of companies, especially those in retail.

Revenues are up 0% and 6% per year over the past 5 and 10 years. Revenues per share are up 1.2% and 6.6% per year over the past 5 and 10 years. The discrepancy comes because Reitmans have been buying back stocks. Outstanding shares are down by 0.2% and 4.5% per year over the past 5 and 10 years.

Earnings per share are down by 12.6% per year over the past 5 years. The EPS is up 6% per year over the past 10 years. Analysts following this stock think that earnings will grow over the next 3 years.

Cash flow is down 3% per year over the past 5 years. It is up 11.8% per year over the past 10 years. Book Value is up 4% per year over the past 5 years and up 8.6% per year over the past 10 years.

This is a company with a strong balance sheet. The current Liquidity Ratio is 3.93 and the current Debt Ratio is 4.46. Having a strong balance sheet really helps companies weather a lot of market volatility and recessions. The current Leverage and Debt/Equity Ratios are also quite good at 1.29 and 0.29. The company does not have much in the way of debt.

The Return on Equity was a bit low for the financial year ending in January 2012 at 9.6%. It did not quite make it into the good zone of 10% to 15%. However, the 5 year median ROE is very good at 16.4%. The ROE on comprehensive income coming in at 9.2% for the end of January 2012 and at 15.1% for the 5 year median rate confirms the ROE based on net income.

This has been quite a good stock for its investors. This is a retail store out of Montreal, as was Le Chateau I reviewed yesterday.

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. 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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