Shoppers Drug Mart

Note: Shoppers increased their dividend for 2013 to $.285 per share per quarter and this gives them a current yield of 2.66%. This is a 7.5% increase.

I own this stock of Shoppers Drug Mart (TSX-SC, OTC- SHDMF). This stock has been a disappointment for me. I watched it for a number of years before buying and it proceeded to go down after all my purchases. I bought the stock for my TFSA in 2009, 2010 and 2011. By May of 2011 I sold some shares. I have made the grand total of 1.03% per year on this investment. The portion attributable to dividends is 2.97% per year with a capital loss of 1.76% per year.

Dividend yield is currently around 2.5% and the stock has a 5 year median dividend yield of 2.26%. The Dividend Payout Ratios are good with 5 year median DPR for earnings at 33% and for cash flow at 22%. So we can say the stock has a decent yield and decent DPRs. (See my site for information on Dividend Payout Ratios).

Total return over the past 5 years is a negative 2.29% per year with a capital loss of 4.18% per year and dividends at 1.89% per year. There is a positive total return over the past 10 years with the total return at 7.45% per year with capital gain at 5.72% per year and dividends at 1.73% per year.

This stock has 5 and 7 year growth in dividends at 11.7% and14.7%. However, the most recent dividend increase, which occurred in 2012, was for 6%. The best dividend increases were in between 2006 and 2008. I would suspect that future ones will be in the 6 to 7% range.

The total outstanding shares have decreased by 0.78% and 0.06% over the past 5 and 10 years. Shares have increased due to stock options and decreased due to share buy backs. Revenue has increased over the past 5 and 10 years by 4.9% and 10.4% per year. Revenue per Share has increased over the past 5 and 10 years by 5.8% and 10.4% per year.

Earnings have increased by 4.5% and 9% per year over the past 5 and 10 years. Cash Flow has increase by 6% and 11% per year over the past 5 and 10 years. Book Value has increased by 7.7% and 10% per year over the past 5 and 10 years. If you look at 5 year running averages for revenue, earnings and cash flow, the 5 year increases are much better.

The Return on Equity is quite good at 14.1% for the financial year ending in 2012 and a 5 year median value of 14.4%. The ROE on comprehensive income is quite close and quite good at 13.7% for the financial year ending in 2012 and with a 5 year median ROE of 13.9%.

The Liquidity Ratio tends to fluctuate on this stock, with the current one at 1.18. However, if you also consider cash flow after dividends, this ratio goes to 1.48. The Debt Ratios are very good and have always been very good. The current one is 2.51. The current Leverage Debt/Equity Ratios are also good at 1.73 and 0.69.

The problem is that this company stopped being a growth stock (or viewed by the stock market as a growth stock). When a company stops being a growth stock, the change you see is mostly in the Price/Earnings Ratio. For the 5 year prior to my purchase the 5 year median P/E Ratio was 26.04. The current 5 year median P/E Ratio is 15.07.

Even though this company has had growth in Revenues, Earnings, Cash Flow and Book Value, the stock price has been going down. After the stock price hit a low in 2010 and did revive a bit, the stock price has been quite flat since the end of 2010. For the moment, I am continuing to hold what stock I have.

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 Drug Mart. 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 or StockTwits.