Wednesday, August 14, 2013

Andrew Peller Ltd

On my other blog I am today writing about pension assumptions...continue...

I do not own this stock Andrew Peller Ltd (TSX-ADW.A, OTC-ADWPF). I started a spreadsheet in April 2009 after I read a favorable report on the stock. Also, this stock was on Mike Higgs' dividend growth stock list.

I do not think that it is a dividend growth stock. They did some nice dividend increases between 2007 and 2009. Before that, dividends had been level for 8 years. In 2013 the company again had dividend increases. (Financial year ends in March of each year, so March 2013 was last financial year and we are in the 2014 financial year.)

The current dividend yield is 2.82%; however the 5 and 10 year median yields are higher at 3.67% and 3.28%, respectively. The dividend growth over the past 5 and 10 years are 4.8% and 5.9% per year, respectively. The Dividend Payout Ratios are quite good with the 5 year median ratio for earnings at 41% and for cash flow at 23%.

The 5 and 10 year total return is quite decent with the total return at 7.52% and 11.22% per year respectively. The capital gain portion of these returns was at 4.11% and 7.46% per year. The dividend portion of these returns was at 3.41% and 3.76% per year.

There are two types of shares. Class A shares are non-voting shares and Class B shares are voting shares. Insiders own almost 87% of the Class B shares. Total outstanding shares have decreased marginally per year over the past 5 and 10 years. The company at times has repurchased shares. They have issued, but not often stock options. They also have an Employee Stock Purchase Plan.

This is a retail stock and earnings have fluctuated over the years. The 5 and 10 year growth in earnings are at 6.3% and 7.9% per year, respectively. However, if you use the 5 year running averages, growth over the last 5 and 10 years is at 1.1% and 3.9%, much lower figures. Revenues have progressed nice as has cash flow with growth in the 5 to 7% range

The Return on Equity is generally in the 9 to 11% range. The ROE for comprehensive income is often the same as for net income but this has been lower over the past two years with the ROE on comprehensive income some 6% lower for the financial year ending in March 2013. However, ROE on comprehensive income was still at 10.7% a good value.

An April 2013 article by Martin Mittelstaedt in the G&M says that this stock is cheap but illiquid. The Canadian Dividend Blogger also wrote a favorable report on this stock in June 2013.

As far as the current stock price goes, both the dividend yield test and the book value tests show that it is relatively expensive. The current dividend yield is 2.82% and the stock has a 5 year median dividend yield of 3.67% which is some 23% higher. The 10 year median Price/Book Value per Share is 1.29 and the current P/B Ratio is some 22% higher at 1.57. See my spreadsheet at adw.htm.

Andrew Peller Limited 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.

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.

1 comment:

  1. Thanks for the link. Andrew Peller has quite a run up in the last six months, nearly +40%. I don't think I'd buy any more now but they are definitely one to watch on a pullback especially if they went back to $10.