Monday, June 16, 2014

Reitmans (Canada) Ltd.

On my other blog I am today writing about Canadian Banks and their good second quarter of 2014 continue...

I own this stock of Reitmans (Canada) Ltd. (TSX-RET.A, OTC-RTMAF). I bought this company in September 2013. It was in financial difficulties and so was quite cheap. I believe it will recover.

The first thing I noticed when updating my spreadsheet was that anyone who had this stock for 10 years have made a profit. If you look at 10 year total return to the end of January 2014, shareholders have earned 8.92% per year. Mind you, this is all in dividends as the portion of the total return attributable to dividends is 9.98% per year. The portion of the total return attributable to capital loss is 1.05% per year. In this case, it certainly paid off buying a dividend paying stock.

This is not true for the 10 years to date because if you had it 10 years to date the loss is at 1.97% per year or a 58% total loss. I have not made any money on this stock since buying it in 2013. My investment is down 25% to date or at 23.09% per year.

There is an article in the Montreal Gazette about Reitmans having a bad first quarter in ret.htm. This is the case as Reitmans did have a bad first quarter. The few analysts that are still following this stock have been busy reducing their estimates for the financial year ending in January 2015.

The analysts' recommendations are a Hold. The 12 month stock price is $6.00 and this implies a total return of 4.20% with 0.84% from capital gains and 3.36% from dividends.

The good thing is that the debt ratios are holding up. The current Liquidity Ratio is 3.13. The Debt Ratio is 3.87. The current Leverage and Debt/Equity Ratios are 1.35 and 0.35. These are all still quite high.

I will continue to hold on to the share I have bought. On one basis, this stock is showing as cheap and that is looking the Price/Book Value per Share Ratio. The 10 year P/B Ratio is 2.26 and the current P/B Ratio at 0.94 is almost 60% lower. See my spreadsheet at ret.htm.

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.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

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