Jean Coutu Group Inc.

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

I do not own this stock of Jean Coutu Group Inc. (TSX-PJC.A, OTC-JCOUF), but I used to. I bought this stock first in 2000 for my RRSP account. In 2007, I sold this stock in my RRSP account because I wanted money to invest in Saputo which I liked better at that time. In 2004, I bought some for my trading account. It had increasing dividends, a good P/E Ratio and it was a stock I already owned. In 2007, I was looking to buy a condo and so had to raise some money for a mortgage. This was not doing that well at the moment, so I sold the stock in my Trading Account.

This is a dividend growth stock. It dividend is low, but the increases are good. The current dividend yield is 1.85%. The 5 year median dividend yield is 2.29%. This historical high and low dividend yields are 2.59% and 0.47%. The 5 and 10 years dividend growth is 16.3% and 11% per year.

They do not raise the dividend every year, but dividends have grown well. There was no dividend increase in 2013, but latest increase for 2014 was for 17.65%. For the first time in 2013 the company paid a special dividend.

The Dividend Payout Ratios are good. The 5 year median DPR for EPS was at 30.5% and for CFPS was at 25.9%. The DPR for the financial year ending first of March 2014 was at 36.6% for EPS and 53% for CFPS.

The total return to date over the past 5 and 10 years is at 20.25% and 3.78% per year. The portion of this total return attributable to dividends is at 2.94% and 1.43%. The portion of this total return attributable to capital gains is at 17.31% and 2.35%. This is a consumer stock and therefore is bound to have its ups and downs. It was hit hard by the 2008 recession and that is why the 5 year returns look so good.

The outstanding shares have decreased by 4.3% and 1.8% per year over the past 5 and 10 years. Shares have increased due to Stock Options and Stock Issues and decreased due to Buy Backs. Earnings and cash flow are up over the past 5 and 10 years, but revenue is only up over the past 5 years

The Revenue is up by 2.9% and down by 4% per year over the past 5 and 10 years. Revenue per Share is up by 7.6% and down by 2.2% per year over the past 5 and 10 years.

Earnings per Share is up by 44% per year over the past 4 years and up by 10.5% per year over the past 10 years. The company had a massive loss year 5 years ago, so there is no 5 year value for growth or 5 year running averages growth.

Cash Flow is up by 11% and 3.3% per year over the past 5 and 10 years. Cash Flow per Share is up by 16.38% and 5.23% per year over the past 5 and 10 years.

The Return on Equity is below 10% in 5 of the last 10 years. In two of those years there were earnings losses. The ROE has been above 10% each year of the last 5 years. The ROE for the financial year ending March 2014 was at 46.9% and the 5 year median is 35.4%. The ROE on comprehensive income was a bit lower at 42.6% and with a 5 year median of 35.2%.

The Liquidity Ratios has generally been good and the one for March 2014 financial year is 2.23 it has a 5 year median value of 1.50. The Debt Ratio has also been good and the one for March 2014 financial year is 5.01 and it has a 5 year median of 2.53. Leverage and Debt/Equity Ratios are also good with the ones for March 2014 financial year at1.25 and 0.25 and the 5 year median values at 1.65 and 0.65.

Mostly the dividend yield on this stock has been below 1%, so it has taken a while for past shareholders to get a really nice dividend yield on their original purchase. For the stock I bought in 2000 I would today have a dividend yield on my original investment at 5.41%. This is because the original dividend yield I got was 0.95%. I would have gotten a dividend growth rate of 12.47% per year.

However, with the dividend around 1.85% today, current investors could get a dividend yield of 6.01% in 5 years and 10.81% in 10 years with the same 12.47% dividend growth rate. The point of investing in dividend growth companies is to have a portfolio producing an increasing income.

Sound bit for Twitter and StockTwits is: Dividend Growth Stock in retail. See my spreadsheet at pjc.htm.

This is the first of two parts. The second part will be posted on Thursday, August 14, 2014 and will be available here. The first part talks about the stock and the second part talks about the stock price.

The Jean Coutu Group is one of the most trusted names in Canadian pharmacy retailing. The Corporation operates a network of 413 franchised stores located in the provinces of Québec, New Brunswick and Ontario under the banners of PJC Jean Coutu, PJC Clinique, PJC Santé and PJC Santé Beauté. Furthermore, the Jean Coutu Group owns Pro Doc Ltd ("Pro Doc"), a Québec-based subsidiary and manufacturer of generic drugs. Controlling shareholder is Jean Coutu. Its web site is here Jean Coutu.

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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