Wednesday, October 1, 2014

Le Chateau Inc.

On my other blog I am today writing about Preferred Shares continue...

I do not own this stock of Le Chateau Inc. (TSX-CTU.A, OTC-LCUAF). In June 10, 2012 I started spreadsheet because of a request from Blog reader. It was also on my list of dividend and special dividend paying stocks from a column Jennifer Dowty wrote about Dividend Paying stocks in 2010.

It has been one year since I last reviewed this stock. I guess it is a plus for this stock since it has survived another year. It is interesting that even though the stock has fallen to a low or $1.20, investors that have had this stock for 10 years have lost only 1.01% per year. The capital loss is $14.87% per year, but dividends are at 13.85% per year. The main reason for the loss is that the stock fell almost 65% so far this year.

As far as insider trading goes, the CEO was still buying this stock in January 2014 and insider buying is at $800,190. This buying represents 2.4% of the outstanding shares and therefore is quite a bit. There has been no insider buying or selling since then.

I guess a bad sign is that I cannot find any analyst that follows this stock currently. The last time I found analysts that followed this stock were for my review in mid-2012. For my review of 2013, I could only find some net income estimates.

Revenue has been falling since 2010 and is still falling as far as what the second quarterly financials say. They still have revenue, but they are not making any money. They wisely cut their dividends because of the lack of earnings. They also have negative cash flow for 2013 and this has not improved with the second quarterly report either.

They have some heavy insider ownership with the CEO and Chairman having shares still worth around $25M and a director having shares worth around $7.1M. They have tiered shares with Class A shares carrying one vote and Class B shares carrying 10 votes.

Their debt ratios are good with the Liquidity Ratio at 2.20 and the Debt Ratio at 2.46. The Leverage and Debt/Equity Ratios are good at 1.69 and 0.69.

This recent G&M article talks about the current tough Canadian retail market. A recent article in the Montreal Gazette also talks about the current tough Canadian retail market. There is also an interesting recent blogger called Forest City Fashionista who talks about the opening of a new Le Chateau in London, Ontario.

Sound bit for Twitter and StockTwits is: I would not buy. I have already bought some Reitman shares which are in the same category as this stock. I was willing to take a chance on Reitman, but not on this stock. See my spreadsheet at ctu.htm.

I will have only one entry for this stock as I must do on some stock because I cover too many stocks to do double entries on all that I follow.

Le Chateau is a Canadian specialty retailer and manufacturer of contemporary fashion apparel, accessories, and footwear at value pricing for style-conscious women and men of all ages. Its web site is here LeChateau.

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.

See my website for stocks followed and investment notes. Follow me on Twitter or StockTwits.

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