The North West Company 2

On my other blog I am today writing about the presentation at the World Money Show in Toronto by Andrew Busch.

I do not own this stock of The North West Company (TSX-NWC, OTC-NWTUF). I wanted to review all the income trust stocks touted in the Money Show of 2009. There was a lot of talk at this show about some of the Unit Trust being currently good buys with very good yield. This stock changed from an income trust to a corporation in 2011.

When I look at insider trading, I find $1.2M of insider selling and $0.5M of insider buying with net insider selling at $0.7M. There is some insider ownership with the CEO owning shares worth around $6.7M and the CFO owning shares worth around $1.6M.

The 5 year low, median and high median Price/Earnings per Share Ratios are 14.63, 16.12 and 17.60. The 10 year corresponding values are 12.84, 13.67 and 14.05. It would appear that the P/E Ratios are currently increasing. The current P/E Ratio is 20.11 based on a stock price of $23.33 and 2014 EPS estimate of $1.16. This stock price test suggests that the stock is relatively expensive. On the other hand a P/E of 20.11 is not particularly high.

I get a Graham Price of $13.18. The 10 year low, median and high median Price/Graham Price Ratios are 1.09, 1.31 and 1.56. The current P/GP Ratio is 1.77 based on a stock price of $23.33. This stock price test suggests that the stock is relatively expensive.

The 10 year Price/Book Value per Share Ratio is 3.06. The current P/B Ratio at 3.50 is some 15% higher. The P/B Ratio is based on a stock price of $23.33 and BVPS of $6.66. This stock price test suggests that the stock is relatively reasonable, but to the higher end of the reasonableness range.

The 5 year dividend yield is 5.14% and the current dividend yield is only 3% lower at 4.97%. This historical average dividend yield and historical median dividend yields are much higher at 7.73% and 7.38%, but this is expected as this company used to be in income trust. When income trust companies convert to corporations, their dividend yields go down. By the 5 year dividend yield stock price test suggests that the stock is relatively reasonable.

When I look at analysts' recommendations, I find Buy and Hold recommends. Most of the recommendations are a Hold and the consensus recommendation would be a Hold. The 12 months stock price consensus is $24.80. This implies a total return of 11.27% with 4.97% from dividends and 6.30% from capital gains.

The Net News Ledger reports on the company's second quarterly results. This article at BNN talks about a recent proxy fight with Montrusco Bolton.

Sound bit for Twitter and StockTwits is: Not cheap, but could be reasonable. This dividend growth consumer staple stock seems to be reasonably priced on some levels. The dividend is good and the company has had decent dividend increases in the past. See my spreadsheet at nwc.htm.

This is the second of two parts. The first part was posted on Thursday, October 23, 2014 and is available here. The first part talks about the stock and the second part talks about the stock price.

The North West Company is a leading retailer of food and everyday products and services to rural communities and urban neighborhoods in Canada, Alaska, the South Pacific and the Caribbean. North West operates 225 stores under the trading names Northern, NorthMart, Giant Tiger, AC Value Center, and Cost-U-Less. Its web site is here North West Company.

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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