Jean Coutu Group Inc.

Sound bite for Twitter and StockTwits is: Relative price good. The various tests on price are showing different results. I will go with the P/B Ratio and Dividend Yield tests as they do not involve estimates. The main worry seems to be Quebec Drug Reform. See my spreadsheet on Jean Coutu Group Inc.

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 2004, I bought some of this stock for my trading 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. Also, in 2007, I was looking to buy a condo and so had to raise some money for a mortgage. This company was not doing that well at the moment, so I sold the stock in my Trading Account.

Dividends are low to moderate and dividend increases are moderate. The current dividend yield is 2.51% based on dividends of $0.48 and a stock price of $19.10. The 5 year median dividend yield is 1.94% and the historical median dividend yield is just 0.74%.

Dividends have been increasing over the years from a 10 year median for Dividend Payout Ratio for EPS of 15.01% 10 years ago to a current 10 year median of 28.37%. The DPR for 2016 for EPS was 38.6%. It is expected to be slightly higher for 2017. The DPR for CFPS was 32%. The DP Ratios are fine. (Note that the financial year for this company ends around March first each year.)

The growth in EPS has been good. However for both Revenue and Cash Flow the 10 year growth is non-existent and they have low growth over the past 5 years. EPS has grown at 8.2% and 9.9% per year over the past 5 and 10 years. Revenue is up by 1.9% per year over the past 5 years, but down by 13.6% over the past 10 years. I am looking at Revenue rather than Revenue per Share as outstanding shares have declined by 4.3% and 3.4% per year over the past 5 and 10 years.

The 5 year low, median and high median Price/Earnings per Share Ratios are 9.80, 11.42 and 13.05. The corresponding 10 year values are 10.21, 11.66 and 13.10. The historical values are 13.57, 19.06 and 22.70. It is interesting that the P/E Ratios have been getting lower over time. The current P/E Ratio is 17.21 based on a stock price $19.10 and 2017 EPS estimate of $1.11. This company has changed over time, so I am going to just consider the 5 and 10 year ratios. On this basis the stock price is relatively expensive.

I get a Graham Price of $12.45. The 10 year low, median and high median Price/Graham Price Ratios are 1.23, 1.46 and 1.74. The current P/GPR ratio is 1.53 based on a stock price of $19.10. This stock price testing suggests that the stock price is reasonable but above the median.

The 10 year median Price/Book Value per Share Ratio is 3.69. The current P/B Ratio is 3.08 a value some 16% lower. The current P/B Ratio is based on BVPS of $6.20 and a stock price of $19.10. This stock price testing suggests that the stock price is relatively reasonable and below the median.

The historical median dividend yield is 0.74% and the current dividend yield is 2.51% based on dividends of $0.48 and a stock price of $19.10. The current dividend yield is some 239% above the historical yield. The 5 year dividend yield is 1.94% a values some 29% below the current yield. The historical high dividend yield is 2.77% which is still some 9% above the current one, so we are not at an historical high. This stock price testing suggests that the stock price is relatively cheap.

When I look at analysts' recommendations, I find Buy, Hold, Underperform and Sell. Most of the recommendations are a Hold. The 12 month consensus stock price is $18.80. This implies a total loss of 0.94% with 2.51% from dividends and a capital loss of 1.57%.

Lee Rogers on Press Telegraph talks about recent analysts calls. Nelson Smith of Motley Fool currently likes this company at a P/E of 17 on trailing earnings and price of $19.42. This company is currently being sued by franchise owners according to Damon van der Linde at Financial Post. Paul Delean of the Montreal Gazette talks about portfolio manager of the Montreal Gazette portfolio, Christine Décarie, selling off this stocks. She said it was not in trouble, but she does not really know the full impact yet of the (provincial) drug reform.

I will have only one entry for this stock this year. However, I did a more complete report on this company in 2015 and you can see those reports here and here.

The last stock I wrote about was about was Evertz Technologies (TSX-ET, OTC-EVTZF)... learn more . The next stock I will write about will be Superior Plus Corp. (TSX-SPB, OTC-SUUIF)... learn more on Monday, August 29, 2016 around 5 pm.

Also, on my book blog I have put a review of the book In-Between Days by Teva Harrison. learn more...

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 Group Inc.

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. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits.