Monday, October 30, 2017

North West Company

Sound bite for Twitter and StockTwits is: Dividend Growth Consumer. Price seems a bit high but this is a low risk stock. See my spreadsheet on North West Company.

I do not own this stock of . 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 Income Trust being currently good buys with very good yields. This stock changed from an income trust to a corporation in 2011.

This company has lately had mediocre results. It does have good debt ratios which should help it through any trying times. The Liquidly Ratio for January 2017 (the 1996 financial year end) was 2.15 with 5 year median of 2.10. The Debt Ratio for 2017 was 1.84 with a 5 year median of 1.83. I like to see these ratios at 1.50 and above, so these are good.

The Leverage Debt/Equity Ratios are fine at 2.19 and 1.19. The Long Term Debt/Market Cap Ratio is 0.20. Both these ratios are normal for this sort of company, so they are fine. But they are not better than normal like the Liquidity and Debt Ratios are.

The dividend yield is good and the dividend growth is low. The current dividend is 4.06% with 5 and 10 year and historical yields at 4.53%, 4.98% and 5.46%. The dividend growth over the past 5 and 10 years is at 5.3% and 4.5% per year.

Dividend changes have been a bit mixed. There was a large increase in 1998 after being flat for a number of years. There was a decrease in dividends of almost 30% when this company ceased to be an income trust. The last increase was in 2017 and it was for 3.2%. The Dividend Payout Ratio for 1996 is 79% with 5 year coverage of 83%. The DPR for CFPS for 2016 was 35% with 5 year coverage of 37%.

The company has good Return on Equity (ROE) with this ratio being above 10% for each of the past 10 years. The ROE for 2016 is 21% with a 5 year median of $19.9%. The ROE on Comprehensive Income confirms the good ROE on net income with ROE for 2016 of 19% and a 5 year median of 21%.

The only other thing to mention in regards to this is the slow rise in Book Value was has increased by 5.3% and 3.8% per year over the past 5 and 10 years. The book value is the equity part of this ratio. The current P/B Ratio is quite high at 4.18. In other words the ROE might not be quite as good as it first appears.

The 5 year low, median and high median Price/Earnings per Share Ratios are 16.43, 18.54 and 20.66. The 10 year values are 15.02, 16.65 and 18.26. The historical ratios are 9.85, 12.44 and 14.72. The current P/E Ratio is 17.31 based on a stock price of $31.50 and 2018 EPS of $1.82. This stock price testing suggests that the stock price is probably relatively reasonable.

I get a Graham Price of $17.57. The 10 year low, median and high median Price/Graham Price Ratios are 1.45, 1.61 and 1.81. The current P/GP Ratio is 1.79 based on a stock price of $31.50. This stock price testing suggests that the stock price is reasonable but above the median.

I get a 10 year median Price/Book Value per Share Ratio of 3.54. The current P/B Ratio is 4.18 a value some 18% higher. The current P/B Ratio is based on Book Value of $366M, BVPS of $7.54 and a stock price of $31.50. This stock price testing suggests that the stock price is reasonable but above the median.

I get an historical dividend yield of 5.46%. This is quite a high yield. The current Dividend Yield is 4.06% based on dividends of $1.28 and a stock price of $31.50. The current Dividend Yield is some 25.6% lower than the historical one. It is also some 10% and 18% lower than the 5 and 10 year median yields. This stock price testing suggests that the stock price is getting relatively expensive.

When I look at analysts' recommendations, I find Buy Recommendations (2) and Hold Recommendations (5). The consensus recommendation would be a hold. The 12 month stock price consensus would be $33.71. This implies a total return of 11.08% with 7.02% from capital gains and 4.06% from dividends.

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.

DBR Staff at Dasher Business Review says that the stock price is rising and the company has some good ratios like ROE. Staff at Financial Newsweek gives some technical analysis. Will Ashworth of Motley Fool likes this stock. See what analysts are saying about this stock at Stock Chase. They think it is a good company to be bought for its yield.

The last stock I wrote about was about was Equitable Group Inc. (TSX-EQB, OTC-EQGPF)... learn more. The next stock I will write about will be Pason Systems Inc. (TSX-PSI, OTC-PSYTF)... learn more on Wednesday, November 1, 2017 around 5 pm. Tomorrow on my other blog I will write about Money Show 2017 - Benj Gallander.... learn more on Tuesday, October 31, 2017 around 5 pm.

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. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.

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