Thursday, May 10, 2018

Reitmans (Canada) Ltd

I am sorry I did not publish this report yesterday as I said I would. However, I did spend a lot of time getting my computer up and running properly. I do not like to rush these reports because that can lead to errors.

Sound bite for Twitter and StockTwits is: Dividend Paying Consumer. This stock is in the consumer discretionary sector. It is making an effort to recover. It is selling cheap. See my spreadsheet on Reitmans (Canada) Ltd.

I own this stock of Reitmans (Canada) Ltd. (TSX-RET.A, OTC-RTMAF). I was following this stock as it was a stock on Mike Higgs' dividend growth stocks list. I bought this company in September 2013. It was in financial difficulties and so was quite cheap. I believed it would recover, but I am beginning to wonder now.

They cannot cover their dividends with EPS. With the earnings loss of 2018 there is no coverage of dividends by EPS. Their coverage via CFPS is fine with the one of 2018 at 36% and 5 year coverage at 25%. There used to be analysts following this stock, but that has dropped to none.

The company used to raise dividends on a regular basis. However, they were cut 75% in 2013 and they have been level since. This is because the company has been in financial difficulties since that time.

The Total Return is show below for years of 5 to 30. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See charts below. So long term holders still have not done badly. However, anyone that has bought this stock in the last 10 years have a loss.

Years Div Gth Tot Ret Cap Gain Div
5 -24.21% -15.38% -18.78% 3.39%
10 -11.25% -9.10% -13.97% 4.87%
15 4.73% 8.47% -1.36% 9.82%
20 5.78% 13.84% 3.55% 10.29%
25 4.60% 9.40% 2.25% 7.15%
30 3.82% 8.56% 2.40% 6.16%

The 5 year low, median and high median Price/Earnings per Share Ratios are 22.88, 32.71 and 39.67. The corresponding 10 year ratios are 15.16, 17.60 and 21.02. The historical ratios are 10.16, 13.05 and 15.47. The reason the 5 year ratios are so out of whack is that there were recent years of earning losses and the drop in earnings was deeper than the drop in stock price. The current P/E Ratio is 133.33 based on a stock price of $4.00 and 2018 (February 2019) earnings estimate of $0.03. This information is unusable to check up on the current stock price.

I get a Graham Price of $1.91. The 10 year low, median and high median Price/Graham Price Ratios are 0.94, 1.14 and 1.48. The current P/GP Ratio is 2.10 based on a stock price $4.00. The Graham Price has fallen from $4.75 in 2017 to just $1.91. This is why the current P/GP Ratio is so high. This information is no much help to establish a stock price either.

I get a 10 year median Price/Book Value per Share of 1.50. The current P/B Ratio is just 0.74 based on Book Value of $341M, Book Value per Share of $5.38 and a stock price of $4.00. The current P/B Ratio is some 50% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.

The P/B Ratio test is a good one for this stock. This is because unlike with the P/E Ratio all P/B Ratios make sense. The Book Value is declining, but not as fast as the stock price. Also, with this stock the P/B Ratio is less than 1.00. This means that the stock is selling below the theoretical breakup price of the company.

I get an historical median dividend yield of 3.13%. The current dividend yield is 5.00% a values some 60% below the historical median dividend yield. The current dividend yield is based on dividends of $0.20 and a stock price of $4.00. This stock price testing suggests that the stock price is relatively cheap. However, this is not a particularly good test because dividends have been cut and then flat for some time. The dividend yield is high, but not sky high. This suggests that investors are not very worried about a dividend cut.

The 10 year median Price/Sales (Revenue) Ratio is 0.64. The current P/S Ratio is 0.28 based on 2018 (February 2019) Revenue estimate of $889, Revenue per Share of $14.04 and a stock price of $4.00. The current ratio is some 55% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap. This is also a good test.

When I look at analysts’ recommendations I find that there are no analysts following this stock. This shows that this stock is really out of favor as there are used to be some analysts following it and now there are none.

The company announced on Cision the retirement of current Chief Financial Officer and his replacement. Silas Weatherspoon on Park City Caller says that the Williams Percent Range of -26.92 shows that the company is neither overbought or oversold. The company announced the closing of HYBA Stores on Cision. The company reported on their fourth quarter on Cision

Reitmans (Canada) Ltd is a retailer of varied types of apparels. It manages apparel stores under the Reitman, Penningtons, RW & CO, Addition Elle, Thyme Maternity and Hyba brands. Its web site is here Reitmans (Canada) Ltd.

The last stock I wrote about was about was Power Financial Corp. (TSX-PWF, OTC-POFNF)... learn more. The next stock I will write about will be Canadian Utilities Ltd (TSX-CU, OTC-CDUAF)... learn more on Friday, May 11, 2018 around 5 pm. Tomorrow on my other blog I will write about Defined Contribution Pensions.... learn more on Thursday, May 10, 2018 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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