I do not own this stock of Le Chateau Inc. (TSX-CTU, 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. Jennifer Dowty wrote a column on Dividend Paying stocks in 2010 The title of the article in Investor’s Digest was Dividend Stocks: Buy,
When I was updating my spreadsheet, I noticed that they took out a loan from their Credit Facility, that their assets are decreasing and their book value continues to decrease. Between 2016 and 2018, book value declined 99% and is now just $0.01 per share. The Second Quarter of 2018 shows a negative Book Value.
The company cut their dividends in 2011 when they first got into financial difficulties. They have not made a profit since so until they do again there will be no dividends.
The long term debt increased by 95% in 2017 and the Long Term Debt/Market Cap is extremely high at 10.47. The stock went up the first part of this year so this ratio is now 6.92. Still extremely high. You do not want to see this ratio over 1.00. The Debt Ratio was 1.00 for the financial year ending January 2018. With the second quarter of 2018, the ratio is just 0.94. This means that the assets cannot cover the liabilities and therefore there is a negative Book Value.
The Liquidity Ratio is good at 3.40 and it is wise for them to have it high because they are still not making any profit. Leverage and Debt/Equity Ratios are extremely high at 615.17 and 614.17. On the other hand, they just got a new credit facility at reasonable interest rates. This is a good sign.
The Total Return per year is shown below for years of 5 to 25. 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.
From the chart below, you can see that people who have held this stock for 15 or more years have made a return. All this return would be in dividends as the stock has capital loss for every period I covered.
| Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|
| 5 | n/a | -46.53% | -46.53% | 0.00% |
| 10 | n/a | -31.42% | -36.30% | 4.88% |
| 15 | n/a | 11.06% | -17.00% | 28.06% |
| 20 | n/a | 6.29% | -13.49% | 19.77% |
| 25 | n/a | 8.18% | -9.39% | 17.57% |
I cannot do any price testing with the Price/Earnings per Share Ratios because they are all negative except the historical ones as this company has not made any profit since 2011. The current P/E Ratio is negative also. The historical low, median, and high median P/E Ratios are 4.58, 6.61 and 9.03. It had a historical median P/E Ratio of 8.48 prior to 2011.
I cannot get a Graham Price because of the history of earnings losses since 2011. I could not test this currently either because of the negative book value.
I get a 10 year median Price/Book Value per Share Ratio of 0.99. However, I cannot do any testing using the P/B Ratio as it is now negative.
I cannot do any historical median dividend yield testing because there are no dividends.
The 10 year median Price/Sales (Revenue) Ratio is 0.36. The current P/S Ratio is 0.05 based on 12 month revenue to the end of the second quarter of $199M, Revenue per Share of $6.64 and a current stock price of $0.32. The current P/S Ratio is 86% lower than the 10 year ratio. This stock price testing suggests that the stock price is relatively cheap.
When I look at analysts’ recommendations I cannot find any analysts that is following this stock.
The company talks about the second quarter of 2018 on Global News Wire. The company talks about more store closures on the Financial Post due to e-commerce. Victor Youngblood on Simply Wall Street talks about the debt of the company but does not seem to realize the company got into financial difficulties in 2011 which have yet to be resolved. Last year Susan Portelance of Motley Fool compared this company unfavorably with Reitmans. There is nothing since 2011 on Stock Chase because analysts are no longer following this company.
Le Chateau Inc is a Canadian brand in specialty retailing, offering a broad array of contemporary fashion apparel, accessories, and footwear for style-conscious women and men. Its web site is here Le Chateau Inc.
The last stock I wrote about was about was Granite REIT (TSX-GRT.UN, NYSE-GRP.U) ... learn more. The next stock I will write about will be K-Bro Linen Inc. (TSX-KBL, OTC-KBRLF) ... learn more on Friday, October 5, 2018 around 5 pm. Tomorrow on my other blog I will write about Something to Buy October 2018.... learn more on Thursday, October 4, 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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