I do not own this stock of Dollarama Inc. (TSX-DOL, OTC-DLMAF). I belong to an investment club and this was a stock I volunteered to look at. I had, of course, heard of this stock before and people have mentioned that it is doing very well for shareholders.
When I was updating my spreadsheet, I noticed that they are still going into debt to buy back shares. The Book Value is negative because the assets cannot cover the liabilities. This makes the stock vulnerable and a big risk in any economic turndown. There is also a lot of insider selling of some 0.12% where you would expect 0.01% to 0.02%. However, selling is not by CEO or CFO. The CEO has bought more shares and the CFO who previously did not have any shares have bought some.
The dividend yield is very low. I would not consider this a dividend paying stock as yield is below 1%. The current yield is 0.41%, the 5 year median is 0.46% and the 6 year median is 0.53%. They have been paying dividends since 2012. The dividend increases are moderate to good. The 5 and 6 year dividends growth is 10% and 16% per year.
They can afford their dividends. The Dividend Payout Ratio for 2017 is 9.45% with 5 year coverage at 11.48%. The DPR for CFPS is 7.69% with 5 year coverage at 9.15%. So, they have no trouble paying dividends.
Debt Ratios are not all bad. The Long Term Debt/Market Cap Ratio is low at 0.07. That is were the good news stops for debt ratios. The Liquidity Ratio for 2017 is 0.79. This means that current assets cannot cover current liabilities. If you add in cash flow after dividends the ratio is 1.61. This is not bad, but since it is a retail stock, cash flows can be volatile.
The Debt Ratio is 0.88. This mans that the assets cannot cover the liabilities and so we have a negative book value. The Leverage and Debt/Equity Ratios cannot be calculated because of the negative Book Value. Last year they were very high at 18.58 and 17.58.
The Total Return per year is shown below for years of 5 to 9. 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 far, shareholders have done very well on this stock.
| Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|
| 5 | 10.18% | 40.35% | 39.72% | 0.63% |
| 6-9 | 15.63% | 37.12% | 36.62% | 0.50% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 19.13, 23.63 and 28.13. The corresponding 8 year ratios are 16.79, 21.37 and 25.94. The current P/E Ratio is 21.63 based on a current stock price of $37.85 and 2018 EPS estimate of $1.75. This stock price testing suggests that the current stock price is reasonable.
I cannot calculate the Graham Price for this stock as the book value is negative. So basically, it has no Graham Price or it is zero for all practical purposes.
I get a 10 year median Price/Book Value per Share Ratio of 3.66. I cannot get a current one because the book value is negative.
I get an historical median dividend yield of 0.53% (6 year). The current yield is 0.41% a value some 22% lower. The current yield is based on Dividends of $0.16 and a stock price of $37.85. This stock price testing suggests that the stock price is relatively expensive.
The 8 year median Price/Sales (Revenue) Ratio is 2.49. The current P/S Ratio is 3.48 based on 2018 Revenue Estimate of $3,551M, Revenue per Share of $10.87 and a stock price of $37.85. The current ratio is some 40% above the 8 year ratio. This stock price testing suggests that the stock price is relatively expensive.
For P/GP and P/BV Ratios I can do no testing due to lack of a positive book value. The P/E and P/S Ratio tests are based on estimates and one shows a reasonable price and the other shows an expensive price. The Dividend Yield, which is not based on estimates, but currently available data, shows price as expensive.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (7) and Hold (7). The consensus would be a Buy. The 12 month stock price is $42.21. This implies a total return of $11.93% with 11.52% from capital gains and 0.41% from dividends and based on a stock price of $37.85.
Svea Herbst-Bayliss on Financial Post talks about a short seller who thinks stock will fall 40%. David Jagielski on Motley Fool thinks the company is a long term buy at a current bargain price. Gary James on Marea Informative about some insider buying. Mary Kom on Fairfield Current talks about an insider selling. See what analysts are saying about this stock on Stock Chase. They seem neutral to negative.
Dollarama Inc operates dollar stores in Canada that sell all items for $4 or less. The Company maintains retail operations in every Canadian province. Its web site is here Dollarama Inc.
The last stock I wrote about was about was Encana Corp. (TSX-ECA, NYSE-ECA) ... learn more. The next stock I will write about will be Keyera Corp. (TSX-KEY, OTC-KEYUF) ... learn more on Friday, November 9, 2018 around 5 pm. Tomorrow on my other blog I will write about Something to Buy November 2018.... learn more on Thursday, November 8, 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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