I do not own this stock of Alcanna Inc (TSX-CLIQ, OTC-LQSIF). The idea of following this stock came from a reader of my blog.
When I was updating my spreadsheet, I noticed that Selling and Admin expenses increased much more than Sales. Selling and Admin increased by 14.4% compared to Sales which increased by 5%. They had a big write off for goodwill. There is a lot of insider buying below $6.00. This company has some good debt ratio for 2018, but this changed in the second quarter of 2019.
They have cancelled their dividends for this year. They could not afford their dividends as they have not been making a profit in the last two years. They used to be an income trust and income trusts could pay out based on FFO and AFFO, but corporation should be paying out based on earnings. They have never been close to paying out their dividends paid on earnings.
Debt Ratios are fine for 2018 but have vulnerabilities currently because of accounting changes. We will have to see how these new accounting changes play out in the longer term. Their Long Term Debt/Market Cap ratio is low and good at 0.47 for 2018 and currently at 0.51. Their Liquidity Ratio is high and good at 3.17 for 2018 and 2.57 currently. Their Debt Ratio is good in 2018 at 2.24. However, it becomes low currently at 1.20 because of following different account rules for its leases. The Leverage and Debt/Equity Ratios are fine in 2018 at 1.81 and 0.81 but become very high currently at 5.98 and 4.98 because of the same accounting changes noted above.
The Total Return per year is shown below for years of 5 to 14 to the end of 2018. 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 chart below.
The shareholders with longer term holdings have made a profit because of dividends, but shareholders have not profited over the last few years because dividends have been cut and capital gains losses are bigger.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | -19.73% | -14.36% | -21.44% | 7.08% |
| 2008 | 10 | -13.96% | 5.38% | -8.69% | 14.07% |
| 2004 | 14 | -7.86% | 3.81% | -8.47% | 12.28% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are all negative at 0.91, 1.83 and 2.83. The 10 year corresponding ratios are 13.44, 14.91 and 16.38. The corresponding historical ratios are 13.91, 16.41 and 18.95. The current P/E Ratio is a negative 13.23 based on a stock price of $5.30 and 2019 EPS estimate of earnings losses of $0.40. The P/E Ratio for next year is 26.50 based on a stock price of $5.30 and 2020 EPS of $0.20. This all suggests that the P/E Ratio test for this stock is probably undesirable.
I get a Graham Price of $3.28. The 10 year low, median, and high median Price/Graham Price Ratios are 0.88, 1.11 and 1.39. The current P/GP Ratio is 1.62 based on a stock price of $5.30. This stock price testing suggests that the stock price is relatively expensive. But this is probably not a good test either because of all the earning losses.
I get a 10 year median Price/Book Value per Share Ratio of 1.20. The current P/B Ratio is 2.22 based on a stock price of $5.30, Book Value of $88.7M and Book Value per Share of $2.39. The current ratio is 84% higher than the 10 year ratio. This stock price testing suggests that the stock price is relatively expensive.
A dividend yield test cannot be done because the dividend has been cancelled.
The 10 year median Price/Sales (Revenue) Ratio is 0.48. The current P/S Ratio 0.25 based 2019 Revenue estimate of $797M, Revenue per Share of $21.47 and a stock price of $5.30. The current ratio is 49% below the 10 year ratio. This stock price testing suggests that the stock price is relatively expensive
Results of stock price testing is that the stock price is probably cheap by the only real valid test that I can do, which is the P/S Ratio Test. There are problems with the other tests due to the number and amount of the earning losses and lack of a dividend.
Is it a good company at a reasonable price? Personally, I would not buy this company at the present time, so I cannot say it is a good company to buy. It is probably cheap.
When I look at analysts’ recommendations, I find Strong Buy (1), Buy (1), and Hold (3). The consensus would be a Buy. The 12 month stock price is $7.60. This implies a total return of 43.40% all from capital gains.
See what analysts are saying on Stock Chase. They are now into cannabis. (Everyone is now into cannabis.) Christopher Liew on Motley Fool says to avoid this stock at all costs. A writer on Simply Wall Street says it is running a high debt while not making money and this can be a risky business. A writer on Simply Wall Street says that a company losing money with revenues going in the wrong direction is not what investors like to see. A contributor on Goodwell Gazette says that the Piotroski F-Score of 2 for this company is a low one. David Arnold on Invest Tribune says there has been an increase in short sellers of this stock.
Alcanna Inc is the private-sector retailer of alcoholic beverages in Canada and in the top 5 in North America. The company operates approximately 235 stores under the brand names Wine & Beyond, Liquor Deport and Brown Jug in Alberta, B.C., and Alaska. The company owned 25 per cent by Aurora Cannabis Inc and also owns the Nova Cannabis brand with 5 stores in Alberta and 1 in Toronto. Its web site is here Alcanna Inc.
The last stock I wrote about was about was Great-West Lifeco Inc (TSX-GWO, OTC-GWLIF) ... learn more. The next stock I will write about will be Granite REIT (TSX-GRT.UN, NYSE-GRP.U) ... learn more on September 25, 2019 around 5 pm. Tomorrow on my other blog I will write Money Show 2019 Gold.... learn more on Tuesday, September 24, 2019 around 5 pm.
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