I do not own this stock of North West Company (TSX-NWC, OTC-NWTUF). 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. The
When I was updating my spreadsheet, I noticed that the debt is increasing. So far this year the increase is 42%. In 208 it was 17% and in 2017 it was 37%. The Long Term Debt/Market Cap is still fine at 0.38 currently.
Talk about dividends yields and growth. The dividends are in the moderate range (2% to 4% ranges). The current dividend is 4.69%. The 5, 10 and historical median dividend yields are 4.49%, 4.64% and 4.82%. For a while the dividend yields were higher because this company was an income trust between 1997 and 2011. The dividend yields have varied over time.
The Dividend Payout Ratios are fine. The DPR for EPS for 2019 was 72% with 5 year coverage at 83%. The DPR for CFPS for 2019 was 36% with 5 year coverage at 37%.
Debt Ratios are fine. The Long Term Debt/Market Cap ratio for 2019 is 0.24. The Liquidity Ratio for 2019 is 2.13 with 5 year median also at 2.13. The Debt Ratio for 2019 was 1.70 with 5 year median at 1.82. The Leverage and Debt/Equity Ratios for 2019 is 2.50 and 1.47 with 5 year medians at 2.20 and 1.20.
The Total Return per year is shown below for years of 5 to 27 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.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2013 | 5 | 4.24% | 8.49% | 4.07% | 4.42% |
| 2008 | 10 | 2.20% | 12.06% | 6.40% | 5.67% |
| 2003 | 15 | 6.47% | 17.12% | 9.32% | 7.80% |
| 1998 | 20 | 12.04% | 18.62% | 9.97% | 8.65% |
| 1993 | 25 | 9.93% | 12.07% | 7.03% | 5.04% |
| 1991 | 27 | 8.87% | 11.33% | 6.76% | 4.57% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 16.43, 18.54 and 20.66. The corresponding 10 year ratios are 15.43, 17.65 and 19.75. The corresponding historical ratios are 9.9, 12.82 and 15.19. The current P/E Ratio is 17.38 based on a stock price of $28.15 and 2020 EPS estimate of $1.62. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $17.34. The 10 year low, median, and high median Price/Graham Price Ratios are 1.47, 1.68 and 1.84. The current P/GP ratio is 1.62 based on the stock price of $28.15. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median Price/Book Value per Share Ratio of 3.56. The current P/B Ratio is 3.41 based on Book Value of $402M, Book Value per Share of $8.38 and a stock price of $28.15. The current ratio is some 4% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 4.82%. The current dividend yield is 4.69% based on dividends of $1.32 and a stock price of $18.15. The current yield is 3% below the historical median yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
The 10 year median Price/Sales (Revenue) Ratio is 0.71. The current P/S Ratio is 0.65 based on 2020 Revenue estimate of $2,097M, Revenue per Share of $45.01 and a stock price of $28.15. The current ratio is 8% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
Results of stock price testing is that the stock price is probably reasonable. Most of the testing shows this. The exception is the dividend yield test. However, yield has varied a lot with this stock because it started as a corporation, the became an income trust and then back to a corporation. What is perhaps telling is the last of recent divided increases. There were no increases in 2019 and so far in this financial period an increase of 3.1%. This shows that management’s short term expectations are low.
Is it a good company at a reasonable price? The company seems to be a good dividend payer. They have been paying dividends each year for the past 30 years that I know of. I would expect slow growth in dividends in the future. It could be considered to be a defensive stock like Aditya Raghunath talks about in a Motley Fool write up below. The stock price is probably reasonable.
When I look at analysts’ recommendations, I find Buy (1) and Hold (4) recommendations. The consensus would be a Hold. The 12 months stock price consensus is $31.00. This implies a total return of 14.81% with 10.12% from capital gains and 4.69% from dividends.
See what analysts are saying on Stock Chase. Not a good pick by some analysts and they question the buying of a small regional airline. Aditya Raghunath on Motley Fool thinks this is a great defensive stock. Simply Wall Street says the company pays out more than the free cash flow . A writer on Market Stock Alerts says the current Price Option Signal is a Sell. A news release by the company on Newswire says the company can increase the level of non-Canadian ownership control..
The North West Co Inc is a Canada-based company that is principally engaged in retail business in underserved rural communities and urban neighborhoods. The company operates business in Northern Canada, Western Canada, rural Alaska, the South Pacific islands, and the Caribbean, with around two thirds of the company's total revenue coming from the Canadian market. Its web site is here North West Company.
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 Friday, 25, 2019 around 5 pm possibly. I am going on Holidays on October 20, 2019.
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.
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