I own this stock of Reitmans (Canada) Ltd (TSX-RET.A, OTC-RTMAF). 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 if it will recover. The owners are still trying.
When I was updating my spreadsheet, I noticed that they have suspended their dividends after paying them for over 30 years that I know of. This stock reached its height in 2007 at around 26.59, and had another high of 2010 of $18.89, but has gone down ever since. On the way to the first high it split 3 times. Also, Fairfax Financial Holdings Limited sold off their shares in August 2019.
They have suspended their dividends. From my records I know that they have paid dividends for the past 32 years. The dividend growth has varied. Their dividends were often flat and they had decreases in the past, but they consistently had paid dividends until now. Currently shareholders have only made any money on this stock because of dividends.
The Dividend Payout Ratios (DPR) no longer matter at this point as dividends are suspended. When they were paying dividends, they had good DPRs for EPS until 2011 but because of earnings losses this DPR has not been good since. However, they always had good cash flow to pay dividends. Even in 2019, their DPR for CFPS was good at 12% with 5 year coverage at 23%.
Debt Ratios are fine but have deteriorated recently. The Liquidity Ratio for 2019 is low at 1.34. This ratio was mostly much higher, but has varied and their 5 year median is 2.64. The Debt Ratio for 2019 is also lower than it has been at 1.53 and it has a 5 year median of 3.15. The Leverage and Debt/Equity Ratios are higher than they have been in the past with the 2019 ratios at 2.89 and 1.89 and 5 year medians at 1.41 and 0.41.
The Total Return per year is shown below for years of 5 to 32 to the end of 2019. 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. |
|---|---|---|---|---|---|
| 2014 | 5 | -5.59% | -26.02% | -31.53% | 5.51% |
| 2009 | 10 | -14.52% | -16.75% | -23.43% | 6.69% |
| 2004 | 15 | -2.06% | -6.22% | -15.42% | 9.20% |
| 1999 | 20 | 3.19% | 12.51% | -3.88% | 16.39% |
| 1994 | 25 | 3.40% | 11.17% | -2.04% | 13.20% |
| 1989 | 30 | 2.83% | 8.60% | -1.83% | 10.43% |
| 1987 | 32 | 2.65% | 7.79% | -1.82% | 9.62% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are all negative. The corresponding 10 year ratios are 25.2, 32.03 and 20.94. The corresponding historical ratios are 10.16, 13.05, and 15.47. The current P/E Ratio is negative so I cannot do this test. There are no estimates available and the only EPS I can use is for the last 12 months, which is negative.
I get a Graham Price of $3.13 but it is just an estimate because of the lack of recent positive EPS recently. The 10 year low, median, and high median Price/Graham Price Ratios are 0.96, 1.14 and 1.48. The current P/GP Ratio is 0.03 based on a stock price of $0.08. This stock price testing suggests that the stock price is relatively cheap
I get a 10 year median Price/Book Value per Share Ratio of 1.02. The current P/B Ratio is 0.02 based on a stock price of $0.08, Book Value of $194M and Book Value per Share of $3.97. The current ratio is 98% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median P/CF Ratio of 7.81. The current P/CF Ratio is 0.05 based on last 12 month CFPS of $1.58, Cash Flow of $77.2M, and a stock price of $0.08. The current ratio is 99% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I cannot do any dividend yield test because the dividends have been suspended.
The 10 year median Price/Sales (Revenue) Ratio is 0.39. The current P/S Ratio is 0.004 based on last 12 months revenue of $869M, Revenue per share of $17.79 and a stock price of $0.08. The current ratio is 99% below the 10 year ratio. This stock price testing suggests that the stock price is relatively cheap.
Results of stock price testing is that the stock price is relatively cheap. For the tests I can do, the stock price is coming up as relatively cheap.
Is it a good company at a reasonable price? This stock is relatively cheap. However, it is cheap for a reason. It is now under creditor protection. The company is hopeful that it can emerge from this process. It was having problems prior to the Covid 19, but the Covid 19 has might have finally killed the company.
When I look at analysts’ recommendations, I find one analyst that gives it a ranking of Hold on Wall Street Journal. This stock has few if any analysts following it as it is doing so badly.
The company announces its plan to get protection under the Companies' Creditors Arrangement Act and restructure in a Press Release. The company gets a court order under Companies' Creditors Arrangement Act in a Press Release. There are a couple of entries on Stock Chase. Nelson Smith on Motley Fool talks about this company entering bankruptcy protection and who might be next. A writer on Simply Wall Street points out that a company that is not earning profit and cannot grow their revenue should be avoided. The Canadian Press announced in the Toronto Star the sale of Reitman’s stock by Fairfax Financial. Benj Gallander of the Contra the Heard Investment Letter gives his thoughts on Reitmans on BNN Bloomberg.
Reitmans (Canada) Ltd is an apparel retailer based in Canada. Its main business is the sale of ladies' specialty apparel to consumers through its retail banners such as including Reitmans, which is a women's apparel specialty chain and fashion brand, Penningtons, RW & CO., which offers fashions for both men and women, Addition Elle, Thyme Maternity, which offers a complete line of nursing fashions and accessories and Hyba.. Its web site is here Reitmans (Canada) Ltd.
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