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 the revenue has been going up and down, but for the last 3 years they have had earning losses. I note that the sales only went up in 2019 by 6%, but the cost of sales went up by 24%. For this stock, shareholders have not done well and now the dividend has been suspended.
This is another stock that has suspended their dividends. Dividends were suspended in 2018. They had earning losses for the past 3 years to 2019. However, analysts expect this company to make money this year. (But they have said that before.) They could not continue to pay dividends when there are multiple years of earning losses. The 5 year coverage for Cash Flow for 2019 was 87%, but the 5 yar coverage in 2018, the last year of dividends was 109%.
Some Debt Ratios have deteriorated. The Long Term Debt/Market Cap Ratio for 2019 is 0.32 and this is a good number. The Liquidity Ratio for 2019 at 2.10 is a good number. The Debt Ratio at 1.17 is low and it is better if it is 1.50 or above. It used to be a lot better, for example last year it was 2.24 and has a 5 year median of 2.19. The Leverage and Debt/Equity Ratios have also deteriorated and for 2019 they are 6.82 and 5.82 and much too high. It is better if they were under 3.00 and 2.00. They used to be. In 2018 these ratios were 1.81 and 0.81 and the 5 year medians are 1.81 and 0.81 which are good ratios.
The Total Return per year is shown below for years of 5 to 15 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 | 0.00% | -17.92% | -21.99% | 4.06% |
| 2009 | 10 | 0.00% | -3.26% | -11.82% | 8.56% |
| 2004 | 15 | 0.00% | 3.85% | -7.59% | 11.44% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are negative and so not useable. The corresponding 10 year ratios are 13.44, 14.91 and 16.38. The corresponding historical ratios are 13.18, 16.22 and 18.46. The current P/E Ratio is 13.59 based on a stock price of $4.35 and EPS estimate for 2020 of $0.32. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $3.47. The 10 year low, median, and high median Price/Graham Price Ratios are 0.90, 1.24 and 1.55. The current P/GP Ratio is 1.25 based on a stock price of $4.35. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10 year median Price/Book Value per Share Ratio of 1.25. The current P/B Ratio is 2.60 based on a stock price of $4.35, Book Value of $66.9M and a Book Value per Share of $1.67. The current ratio is 108% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. The reason for the stock showing expensive on this test is because the book value has been declining. It has declined by 32% per year over the past 5 years. This is a very bad sign.
I get a 10 year median Price/Cash Flow per Share Ratio of 9.86. The current P/CF Ratio is 3.85 based on a stock price of $4.35, Cash Flow for the last 12 months of $43.3M and Cash Flow per Share of $1.13. The current ratio is 61% below the 10 year ratio. This stock price testing suggests that the stock price is relatively cheap.
I cannot do dividend yield tests because the dividends have been suspended.
The 10 year median Price/Sales (Revenue) Ratio 0.48. The current P/S Ratio is 0.22 based on Revenue estimate for 2020 of $805M, Revenue per Share of $20.10 and a stock price of $4.35. The current ratio is 55% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
Results of stock price testing is that the stock price is probably cheap. The P/S Ratio is pointing at a cheap price. The problem is with the P/B Ratio test. It is testing as expensive because of the big decline in book value. This points out that the stock is probably very risky.
Is it a good company at a reasonable price? The price is probably cheap. However, this would be a very risky investment. I know that it is into selling cannabis, but companies selling cannabis have not proven that they can make money at it yet. Certainly, this company has not proven that they can make a profit.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (1) and Hold (1). The consensus would be a Buy. The 12 month stock price $6.31. This implies a total return of 45.06% all from capital gains.
The last analysts’ remarks were in 2019 on Stock Chase. It is always a bad sign when analysts lose interest in a stock. Nelson Smith on Motley Fool thinks this stock is a bargain. He points out that it is also selling cannabis as well as liquor. A writer on Simply Wall Street points out that not only is this company not making a profit, the revenue is growing very slowly. The company announced on Newswire a bought deal for common shares. This will dilute the shares of current shareholders. A writer on Cannin thinks that the stock price is likely to improve in the long term.
Alcanna Inc is a private sector retailer of beer, wine and spirits in North America and Canada operating approximately 231 locations under the Wine and Beyond, Ace Liquor Discounters and Liquor Depot banners in Alberta and British Columbia. The company also operates Nova Cannabis retail stores in Alberta and in Toronto, Ontario. 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 Friday, September 25, 2020 around 5 pm. Tomorrow on my other blog I will write about My Stock Reports .... learn more on Thursday, September 24, 2020 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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