Is it a good company at a reasonable price? Personally, I would not buy this stock. I do not buy stock which have negative and near negative book values. I believe they are vulnerable for going into bankruptcy in bad times. I like to buy good stocks for the long term. The stock price would seem to be expensive, but there seems to be lots of people that like this stock very much. Of course, you can always buy it under greater fool theory. For information on this theory, see Wikipedia. This is a personal opinion and it seems to be at variance to what others think about this stock.
Also, I do not consider this a dividend stock because of the very low dividends. According to my calculations, it would take 15 years before the dividend yield would even right 1%. See chart below.
| Div Pd | Div Yield | Years | At IRR | Div Cov |
|---|---|---|---|---|
| $0.43 | 0.44% | 5 | 8.57% | 1.75% |
| $0.64 | 0.67% | 10 | 8.57% | 3.94% |
| $0.97 | 1.01% | 15 | 8.57% | 7.24% |
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 do not list a Chief Financial Officer (CFO) on their website. I google this and apparently, they have just appointed one and he will take this position on December 18, 2023. I noticed that this year they have positive book value (that is what the company is worth according to its accounts) turned positive this year. It was $28.410 in 2023 and is $203,509 now. Analysts expected it to be negative again.
The financial year end for this company is the Sunday before 1 February each year. The financial year end I am looking at is dated January 19, 2023. Last year the financial year end was January 30, 2022.
I must admit this stock has a good growth record. See below. What I do not like is that the Book Value per Share was $0.10 at the end of the last financial year February 2022 and is now $0.72 currently and the P/B Ratio is 130.66. Normally you get P/B Ratios of 1.50 to maybe 3.50.
| Year | Item | Tot. Growth | Per Year |
|---|---|---|---|
| 5 | Revenue Growth | 54.70% | 9.12% |
| 5 | EPS Growth | 81.98% | 12.72% |
| 5 | Net Income Growth | 54.38% | 9.07% |
| 5 | Cash Flow Growth | 36.36% | 6.40% |
| 5 | Dividend Growth | 50.84% | 8.57% |
| 5 | Stock Price Growth | 51.27% | 8.63% |
| 10 | Revenue Growth | 171.83% | 10.52% |
| 10 | EPS Growth | 463.27% | 18.87% |
| 10 | Net Income Growth | 262.86% | 13.76% |
| 10 | Cash Flow Growth | 239.01% | 12.99% |
| 10 | Dividend Growth | 208.86% | 11.94% |
| 10 | Stock Price Growth | 705.60% | 23.20% |
If you had invested in this company in December 2012, for $1,002.66 you would have bought 102 shares at $8.83 per share. In December 2022, after 10 years you would have received $163.77 in dividends. The stock would be worth $8,077.38. Your total return would have been $8,241.15. This is a total return would be a total return of 23.85% per year with 23.20% from capital gain and 0.65% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $9.83 | $1,002.66 | 102 | 10 | $163.77 | $8,077.38 | $8,241.15 |
The current dividend yield is low with dividend growth moderate. The dividend yield is low (below 2%) at 0.29%. This is so low you wonder about calling it a dividend stock. The 5, 10 and historical dividend yields are also low at 0.37%, 0.40, and 0.41%. The dividends have been growing at a moderate rate (8% to 14% ranges) at 8.6% per year for the past 5 years. The last dividend increase was for 6.6% and it occurred in 2023. Increases have varied and sometime greatly.
The Dividend Payout Ratios (DPR) are low and that would be expected because of the very low dividend yield. The DPR for 2022 for Earnings per Share (EPS) is 8% with 5 year coverage at 10%. The DPR for 2022 for Cash Flow per Share (CFPS) is 5% with 5 year coverage at 7%. The DPR for 2022 for Free Cash Flow (FCF) is 9% with 5 year coverage at 8%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 7.83% | 10.04% |
| CFPS | 5.04% | 6.83% |
| FCF | 8.64% | 7.99% |
Debt Ratios range from good to awful. The Long Term Debt/Market Cap Ratio for 2022 is good at 0.08. The Liquidity Ratio for 2022 is low at 0.99, but when you add in cash flow after dividends it is better at 1.69. The current one at 1.10 with cash flow after dividends at 2.25 is fine. The Debt Ratio for 2022 is very low at 1.01 and not much better currently at 1.04. at 2.04. The Leverage and Debt/Equity Ratios for 2022 are pathetic and this is because there is barely a positive book value. For these ratios, I like them below 3.00 and 2.00.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.08 | 0.07 |
| Intang/GW | 0.04 | 0.03 |
| Liquidity | 0.99 | 1.10 |
| Liq. + CF | 1.69 | 2.25 |
| Debt Ratio | 1.01 | 1.04 |
| Leverage | 169.65 | 24.56 |
| D/E Ratio | 168.65 | 23.56 |
The Total Return per year is shown below for years of 5 to 14 to the end of 2022. 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. |
|---|---|---|---|---|---|
| 2017 | 5 | 8.57% | 8.97% | 8.63% | 0.34% |
| 2012 | 10 | 13.68% | 23.85% | 23.20% | 0.65% |
| 2008 | 14 | 26.56% | 25.88% | 0.67% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 19.59, 25.31 and 30.39. The corresponding 10 year ratios are 19.51, 25.15 and 30.29. The corresponding historical ratios are 18.66, 23.97 and 31.11. The current P/E Ratio is 28.48 based on a stock price of $96.25 and EPS estimate for 2024 of $3.38. The current ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a Graham Price of $7.40. The 10-year low, median, and high median Price/Graham Price Ratios are 8.84, 11.48 and 13.73. The current P/GP Ratio is 13.00 based on a stock price of $96.25. The current ratio is between the median and high ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable but above the median. Note that a good ratio for P/GP Ratio is below 1.00. Generally, you should not consider a stock with a ratio above 1.20. The ratios on this stock are so high because of the very low Book Value.
I get a 10-year median Price/Book Value per Share Ratio of 7.45. The current P/B Ratio is 133.63 based on a Book Value of $204M, Book Value per Share of $0.72 and a stock price of $96.25. The current ratio is 1692% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. Note also her the P/B Ratios are extremely high. This is again because of lack of a decent Book Value.
I get a 10-year median Price/Cash Flow per Share Ratio of 19.29. The current P/B Ratio is 19.89 based on a stock price of $96.25, Cash Flow per Share estimate for 2024 of $3.05 and a Cash Flow of $1,368M. The current ratio is 3% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get an historical median dividend yield of 0.41%. The current dividend yield is 0.29% based on dividends of $0.22 and stock price of $29.25. The current dividend yield is 28% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median dividend yield of 0.40%. The current dividend yield is 0.29% based on dividends of $0.22 and stock price of $29.25. The current dividend yield is 26% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10-year median Price/Sales (Revenue) Ratio is 3.54. The current P/S Ratio is 4.66 based on Revenue estimate for 2024 of $5,836M, Revenue per Share of $20.65 and a stock price $29.25. The current ratio is 32% below the 10 year median 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 expensive. The dividend yield tests say this and it is confirmed by the P/S Ratio test. Other tests say it is either reasonable but above the median or expensive.
When I look at analysts’ recommendations, I find Strong Buy (2), Buy (7) and Hold (3). The consensus would be a Buy. The 12 months stock price consensus is $104.46 with a high of $105.00 and low of $94.00. The consensus price of $104.46 implies a total return of 8.82% with 8.53% from capital gains.
Analyst on Stock Chase do like this company. Stock Chase gives this stock 4 stars out of 5. It is on all the dividend lists I follow. Amy Legate-Wolfe on Motley Fool likes the company’s growth. Daniel Da CostaMotley Fool says this company is trading just off its all-time high, but has impressive potential. The company put out a press release via Newswire about their year-end results for 2023. The company put out a press release on Newswire about their second quarter of 2024.
Simply Wall Street put out a report via Yahoo Finance about this company. They say that the company is favoured by institutional owners. They give out two warnings of has a high level of debt; and significant insider selling over the past 3 months.
Dollarama Inc is a Canada-based company principally engaged in operating discount retail stores. The company's stores are throughout Canada, generally located in convenient locations, such as metropolitan areas, midsize cities, and small towns. All the stores are owned and operated by the company. Its web site is here Dollarama Inc.
The last stock I wrote about was about was Ovintiv Inc (TSX-OVV, NYSE-OVV) ... learn more. The next stock I will write about will be Trigon Metals Inc (TSX-TM, OTC-PNTZF) ... learn more on Friday, October 27, 2023 around 5 pm. Tomorrow on my other blog I will write about The Glenn Show.... learn more on Thursday, October 26, 2023 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. I am not a licensed professional investment advisor. 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 site for an index to these blog entries and for stocks followed. 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. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
No comments:
Post a Comment