Is it a good company at a reasonable price? This is a rather safe consumer stock that produces dividend income and has a reasonable return. I think a reasonable long term total return to be 8% per year, with part from dividends and part from capital gains. This stock has done this for shareholders in the past and there is no reason to believe that it will not continue to do so. The stock price seems to be reasonable at the present time.
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. This company has a financial year end of January 31, so I will be looking at the financials for their financial year ending January 31, 2023.
When I was updating my spreadsheet, I noticed this is a relatively small company, but it has done quite well for its shareholders. See the chart below. I it growing all items I am following.
| Year | Item | Tot. Growth | Per Year |
|---|---|---|---|
| 5 | Revenue Growth | 20.42% | 3.79% |
| 5 | AEPS Growth | 59.73% | 9.82% |
| 5 | Net Income Growth | 81.95% | 12.72% |
| 5 | Cash Flow Growth | 29.29% | 5.27% |
| 5 | Dividend Growth | 16.41% | 3.08% |
| 5 | Stock Price Growth | 24.37% | 4.46% |
| 10 | Revenue Growth | 55.44% | 4.51% |
| 10 | AEPS Growth | 102.99% | 7.34% |
| 10 | Net Income Growth | 87.56% | 6.49% |
| 10 | Cash Flow Growth | 41.74% | 3.55% |
| 10 | Dividend Growth | 43.27% | 3.66% |
| 10 | Stock Price Growth | 56.61% | 4.59% |
If you look at the chart below, this records the returns using January 31 to January 31 returns. The Total Return per year is shown below for years of 5 to 31 to the end of January 2023. It varies somewhat from the chart further down which is showing returns of 5 to 31 to the end of December 2022.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2018 | 5 | 3.08% | 8.81% | 4.46% | 4.35% |
| 2013 | 10 | 3.66% | 9.16% | 4.59% | 4.58% |
| 2008 | 15 | 2.49% | 9.90% | 4.61% | 5.28% |
| 2003 | 20 | 5.61% | 17.16% | 8.65% | 8.51% |
| 1998 | 25 | 10.19% | 16.34% | 8.25% | 8.10% |
| 1993 | 30 | 8.76% | 11.22% | 6.33% | 4.90% |
| 1990 | 31 | 8.27% | 12.10% | 6.99% | 5.11% |
If you had invested in this company in December 2012, for $1,007.55 you would have bought 45 shares at $22.39 per share. In December 2022, after 10 years you would have received $581.85 in dividends. The stock would be worth $1,600.65. Your total return would have been $2,182.50. This is a total return would be a total return of 7.72% per year with 3.42% from capital gain and 3.45% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $22.39 | $1,007.55 | 45 | 10 | $581.85 | $1,600.65 | $2,182.50 |
The current dividend yield is moderate with dividend growth low. The current dividend yield is moderate (2% to 4% ranges) at 4.33%. The 5, 10 and historical dividend yields are also moderate at 4.35%, 4.36% and 4.75%. The dividend growth is low (below 8% per year) at 3.1% per year over the past 5 years. The last dividend increase was in 2023 and it was for 2.6%.
The Dividend Payout Ratios (DPR) are fine. The DPR for Earnings per Share (EPS) for 2023 is 59% with 5 year coverage at 58%. The DPR for Adjusted Earnings per Share (AEPS) for 2023 is 55% with 5 year coverage at 63%. The DPR for 2023 for Cash Flow per Share (CFPS) is 25% with 5 year coverage at 27%. The DPR for 2023 for Free Cash Flow (FCF) is 52% with 5 year coverage at 65%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 59.36% | 58.04% |
| AEPS | 54.78% | 62.63% |
| CFPS | 25.31% | 26.72% |
| FCF | 51.75% | 65.07% |
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2023 is good at 0.17. The Liquidity Ratio for 2023 is good at 1.91. The Debt Ratio for 2023 is good at 2.36. The Leverage and Debt/Equity Ratios for 2023 are fine at 2.12 and 1.07.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.17 | 0.19 |
| Intang/GW | 0.04 | 0.05 |
| Liquidity | 1.91 | 2.17 |
| Liq. + CF | 2.36 | 2.78 |
| Debt Ratio | 1.94 | 1.90 |
| Leverage | 2.12 | 2.17 |
| D/E Ratio | 1.09 | 1.14 |
The Total Return per year is shown below for years of 5 to 31 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 | 3.08% | 7.72% | 3.42% | 4.35% |
| 2012 | 10 | 3.66% | 9.44% | 4.74% | 4.58% |
| 2007 | 15 | 2.49% | 8.49% | 3.60% | 5.28% |
| 2002 | 20 | 5.61% | 17.05% | 8.52% | 8.51% |
| 1997 | 25 | 10.19% | 18.98% | 9.22% | 8.10% |
| 1992 | 30 | 8.76% | 12.01% | 6.73% | 4.90% |
| 1990 | 31 | 8.27% | 17.66% | 9.62% | 5.11% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 12.73, 14.31 and 15.90. The corresponding 10 year ratios are 15.92, 18.09 and 20.12. The corresponding historical ratios are 9.97, 12.82 and 15.19. The current P/E Ratio is 13.29 based on a stock price of 36.02 and EPS estimate for 2024 of $2.71. It is below the low ratio for the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 11.74, 1321 and 14.68. The corresponding 10 year ratios are 15.64, 17.59 and 19.47. The current P/AEPS Ratio is 13.05 based on a stock price of $36.02 and AEPS estimate for 2024 of $2.76. The current ratio is below the low ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively cheap.
I get a Graham Price of $28.82. The 10-year low, median, and high median Price/Graham Price Ratios are 1.49, 1.68 and 1.87. The current P/GP Ratio is 1.25 based on a stock price of $36.02. This ratio is below the low ratio of the 10 year median ratios. 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 3.58. The current P/B Ratio is 2.69 based on a stock price of $36.02, Book Value of $638.5M and Book Value per Share of $13.37. The current ratio is 25% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get a 10-year median Price/Cash Flow per Share Ratio of 9.94. The current P/CF Ratio is 6.47 based on a stock price of $36.02, Cash Flow per Share estimate for 2024 of $5.57 and Cash Flow of $266M. The current ratio is 35% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 4.75%. The current dividend yield is 4.33% based on a stock price of $36.02 and dividends of $1.56. The current ratio is 8.8% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10 year median dividend yield of 4.36%. The current dividend yield is 4.33% based on a stock price of $36.02 and dividends of $1.56. The current ratio is 0.6% above the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10-year median Price/Sales (Revenue) Ratio is 0.72. The current P/S Ratio is 0.70 based on a stock price of $36.02, Revenue estimate for 2024 of $2,465M and Revenue per Share of $51.62. The current ratio is 3.6% 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. The 10 year median dividend yield says this and it is confirmed by the P/S Ratio test. There are a number of tests that say that the stock price is cheap, but I do wonder about them. For example, the P/E Ratio testing says cheap, but a P/E Ratio of 13.29 is not considered cheap. A P/E Ratio of 10.00 or less would be. I do find that the stocks P/E Ratios, P/AEPS Ratios and P/GP Ratios to be rather high.
When I look at analysts’ recommendations, I find Buy (1) and Hold (3). The consensus would be a Hold. The 12 month stock price is $38.75, with a high of $41.00 and a low of $36.00. The consensus price of $38.75 implies a total return of 11.91% with 7.58% from capital gains and 4.33% from dividends.
All the analysts’ recommendations on Stock Chase for 2023 are buys. Stock Chase gives this company 4 stars out of 5. It is on all three of my dividends lists of Money Sense, Maple Money, and Dividend Aristocrats. Joey Frenette on Motley Fool thinks this stock is cheap. Christopher Liew on Motley Fool thinks this is good dividend stock to buy and hold. The company put out a press release on Globe Newswire about its fourth quarter results. The company put out a press release on Global Newswire about their second quarter.
Simply Wall Street via Yahoo Finance reviews this stock and its dividend payments. Simply Wall Street gives this stock 3 and one half stars out of 5. They have no warnings on this stock.
The North West Company is a Canada-based company that is principally engaged in retail business in underserved rural communities and urban neighborhoods. The company provides food, family apparel, housewares, appliances, and outdoor products, with food products accounting for the majority of the company's revenue. The company also offers services, including post offices, income tax return preparation, money transfers, commercial business sales, and others. Its geographical segment includes Canada and International. The company generates maximum revenue from Canada. Its web site is here North West Company.
The last stock I wrote about was about was Logistec Corp (TSX-LGT.B, OTC-LTKBF) ... learn more. The next stock I will write about will be Medtronic PLC (NYSE-MDT) ... learn more on Tuesday, October 10, 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.
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