Is it a good company at a reasonable price? To tell you the truth, I never liked this company as an investment. That is because of the high debt level and the fact that the book value has been negative. I like companies with reasonable balance sheets. I know that it has, so far, produced good growth for its shareholders, but I still do not like the debt level and I cannot consider it a long term buy. Current testing is basically showing the stock price as relatively expensive.
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. I did not like it because of the debt load.
When I was updating my spreadsheet, I noticed that these seems to be a lot of insiders selling over the past year. From the people I follow, the CEO sold 22.8% of his holdings and one officer sold 34.4% of his. I follow 4 directors and another director bought shares and increased his holdings by 5.4% and another increased his by 35.2%. The debt is still very high when compared to the book value. This company is certainly delivering the goods to his shareholders at the present time.
This stock has a finance year ending around February 1 each year, I am reviewing the February 1, 2024 financial year. The dividends yield maybe low, the because of the increases, if you held this stock for the past 5 year, your yield on your original purchase price would be 2.2% and after 10 years 11%.
You can see that growth has been good over the past 5 and 10 years. Analysts expect some good growth this year also, but the Revenue and Earnings growth over the past 12 months to the end of the second quarter is rather low. Note that the stock price is already up 49.65% this year. In the chart below, I am showing 5 and 10 year total growth and per year growth in columns 3 and 4. Column 5 shows growth expected over 12 months to the first quarter in 2024 and expected growth over this year.
| Yr | Item | Tot. Gwth | Per Year | Gwth | Coverage |
|---|---|---|---|---|---|
| 5 | Revenue Growth | 65.35% | 10.58% | 3.73% | <-12 mths |
| 5 | EPS Growth | 113.17% | 16.34% | 8.43% | <-12 mths |
| 5 | Net Income Growth | 84.10% | 12.98% | 7.54% | <-12 mths |
| 5 | Cash Flow Growth | 187.21% | 23.49% | 1.38% | <-12 mths |
| 5 | Dividend Growth | 70.84% | 11.31% | 37.47% | <-12 mths |
| 5 | Stock Price Growth | 194.09% | 24.08% | 49.65% | <-12 mths |
| 10 | Revenue Growth | 184.18% | 11.01% | 14.34% | <-this year |
| 10 | EPS Growth | 515.56% | 19.93% | 26.94% | <-this year |
| 10 | Net Income Growth | 304.03% | 14.99% | 12.92% | <-this year |
| 10 | Cash Flow Growth | 396.45% | 17.38% | 1.06% | <-this year |
| 10 | Dividend Growth | 203.06% | 11.73% | 22.00% | <-this year |
| 10 | Stock Price Growth | 549.44% | 20.57% | 49.18% | <-this year |
If you had invested in this company in December 2013, for $1,014.53 you would have bought 69 shares at $14.70 per share. In December 2023, after 10 years you would have received $123.16 in dividends. The stock would be worth $6,588.81. Your total return would have been $6,711.97. This would be a total return of 21.10% per year with 20.57% from capital gain and 0.41% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $14.70 | $1,014.53 | 69 | 10 | $123.16 | $6,588.81 | $6,711.97 |
The current dividend yield is low with dividend growth moderate. The current dividend yield is low (below 2%). The 5, 10 and historical dividend yields are also low at 0.32%, 0.38% and 0.40%. The dividend growth is moderate (between 8% and 14% per year) at 11.3% per year over the past 5 years. The last dividend increase was in 2024 and it was for 30%.
The Dividend Payout Ratios (DPR) are good. The DPR for 2023 for Earnings per Share (EPS) is good at 8% with 5 year coverage at 8%. The DPR for 2023 for Cash Flow per Share (CFPS) is good at 5% with 5 year coverage at 6%. The DPR for 2023 for Free Cash Flow (FCF) is good at 8% with 5 year coverage at 9%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 7.52% | 8.39% |
| CFPS | 5.14% | 5.61% |
| FCF | 7.61% | 8.50% |
Debt Ratios show very high debt, with really only the Liquidity Ratios being good. The Long Term Debt/Market Cap Ratio for 2024 is good at 0.0.08 and currently at 0.06. The Liquidity Ratio for 2024 is good at 1.93 and 1.99 currently. The Debt Ratio for 2024 is very low at 1.08 and 1.23 currently. The Leverage and Debt/Equity Ratios for 2024 are very high at 13.82 and 12.82 and currently at 5.33 and 4.33. Good Leverage and Debt/Equity Ratios are below 2.00 and 1.00 and acceptable ones are below 3.00 and 2.00. The ratios for this company are very high.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.08 | 0.06 |
| Intang/GW | 0.04 | 0.02 |
| Liquidity | 1.93 | 1.99 |
| Liq. + CF | 4.08 | 4.32 |
| Debt Ratio | 1.08 | 1.23 |
| Leverage | 13.82 | 5.33 |
| D/E Ratio | 12.82 | 4.33 |
The Total Return per year is shown below for years of 5 to 15 to the end of 2023. 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. |
|---|---|---|---|---|---|
| 2018 | 5 | 11.31% | 24.49% | 24.08% | 0.41% |
| 2013 | 10 | 11.73% | 21.10% | 20.57% | 0.53% |
| 2008 | 15 | 14.56% | 26.19% | 25.52% | 0.67% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 21.23, 24.99 and 30.19. The corresponding 10 year ratios are 19.85, 25.15 and 30.29. The corresponding historical ratios are 19.13, 24.51 and 28.56. The current P/E Ratio is 358.08 based on a stock price of $142.90 and EPS estimate for 2025 of $4.07. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $19.74. The 10-year low, median, and high median Price/Graham Price Ratios are 8.74, 11.48 and 13.73. The current P/GP Ratio is 7.24 based on a stock price of $142.90. 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. The median ratio on this stock is 11.48. A normal one would be from around 0.90 to 1.20. These ratios are very high. Also consider the Graham price is $19.74 and the stock price is $142.90.
I get a 10-year median Price/Book Value per Share Ratio of 14.53. The current ratio is 33.60 based on a Book Value of $1,185M, Book Value per Share of $4.25 and a stock price of $142.90. The current ratio is 131% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. Also, note that these ratios are very high. A normal P/B Ratio is considered to be around 1.50.
I get a 10-year median Price/Cash Flow per Share Ratio of 19.29. The current P/CF Ratio 25.75 based on Cash Flow per Share estimate for 2025 of $5.55, Cash Flow of $1,547M, and a stock price of $142.90. The current ratio is 33% above the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 0.40%. The current dividend yield is 0.26% based on dividends of $0.368 and a stock price of $142.90. The current dividend yield is 36% 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 0.38%. The current dividend yield is 0.26% based on dividends of $0.368 and a stock price of $142.90. The current dividend yield is 32% 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 3.65. The current P/S Ratio is 6.25 based on Revenue estimate for 2025 of $6,372M, Revenue per Share of $22.86 and a stock price of $142.90. The current ratio is 71% above 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 relatively expensive. Both the dividend yield tests show the stock price as relatively expensive. This is confirmed by the P/S Ratio test. All the testing is showing the stock price as expensive with the exception of the Price/Graham Price Ratio test. However, the P/GP Ratios are exceptionally high.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (4) and Hold (4). The consensus would be a Buy. The 12 month stock price consensus is $142.45 with a high of $154.00 and low of $130.00. The 12 month consensus stock price of $142.45 implies a total loss of $0.06% with a capital loss of 0.31% and dividends of $0.26%.
Most of the recommendations for 2024 on Stock Chase are buys. There are a few holds and one sell because the analyst thinks the stock price is too expensive. Stock Chase gives this stock 5 stars out of 5. Daniel Da Costa on Motley Fool like this company because it is growing. Jitendra Parashar on Motley Fool says the stock has strong fundamentals and growth prospects. The company put out a press release via Newswire about their February 2024 annual report. The company put out a press release on Newswire about their second quarter of 2025.
Simply Wall Street via Yahoo Finance has a review out on this stock. They talk about its strong financial performance, but also about the high debt level and because it has a higher price to earnings ratio of its industry, suggests that the stock price might be over extended.
Dollarama Inc is a Canada-based company principally engaged in operating discount retail stores. The company's stores are throughout Canada. They plan an expansion into Mexico and has a 60% stake in Latin American’s Dollarcity. 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 25, 2024 around 5 pm. Tomorrow on my other blog I will write about stock markets .... learn more on Thursday, October 24, 2024 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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