Is it a good company at a reasonable price? What you expect from such stock is about half the return from dividends and around half from capital gains. In this stock you are normally getting a bit more from capital gains than dividends. I think that Amy Legate-Wolfe on Motley Fool is right that it is a defensive stock. However, I would think that buying now you would be overpaying for this stock and that is not a good idea. I think that the current price is too high.
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.
When I was updating my spreadsheet, I noticed that both the CEO and CFO increased their shares in the past year. Please note that I am reviewing their fourth quarter financial year end of January 2026. Their second quarter (for 2027) is dated July 2026.
I also noticed that growth has been low in the last 5 years. 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 second quarter in 2027 dated July 31, 2026 and expected growth over this year.
| Yr | Item | Tot. Gwth | Per Year | Gwth | Coverage |
|---|---|---|---|---|---|
| 5 | Revenue Growth | 10.13% | 1.95% | 0.97% | <-12 mths |
| 5 | AEPS Growth | 12.42% | 2.37% | -1.25% | <-12 mths |
| 5 | Net Income Growth | -0.28% | -0.06% | 1.57% | <-12 mths |
| 5 | Cash Flow Growth | -17.45% | -3.76% | 2.38% | <-12 mths |
| 5 | Dividend Growth | 17.39% | 3.26% | 2.47% | <-12 mths |
| 5 | Stock Price Growth | 37.43% | 6.57% | 12.94% | <-12 mths |
| 10 | Revenue Growth | 44.66% | 3.76% | 3.15% | <-this year |
| 10 | AEPS Growth | 113.32% | 7.87% | 11.02% | <-this year |
| 10 | Net Income Growth | 99.90% | 7.17% | 2.08% | <-this year |
| 10 | Cash Flow Growth | 110.24% | 7.71% | 0.37% | <-this year |
| 10 | Dividend Growth | 35.00% | 3.05% | 2.47% | <-this year |
| 10 | Stock Price Growth | 59.22% | 4.76% | 26.00% | <-this year |
If you had invested in this company in December 2015, for $1,003.45 you would have bought 35 shares at $28.67 per share. In December 2025, after 10 years you would have received $496.65 in dividends. The stock would be worth $1,711.85. Your total return would have been $2,208.50. This would be a total return of 9.40% per year with 5.49% from capital gain and 3.91% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $28.67 | $1,003.45 | 35 | 10 | $496.65 | $1,711.85 | $2,208.50 |
The current dividend yield is Moderate with dividend growth Low. The current dividend yield is moderate (2% to 4% ranges) at 3.06%. The 5, 10 and historical median dividend yields are also moderate at 4.15%, 4.34% and 4.51%. The dividend growth in the last 5 years is low (below 8% per year) at 3.3% per year. The last dividend increase was in 2026 and it was for 2.4%.
The Dividend Payout Ratios (DPR) are fine for AEPS and CFPS. The DPR for 2025 for Earnings per Share (EPS) is high at 56% with 5 year coverage at 55%. The DPR for 2025 for Adjusted Earnings per Share (AEPS) is good at 49% with 5 year coverage high at 50%. The DPR for 2025 for Cash Flow per Share (CFPS) is good at 23% with 5 year coverage at 24%. The DPR for 2025 for Free Cash Flow (FCF) is high at 70% with 5 year coverage at 52%. FCF varies for 2026 from $110M to $141.28M. I am using $141.28M.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 56.45% | 54.77% |
| AEPS | 49.27% | 50.41% |
| CFPS | 23.36% | 24.04% |
| FCF | 70.42% | 51.68% |
Debt Ratios are good. The Long Term Debt/Market Cap Ratio for 2025 is good at 0.13 and currently at 0.12. The Liquidity Ratio for 2025 is good at 2.10 and 2.06 currently. The Debt Ratio for 2025 is good at 2.11 and 2.05 currently. The Leverage and Debt/Equity Ratios for 2025 are good at 1.96 and 0.93 and currently at 2.01 and 0.98.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.13 | 0.12 |
| Intang/GW | 0.04 | 0.03 |
| Liquidity | 2.10 | 2.06 |
| Liq. + CF | 2.87 | 2.78 |
| Debt Ratio | 2.11 | 2.05 |
| Leverage | 1.96 | 2.01 |
| D/E Ratio | 0.93 | 0.98 |
The Total Return per Year is shown below for years of 5 to 35 to the end of 2025. 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. |
|---|---|---|---|---|---|
| 2020 | 5 | 3.26% | 12.61% | 8.56% | 4.05% |
| 2015 | 10 | 3.05% | 9.40% | 5.49% | 3.91% |
| 2010 | 15 | 1.17% | 10.26% | 5.93% | 4.34% |
| 2005 | 20 | 4.86% | 13.62% | 7.28% | 6.34% |
| 2000 | 25 | 5.75% | 22.13% | 10.70% | 11.43% |
| 1995 | 30 | 8.73% | 20.76% | 10.42% | 10.35% |
| 1990 | 35 | 8.08% | 17.61% | 9.76% | 7.85% |
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 14.16, 16.53 and 18.90. The corresponding historical ratios are 10.92, 13.01 and 15.36. The current ratio is 18.67 based on a stock price of $54.90 and EPS estimate for 2027 of $2.94. 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 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, 13.21 and 14.68. The corresponding 10 year ratios are 12.65, 15.09 and 17.53. The corresponding historical ratios are 12.65, 15.09 and 17.53. The current ratio is 15.04 based on a stock price of $54.90 and AEPS estimate for 2027 of $3.65. The current ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $36.52. The 10-year low, median, and high median Price/Graham Price Ratios are 1.19, 1.41 and 1.64. The current ratio is 1.50 based on a stock price of $54.90. 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 10-year median Price/Book Value per Share Ratio of 2.97. The current ratio is 3.38 based on a Book Value of $771.8M, Book Value per Share of $16.24 and a stock price of $54.90. The current ratio is14% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median.
I get a 10-year median Price/Cash Flow per Share Ratio of 8.95. The current ratio is 9.30 based on Cash Flow per Share of $5.91 and a stock price of $54.90. The current ratio is 4% 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 4.51%. The current dividend yield is 3.06% based on dividends of $1.68 and a stock price of $54.90. The current dividend yield is 32% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive. But this company was an income trust between 1997 and 2011 and because of this had some high dividend yields. So, this is probably not a good test.
I get a 10 year median dividend yield of 4.34%. The current dividend yield is 3.06% based on dividends of $1.68 and a stock price of $54.90. The current dividend yield is 30% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10-year median Price/Sales (Revenue) Ratio is 072. The current P/S Ratio is 0.97 based on Revenue estimate for 2027 of $2,680M Revenue per Share of $56.39 and a stock price of $54.90. The current ratio is 35% 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 expensive. The 10 year dividend yield test says this and it is confirmed by the P/S Ratio test. Most of the rest of the testing is saying the stock price is reasonable but above the median.
When I look at analysts’ recommendations, I find Strong Buy (3) and Buy (1). The consensus is a Strong Buy. The 12 month stock price consensus is $61.25 with a high of $63.00 and low of $59.00. The consensus stock price of $61.25 implies a total return of 14.63% with 11.57% from capital gains and 3.06% from dividends based on a stock price of $64.90.
Analysts on Stock Chase like this stock. They think it is a well-run business but it is a relatively small company. Amy Legate-Wolfe on Motley Fool likes this stock because it is a defensive stock. Daniel Da Costa on Motley Fool likes this stock because it has consistently raised their dividends. The company put out a press release via Globe Newswire about their fourth quarter ending in 2026. The company put out a press release via Globe Newswire about their second quarter for 2027 dated July 2026.
Guru Focus via Yahoo Finance reviews this company. Guru Focus has 3 warnings of P/E Ratio Near Highs; Elevated PEG Ratio; and Slow Dividend Growth. They still think it is fairly valued.
Simply Wall Street via Yahoo Finance is reviewing three Canadian stocks with Yield of 3% and NWC is the third one. Simply Wall Street has one warning on this stock of earnings have declined by 0.2% per year over past 5 years.
The North West Co Inc is a retailer to rural and remote communities and underserved urban neighbourhood markets in Northern Canada, Western Canada, rural Alaska, the South Pacific islands, and the Caribbean. Its web site is here North West Company.
The last stock I wrote about was about was Teck Resources Ltd (TSX-TECK.B, NYSE-TECK) ... learn more. Next, I will write about Linamar Corporation (TSX-LNR, OTC-LIMAF) ... learn more on Friday, October 2, 2026 around 5 pm. Tomorrow on my other blog I will write about Enbridge Buys Tallgrass.... learn more on Thursday, October 1, 2026 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.
Also, on my book blog I have put a review of the book The World According to China by Elizabeth Economy learn more...
No comments:
Post a Comment