Everyone knows Reitman's? The company offers with its multiple banners, fashion products "everyday" women. Moreover, comparisons advertising Reitman's vs. haute couture shows good positioning that the research enterprise. For those who
follow me for a bit, you will recall that I already commented on the company in financial crisis ( you can read the text here ). At the time I felt incredible to have access to a quality business and profitable despite the crisis that pays a dividend of 8% and is trading at a P / E less than 6.
Today the shares trade higher with a dividend rate of 4.5% (the dividend dollar was even increased) and a P / E of 13.3x (based on 12 months). This valuation is less attractive than in November 2008 but still remains extremely interesting title. One problem I see with this title is that historically it has always traded at multiples lower. We should therefore not be seen to compromise a multiple P / E higher than 15x in my opinion.
Reitman's is a cyclical basis to be negatively affected if the economy slowed down or back into recession. Conversely, the title will benefit from renewed strength in the economy. The company is also affected by the change in the Canadian dollar versus the U.S. dollar. Indeed, Reitman's buys its inventory primarily in U.S. dollars while these sales are in Canadian dollars. The company could use derivatives to hedge its exposure to currency risk, but always decided not to do so. Personally, I think it's a good decision. However this risk exists and I decided to check the figures for the order of magnitude of impact. By my calculations, Reitman's increasing its quarterly net earnings of $ 0.01 per cent currency appreciation.
Reitman's is a well managed, low debt (a mortgage of only $ 10M to $ 655M in assets) and with some development projects underway. If Reitman's should not open new banner (adventure Cassis was relatively painful at first), the company seeks to acquire small independent stores and convert them to existing banners. Reitman's has the cash ($ 200M in current assets) and debt capacity for such acquisitions. The buying opportunities are rare and the company may need to focus on organic growth for some time.
Ultimately, Reitman's seen as a quality title that can be purchased at an attractive price.
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