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Indigo Books & Music (IDG:TSE) Fundamental Valuation Report
Indigo Books & Music (IDG:TSE) Fundamental Valuation Report
Fundamental Valuation Report
Indigo Books & Music(IDG:TSE) Consumer Cyclical:Specialty Retail
This…
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Indigo Books & Music (IDG:TSE) Fundamental Valuation Report
Indigo Books & Music (IDG:TSE) Fundamental Valuation Report
Fundamental Valuation Report
Indigo Books & Music(IDG:TSE) Consumer Cyclical:Specialty Retail
This Report was…
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Indigo Books & Music (IDG:TSE) Fundamental Valuation Report
Indigo Books & Music (IDG:TSE) Fundamental Valuation Report
Print This Report was generated using the tools available on StockCalc.com. Patchell Brook Equity Analytics Inc. emphasizes that the user assumes all risks associated with the use of this report or the Stockcalc website including, but not limited to, all terms and conditions mentioned in…
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Fundamentally Undervalued using Stockcalc's 6 Models
Fundamentally Undervalued using Stockcalc’s 6 Models
The following table contains TSE and TSX listed Stocks that are fundamentally undervalued using the 6 valuation models or data points found on the Stockcalc website as of September 11, 2017 (Models are explained at bottom of this post)
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Undervalued List
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Valuation Series - BMTC Group First Impressions
Yesterday I published a list of 10 potential value stocks that met my initial screen criteria.
Today I started taking a look at these companies to get a first impression. My goal is to further filter the firms and do a deep dive on no more than one or two firms.
Today I'd like to start with BMTC Group.
BMTC Group operates a set of home appliance, electronics, and furniture retail stores in Quebec under several different banners, including Brault & Martineau and Economax, and Ameublements Tanguay. I took a look at their three banners and they are all similar to Leon's and are targeted at the cost conscious consumer. I presume that BMTC's strategy in Quebec is to achieve economies of scale in their distribution network and service consumer with multiple brands to create barriers to entry.
It generated annual revenues of $695 million in 2013, a drop of $22 million from the year prior. However, even with lower sales, it boasts a return on equity of 29% for the 2013 fiscal year. It also carries no explicit debt, except for leases which cost roughly $5.5 million per year. Since this is a financial equivalent of carrying $140-$160 million in long term debt at an interest rate of 4% or 3.5% respectively, the company's debt to equity is about 0.7:1 to 0.8:1. Given their use of assets for retail operations I believe this is a reasonable capitalization ratio.
At first impression, there are two things that I don't like about this company. First, as a smaller business I find that their disclosure isn't great. There is no information in their annual report on their strategy and how their execution of their strategy has affected their performance. Also, they do not disclose relative performance of each banner and there is no mention of same store sales performance or per square foot performance. Importantly, the only mention of the revenue decrease for 2013 is that the economy was soft.
To be fair, I did a brief comparison with Leon's, here in Ontario, and found that Leon's was also shrinking in revenues until they purchased The Brick in 2013.
Secondly, I did not find any news story that would suggest that investors are irrationally afraid of investing in BMTC Group. From all I could find, it seems that the firms is operating normally and so too are its investors.
Overall, I find that a shrinking business model and limited geographic reach, combined with a pretty hefty price to book value of 3.26 (compared with Leon's 2.16), makes this a weak candidate for further analysis.
