Northwest Company keeps hitting new lows. I see current earnings of 2.42 and a PE of 12.6. Do you know what the earning are expected to be for 2024? I am assuming one reason the stock has dropped so much was because sales would have been negatively affected in their stores in the North West Territories in towns like Yellowknife and Hay river. I guess we will see how significant that is when earning are released on September 13th.
At these levels how compelling a buy do you consider NWC? I am thinking of adding to my position but it still would be less than a 3% weight.
Thanks for everything you folks do.
Stuart
NWC was under pressure recently after weak earnings and the stock is now trading at 11.4x times' Forward P/E. In 1Q - 2024, NWC’s revenue grew 7.5% to $594M, beating estimates of $589M and EPS was $0.54 missing estimates of $0.59. Based on consensus estimates, sales are expected to grow by 4% to $2.45B, while EPS is expected to be $2.52 in 2024 and $2.72 in 2025 (note January year end). Recent earnings were under pressure due to high inflation and interest rates, which were largely expected. NWC might have some exposure to a slowing consumer, but it is also a defensive consumer staples name.
We like the company in general and think the long-term thesis on it as a consumer staple name is unchanged. We would be okay to slowly accumulate, especially at this valuation, which we think is quite attractive compared both to peers and historical averages. The current quarter may have been impacted by fires, but the company is supposed to announce if there are 'material' concerns, and it has not.