This is a company (TSX-LNF) that I own. I first bought Leon’s in 2006 and have bought more in 2008, 2009 and 2010. My total return is 7.7% to April 30, 2011. The portion of my return from dividends is probably around 3%. Therefore, the portion from capital gains would be around 4.7%.
On the Insider Trading report, there is a bit of Insider Buying and $1.1M of Insider Selling. The Net Insider Selling is just under $1M. However, this selling does not materially affect the number of shares owned by insiders. Insiders do not have options. However, it would seem that the Leon family owns just under 75% of the shares. According to Reuters, 10 institutions hold just over 12% of the outstanding shares. Over the past 3 months, there have been 3 institutional buyers and 2 institutional sellers. There was a net decrease in shares of around 110,000. In other words, not much is happening.
The company raised the dividend in 2010 by 28%, so this shows management’s faith in the company to produce earnings and cash flow to cover the dividend increase. The Payout from earnings has a 5 year median of 44% and the Payout from cash flow has a 5 year median of 32%. Both these payout ratios were lower in 2010.
When I look at the 5 year median Price/Earnings Ratios, I find a low P/E of 12 and a high P/E of 17. The current P/E of 15 is close, but just above, average for this stock. I get a Graham Price of $10.95 and the current stock price of $13.63 is some 24.5% above this. However, this company’s stock price has seldom been at or below the Graham Price. It is on average some 20% above the Graham Price and the 10 year median difference between the Graham Price and Stock Price is 37.5%.
I get a 10 year median Price/Book Value Ratio of 2.49 and a current P/B Ratio of 2.33. The current Ratio is some 93% of the 10 year median ratio. The Dividend Yield is currently at 2.64% and the 5 year median dividend yield is 2.53%. So, all this shows a good, but not great currently price. Also, the current price is lower because the company did not meet the EPS estimates. When this happens, you often get a good buying period for a stock.
When I look at analysts’ recommendations, there appears to be only one analyst that follows this stock. The current recommendation is a Hold. (See my site for information on analyst ratings.) I know a number of people like this stock because of the low debt and decent dividends. However, this stock is heavily owned by the Leon family. This stock has often been pushed by the Investment Reporter of MPL Communications. Their website is at Leons. They like this stock for its growth and income potential.
I certainly plan to hold on to the shares I have. I believe this is a good investment for me.
This company sells home furnishings, appliances and electronics through a chain of retail facilities and franchises located in Canada. Leon family owns 68% of this company. Its web site is here Leons. See my spreadsheet at lnf.htm.
This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website for stocks followed and investment notes. Follow me on twitter.
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