Jean Coutu (Symbol-PJC.A)

Discuss your favourite picks, broker, and trading or investment style.
User avatar
yielder
Veteran Contributor
Veteran Contributor
Posts: 4911
Joined: 16 Feb 2005 07:47
Location: Hastings, Ontario

Jean Coutu (Symbol-PJC.A)

Post by yielder »

I just listened to the conference call. Once again analysts are trying to focus on integration costs despite the company not wanting to disclose. Unfortunately, unlike the previous quarter, management didn't get into details of specific changes they were making.

Still lots of uncertainty because of management's unwillingness to get into discussions about integration costs. I'd expect the stock to sell off because of the ongoing uncertainty. They say that they are still on target for cost savings.
User avatar
yielder
Veteran Contributor
Veteran Contributor
Posts: 4911
Joined: 16 Feb 2005 07:47
Location: Hastings, Ontario

Post by yielder »

ROBTV's Andrew Bell's mixture of fact and nonsense posing as informed commentary. (move the slider about 1/2 way across to get the PJC story). This is why ROBTV can be dangerous to your financial health.

The URL will probably expire so I'll put the audio on my website.

Mike

Disclosure: I own PJC.SV.A
Last edited by yielder on 08 May 2006 07:35, edited 1 time in total.
User avatar
scomac
Veteran Contributor
Veteran Contributor
Posts: 7788
Joined: 19 Feb 2005 09:47
Location: The Gateway to Wine Country

Post by scomac »

Tough to reconcile all the negative analyst sentiment with the extremely sharp recovery in share price today. The sell-off yesterday was minimal in comparison.
"On what principle is it, that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?"
Thomas Babington Macaulay in 1830
User avatar
yielder
Veteran Contributor
Veteran Contributor
Posts: 4911
Joined: 16 Feb 2005 07:47
Location: Hastings, Ontario

Post by yielder »

scomac wrote:Tough to reconcile all the negative analyst sentiment with the extremely sharp recovery in share price today. The sell-off yesterday was minimal in comparison.
Maybe somebody's ignoring the analysts and listening to management. :lol:

Mike
User avatar
scomac
Veteran Contributor
Veteran Contributor
Posts: 7788
Joined: 19 Feb 2005 09:47
Location: The Gateway to Wine Country

Post by scomac »

Yielder wrote: Maybe somebody's ignoring the analysts and listening to management. :lol:
I had occurred to me that with all the downgrades and new sell ratings issued that this maybe a good time to provide some liquidity to the market and add to my position. Call it a contrarian indicator. :wink:

Scott
"On what principle is it, that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?"
Thomas Babington Macaulay in 1830
User avatar
yielder
Veteran Contributor
Veteran Contributor
Posts: 4911
Joined: 16 Feb 2005 07:47
Location: Hastings, Ontario

Post by yielder »

I just finished reading The Investment Reporter's take on Q3 2005 results. The orientation is completely different from that of sell-side analysts. The focus is on what management is doing to fix the Eckerdt stores instead of acquisition costs. It does take note of the increased general and operating costs but doesn't make the same big deal of them that sell-side analysts have. It is wary of this problem but recognizes that the integration efforts have focused first on financial systems and "will soon integrate operating and other systems". It notes that Q3 cash flow of $92.6 mil exceeded capex of $54.3 mil and div payments of $6.4, i.e., that they have the resources to execute their plan.
User avatar
yielder
Veteran Contributor
Veteran Contributor
Posts: 4911
Joined: 16 Feb 2005 07:47
Location: Hastings, Ontario

Post by yielder »

User avatar
Shakespeare
Veteran Contributor
Veteran Contributor
Posts: 23396
Joined: 15 Feb 2005 23:25
Location: Calgary, AB

Post by Shakespeare »

Sic transit gloria mundi. Tuesday is usually worse. - Robert A. Heinlein, Starman Jones
User avatar
yielder
Veteran Contributor
Veteran Contributor
Posts: 4911
Joined: 16 Feb 2005 07:47
Location: Hastings, Ontario

Post by yielder »

A long and frustrating conference call. Analysts were not happy.

Q: Can you give us a sense of ..........?

A: No. It's against corporate policy to provide guidance on future revenues and earnings.

or

A: No. There are too many things that are changing so it wouldn't be helpful.

PJC is still in transition and focusing on the back room. Sales slipped this quarter, in part, because of an understocking problem so they'll have to get a really focus on efforts above the line. Still a high risk stock with Walgreen, CVS, Wal-Mart and Target all players albeit in a growing market.

From management: "We have to work now on the top line."

From the last analyst, Merrill Lynch: "I just feel that there were a lot of questions that were unanswered. I know there's a lot of moving parts but that's all the more reason for you guys to try and help us tie up the loose ends. You have to help us more by providing more disclosure and clarity. You haven't given us enough detail on one-time costs. We have no idea of where the company stands."
User avatar
scomac
Veteran Contributor
Veteran Contributor
Posts: 7788
Joined: 19 Feb 2005 09:47
Location: The Gateway to Wine Country

Post by scomac »

A frustrating stock to own that moves sharply up or down based on the latest quarter's results and accompanying changes in investor sentiment.

Looking back over the past twelve months, you could have successfully traded this name from low to high twice within its trading range for a 25%+ gain. ISTM that this maybe a particularily good stock to protect intermediate term gains with put options if you are a long term investor.

Never-the-less, a pretty good entry point for both trading or a long term buy and hold, IMO.
"On what principle is it, that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?"
Thomas Babington Macaulay in 1830
User avatar
yielder
Veteran Contributor
Veteran Contributor
Posts: 4911
Joined: 16 Feb 2005 07:47
Location: Hastings, Ontario

Post by yielder »

scomac wrote:A frustrating stock to own that moves sharply up or down based on the latest quarter's results and accompanying changes in investor sentiment.

Looking back over the past twelve months, you could have successfully traded this name from low to high twice within its trading range for a 25%+ gain. ISTM that this maybe a particularily good stock to protect intermediate term gains with put options if you are a long term investor.

Never-the-less, a pretty good entry point for both trading or a long term buy and hold, IMO.
This one is a very tough one to trade. You need a great deal of luck. I first bought in Nov 03 and Jan 04 at an average price of 15.67. This was before there were any rumours of an acquistion. I sold in April 04 at 19.40 after the Eckerdt acquisition was announced because the price had risen to an exuberant level although no acquisition details were available.

I bought again in October 04 at 14.46 after the first post-acquisition results were released and the price was beaten down.

You're right that the price bounces based on quarterly results. The problem is that earnings are all over the place as the consolidation continues. What I look for is over-reaction. I don't think this current price drop is an over-reaction. Even though management is continuing its policy of minimal disclosure during the consolidation period, it's clear that some problems are emerging. They seem to be consolidation related and not long term but you never know.

This is a classic growth stock - you're buying today the what might be in the future.
User avatar
scomac
Veteran Contributor
Veteran Contributor
Posts: 7788
Joined: 19 Feb 2005 09:47
Location: The Gateway to Wine Country

Post by scomac »

Yielder wrote: This one is a very tough one to trade. You need a great deal of luck.
WADR I disagree. Historically, this has been a very tradeable stock from a technical perspective. The MACD has been a reliable indicator of buy and sell signals at each peak and valley across the stock's trading range. Even after yesterday's substantial downdraft, the stock is still within its secular uptrend of the past 3 years. Based on the way in which this stock has reacted to market sentiment, trading opportunites should present themselves going forward.
I don't think this current price drop is an over-reaction. Even though management is continuing its policy of minimal disclosure during the consolidation period, it's clear that some problems are emerging. They seem to be consolidation related and not long term but you never know.
I spent sometime today going back over the numbers to access this stock from a fundamental perspective. I agree the sell-off was a reasonable reaction to the short-term numbers. Strictly using current sales, earnings and net margins place fair value at $16.66. This of course assumes that the company will continue on at the current operational efficiency. Once you begin to apply historic norms for PJC.SV.A to the current sales, things change quite a bit. I've got no reason to believe that managment won't be able to gradually drive the performance of the Eckerd stores towards the long term operational metrics that Coutu has enjoyed. Under that scenario, my target using long term averages for NPM, ROE and P/E multiples is over $36 --- and that's without any further revenue growth. As far as I'm concerned, current prices have all the bad news priced in which makes this compelling from a risk/reward aspect.
This is a classic growth stock - you're buying today the what might be in the future.
ISTM that this is a classic turn around story and currently represents a terrific opportunity for patient longer term investors.

Regards,

Scott
"On what principle is it, that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?"
Thomas Babington Macaulay in 1830
User avatar
yielder
Veteran Contributor
Veteran Contributor
Posts: 4911
Joined: 16 Feb 2005 07:47
Location: Hastings, Ontario

Post by yielder »

scomac wrote: Historically, this has been a very tradeable stock from a technical perspective.
Ahh, that would explain why I think it's a tough one to trade. I could never sort that out. :lol:

Image
flito ray
Contributor
Contributor
Posts: 42
Joined: 27 Nov 2005 20:28
Location: tor

Post by flito ray »

anyone have any thoughts on this one? I decided to get in around the $12.80 mark. Purely speculation but they are still making money and I am hopefull that the U.S. integration will be fixed soon.

Thanks.
flito ray
Contributor
Contributor
Posts: 42
Joined: 27 Nov 2005 20:28
Location: tor

Post by flito ray »

Looking very attractive at these levels. This company is extermely undervalued in my opinion. Lower forward P/E than shoppers drug mart!!
Raymond
Contributor
Contributor
Posts: 95
Joined: 23 Nov 2005 13:52

Post by Raymond »

I am still sitting on the fence on this one!
I think that with the end of the year coming up, lot of investors will dump this stock ( and the other losing ones) to claim capital loses. Not to mention all the funds which will sell their stake to look good on the year end report that will be sent to investors (who want a 'loser' as a holding in the fund????)
So......
I will probobaly pick up shares sometime in early january 2006. Stock price reflects all the pessimism. Any sign of smooth intergration of US aseets, and you can close your eyes and add at least $2 to share price.
Of course, whose to say that Shoppers/Private Equity group will not make a bid or the undervalued co.?
Any thought??
User avatar
scomac
Veteran Contributor
Veteran Contributor
Posts: 7788
Joined: 19 Feb 2005 09:47
Location: The Gateway to Wine Country

Post by scomac »

Raymond wrote: I think that with the end of the year coming up, lot of investors will dump this stock ( and the other losing ones) to claim capital loses.
It's already taking place. In the interests of full disclosure, I sold my position a week or so back (at about a buck higher) to crystallize a capital loss.

I'm prepared to buy back in, but my instinct tells me there isn't going to be any rush. Things just might get a tad worse before they get any better. Regardless, the stock is definitely in the penalty box now, so patience will be mandatory.
"On what principle is it, that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?"
Thomas Babington Macaulay in 1830
arnyk
Veteran Contributor
Veteran Contributor
Posts: 1089
Joined: 04 Dec 2005 10:48

Post by arnyk »

Debt/Equity is still keeping me away. I know it's a mid-cap in the shadows of Shopper's, but...just a couple fundamentals I'm waiting on.

Other than that I'm eyeing $6-$8. Yup I know, never gonna happen. ;)
User avatar
bubbalouie
Veteran Contributor
Veteran Contributor
Posts: 1431
Joined: 04 Dec 2005 23:07
Location: City of Chumps

Post by bubbalouie »

I agree with arnyk, the debt is killing this company. And they need to get their acquisition working better.
flito ray
Contributor
Contributor
Posts: 42
Joined: 27 Nov 2005 20:28
Location: tor

Post by flito ray »

Nice pop today!!! Yowzas! The Jean Coutu Group: November Same Store Sales Increase 4.1% in the Canadian Network and 2.0% in the United States Network :D
:shock:

http://biz.yahoo.com/bw/051215/20051215005642.html?.v=1
User avatar
scomac
Veteran Contributor
Veteran Contributor
Posts: 7788
Joined: 19 Feb 2005 09:47
Location: The Gateway to Wine Country

Post by scomac »

Hmmm.... It may not wait long enough for me to get back in without triggering a superficial loss. I'm actually surprised sentiment could change so quickly. We'll just have to wait and see how it's trading in January.
"On what principle is it, that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?"
Thomas Babington Macaulay in 1830
User avatar
Norbert Schlenker
Veteran Contributor
Veteran Contributor
Posts: 7960
Joined: 16 Feb 2005 09:56
Location: An Argument Surrounded By Water
Contact:

Post by Norbert Schlenker »

scomac wrote:I sold my position a week or so back (at about a buck higher) to crystallize a capital loss.
I'd like to thank you for contributing to the price decline, Scott. :o
Nothing can protect people who want to buy the Brooklyn Bridge.
User avatar
scomac
Veteran Contributor
Veteran Contributor
Posts: 7788
Joined: 19 Feb 2005 09:47
Location: The Gateway to Wine Country

Post by scomac »

Norbert Schlenker wrote: I'd like to thank you for contributing to the price decline, Scott. :o
I doubt that my 700 shares moved the market. :roll: :lol:

What will be interesting is to see how index inclusion moves the trust market today on inclusion day. I have my limit orders in place. :wink:
"On what principle is it, that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?"
Thomas Babington Macaulay in 1830
User avatar
dakota
Veteran Contributor
Veteran Contributor
Posts: 3270
Joined: 27 Feb 2005 12:00
Location: Bay of Quinte

Post by dakota »

scomac wrote:Hmmm.... It may not wait long enough for me to get back in without triggering a superficial loss. I'm actually surprised sentiment could change so quickly. We'll just have to wait and see how it's trading in January.
I read an analysts report yesterday saying that around 10.40 would be the bottom (according to his calculations) Wish I'd remembered to post it. :(
A fool and his money are lucky to get togethere in the first place
basis
Contributor
Contributor
Posts: 11
Joined: 12 Dec 2005 00:31

Post by basis »

For some reason (possibly of the favourable store sales) PJC is moving back up above $14. Unfortunately this stock has been a total disappointment. It had a good runup over five years ago but since has been locked in the $15-$20 price range with occasional moves above and below the range.

[quote="dakota"][quote=I read an analysts report yesterday saying that around 10.40 would be the bottom (according to his calculations) Wish I'd remembered to post it. :([/quote]
Post Reply