Jean Coutu (Symbol-PJC.A)

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flito ray
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Post by flito ray »

basis wrote: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.
dakota wrote:
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 wrote:
having bought in at around mid 11, I would very much welcome a price lock between 15-20. I hope your prediction comes true especially if it's towards the upper end of your prediction!!
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yielder
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Post by yielder »

Jean Coutu swings to profit

Huh???????

When you look behind the numbers, there is improvement but not to the extent that the headline suggests. Sales are up just 0.4% and the growth is in Canada not the US where sales declined 0.4%. There is improvement in operating expenses but it's distorted by store closings. The big swing comes below the line: foreign exchange and Income tax recovery. These are one time events.

Bottom line: This is good news only because it's not bad news. The market will probably like it.

Disclosure: I own PJC.SV.A

Added: Disclosure
Last edited by yielder on 10 Jan 2006 10:25, edited 1 time in total.
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scomac
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Post by scomac »

yielder wrote:
Bottom line: This is good news only because it's not bad news. The market will probably like it.
That's kinda what I thought. :wink: Coutu still has yet to meet analysts' expectations....ya just gotta love how the media packages these sort of "luke warm" results.

Still quite happy to stand aside here. Some real progress accompanied by a higher price would actually be a better value 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
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yielder
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Post by yielder »

scomac wrote:Coutu still has yet to meet analysts' expectations
Hehe. So that means that the analysts will revise expectations down and then get caught with their pants down when PJC surprises either up or down. :lol: Analysts' forecasting is such a mug's game.
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scomac
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Post by scomac »

yielder wrote:Analysts' forecasting is such a mug's game.
Yup, it's almost worthwhile to go back to Dreman's research and quote his statistics regarding how often analysts are wrong and the magnitude of their errors even a quarter or two out. It ain't pretty. IIRC, they're wrong over half the time with a margin of error approaching 50%!! :shock: Could a gaggle of monkeys be any worse? :twisted:
So that means that the analysts will revise expectations down and then get caught with their pants down when PJC surprises either up or down.
I think this is a safer prediction than the actual numbers they come up with. :roll:
"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
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yielder
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Post by yielder »

scomac wrote:Could a gaggle of monkeys be any worse? :twisted:
George claims that his monkey does very well. He works for peanuts. :lol:
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Bylo Selhi
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Post by Bylo Selhi »

yielder wrote:George claims that his monkey does very well. He works for peanuts. :lol:
But not all do.

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Sedulously eschew obfuscatory hyperverbosity and prolixity.
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dakota
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Post by dakota »

Bylo Selhi wrote:
yielder wrote:George claims that his monkey does very well. He works for peanuts. :lol:
But not all do.

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With a stock like Coutu you have to explore all avenues open to you to get the help you'll need :lol:
A fool and his money are lucky to get togethere in the first place
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yielder
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Post by yielder »

The United States corporate pharmacy network posted a 1.4% decrease in retail sales when compared with the same period of the 2005 fiscal year, reflecting the closure of 78 non-performing Eckerd drugstores during the first quarter. Retail sales for the period were $709.4 million for the network. In terms of comparable stores, US network retail sales decreased 0.1%, pharmacy sales increased 0.5% and front-end sales decreased 1.7% compared with the same period last year.
produces this

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Lots of short term, hot money in this stock.
twocentsworth
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Post by twocentsworth »

Bumping around $12.00 now. A corpse? Or is there any hope of a turnaround?
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Post by flito ray »

i'm optimistic about a turn around. really i am.
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dakota
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Post by dakota »

A corpse?
How about the living dead. Better not let scomac hear me say that :wink:
A fool and his money are lucky to get togethere in the first place
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scomac
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Post by scomac »

dakota wrote:
A corpse?
How about the living dead. Better not let scomac hear me say that :wink:
No skin off my nose, dakota. I was wrong. It's happened before and it will happen again; such is life. :roll:

I took advantage of the loss for tax purposes last year and have since moved on.
"On what principle is it, that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?"
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dakota
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Post by dakota »

since moved on.
Oh :oops:
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Post by Grasu »

I just started a small position in this one.

Reasons?
Well, I do not have the timeto dig deep so I try to automate my investing decisions and then add a pinch of common sense to try to avoid the losers (and the really big winners it seems :D).

So here are my thoughts:
- cheap based on historical valuation
- there is a debt problem but they can sell some of the real estate and then lease back the stores. They have done this already in some locations.

BTW, should I have started a new thread or is it the idea to just add to the same thread for a stock for years to come? I am still getting my feet wet on this site so I do not know the house rules.

G
flito ray
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Post by flito ray »

nice run up on no new news. something is stirring i reckon.
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dakota
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Post by dakota »

Coutu to sell Eckerd, Brooks drugstores
Canadian Press

Montreal — Jean Coutu Group Inc. is selling its Eckerd and Brooks drugstores in the United States to Rite Aid Corp. for $3.4-billion (U.S.) in cash and stock.

Montreal-based Jean Coutu Group said Thursday it will receive $1.45-billion in cash and a 32-per-cent stake in Rite Aid, making it the biggest Rite Aid stockholder.

Rite Aid will also assume $850-million of Jean Coutu Group's long-term debt.

Jean Coutu's U.S. division includes 1,858 drugstores, made up of 337 Brooks stores and 1,521 Eckerd stores, plus and six distribution centres, all primarily on the East Coast and in the mid-Atlantic states.
http://www.theglobeandmail.com/servlet/ ... iness/home

That may help the stock somewhat but keep in mind that they will still own a good part of the chain indirectly
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yielder
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Post by yielder »

dakota wrote:
Coutu to sell Eckerd, Brooks drugstores
Canadian Press

Montreal — Jean Coutu Group Inc. is selling its Eckerd and Brooks drugstores in the United States to Rite Aid Corp. for $3.4-billion (U.S.) in cash and stock.

Montreal-based Jean Coutu Group said Thursday it will receive $1.45-billion in cash and a 32-per-cent stake in Rite Aid, making it the biggest Rite Aid stockholder.

Rite Aid will also assume $850-million of Jean Coutu Group's long-term debt.
Hmmmm. With only 111 mil in cash at the last quarter end, this means that RAD's gone to the cap markets for the 1.45 bil in cash. Assuming no equity financing, D/C goes from 58% to 69%. Most of the existing debt is fixed-rate with coupons between 7.5 and 8.25. Most of the existing RAD locations are leased. RAD will probably try to sell and lease back the Coutu locations.

RAD has relatively strong cash flow and profit margins but its balance sheet is far weaker than those of WAG and CVS. The acquired assets need a cash injection to improve sales. Will the existing cash flow be enough to service the new debt and inject cash or will RAD be caught in the same squeeze that PJC.A was caught in?

Hmm. Might be time to exit PJC.A

Disclosure: I have a position. This is not a recommendation to buy or sell. People should do their own research and make their own decisions, ie, I'm not responsible for what you do.
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Post by Small Investor Activist »

The deal looks good for Coutu, it gives them cash to pay off debt, gets them out of a mess and a call on the U.S. market.
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Post by Small Investor Activist »

The deal looks good for Coutu, it gives them cash to pay off debt, gets them out of a mess and gives them a call on the U.S. market. Am I right.
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yielder
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Post by yielder »

The conf call is going on right now. RAD CVX is using synergy a lot!!!!

I'm out.
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Post by Small Investor Activist »

The Post suggested the deal may not happen, this leads me to wonder if it was announced to juice liquidity, an institutional shareholder wants to get out before anymore bad news and put pressure on management. The fact that it was announced in an industry publication "Drug Store News" instead of the mainstream media where disclosure requirements are more strict. Rite-Aid is itself struggling. If it turns out Coutu doesn't get close to the terms of the deal announced there could have been insider leaking. This is all speculation of course.
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yielder
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Post by yielder »

Small Investor Activist wrote:The Post suggested the deal may not happen, this leads me to wonder if it was announced to juice liquidity, an institutional shareholder wants to get out before anymore bad news and put pressure on management. The fact that it was announced in an industry publication "Drug Store News" instead of the mainstream media where disclosure requirements are more strict. Rite-Aid is itself struggling. If it turns out Coutu doesn't get close to the terms of this deal there could have been wrongdoing in the way it was announced in my opinion. This is all speculation of course.
I haven't seen the post article but it doesn't make much sense. Both ops are struggling in the US. They are very small relative to the two big players CVS and, especially, WAG. Let's say anti-trust blocks the deal and the two companies aren't able to survive. CVS and/or WAG scoop up the remains and close lots of stores because of overlap. If WAG were making the offer, anti-trust might be an issue.

The deal was announced in the media newswires not Drug Store News.

Drug Store News has learned that a mega-deal between Rite Aid and Brooks/Eckerd stores is imminent and could be announced as early as Friday.

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Industrywide speculation about a potential Rite Aid and Brooks/Eckerd deal have been circulating for several months, and was the topic of conversation last week among attendees at the ECRM health care meeting in Scottsdale, Ariz., and an NACDS Advisory Committee meeting.

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“I’m not going to comment on rumors or speculation,” Karen Rugen, senior vice president of corporate communications at Rite Aid, told Drug Store News. “That rumor’s been around for a long time.”

Michel Coutu, president of U.S. operations for the Jean Coutu Group, which currently owns Brooks/Eckerd, also declined to comment on what he described as rumors.
Source

As a serious stock investor, I strongly object to your posting incorrect misleading information when you had access to the correct information.
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Post by Small Investor Activist »

Small Investor Activist wrote:The deal looks good for Coutu, it gives them cash to pay off debt, gets them out of a mess and gives them a call on the U.S. market. Am I right. (Posted: Thu Aug 24, 2006 9:28 am)
Jean Coutu Group PJC.A-T 12.600 +1.650 Vol. 10,478,165
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yielder
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Post by yielder »

yielder wrote:Will the existing cash flow be enough to service the new debt and inject cash or will RAD be caught in the same squeeze that PJC.A was caught in?
Answered by the company: No. In the first 12 months, CAPEX will exceed cash flow.
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