The North West Company (TSE: NWC) is a Canada-based retail company that serves underserved rural communities and urban neighborhoods.
The company sells food, family apparel, housewares, appliances, and outdoor products, with food products accounting for the majority of the company’s revenue.
The company recently announced its earnings report for the first quarter, which ended April 30, 2022. Revenue was essentially flat, gaining 0.2% year-over-year for the three-month period. When looking at same-store sales, revenue decreased slightly by 0.7%. The main driver of the flat sales was tough comparisons from the boost received from COVID-19.
Nonetheless, the company is performing much better compared to its pre-pandemic levels. For example, in Q1, same-store sales were 21.3% higher than in Q1 2019. Likewise, adjusted net earnings were 106.4% higher compared to pre-pandemic levels.
Earnings per share fell to C$0.57 from C$0.80, which missed analysts’ expectations of C$0.60. However, adjusted EPS, which excludes the impact of an insurance-related gain and stock-based compensation expenses, came in at C$0.63. Therefore, the company beat earnings on an adjusted basis.
Dividend
For income-oriented investors, NWC pays a 4.12% dividend yield on an annualized basis. When taking a look at NWC’s historical dividend yield, you can see that it has been declining:
At 4.12%, the current yield is on the low end of the range, indicating that income-oriented investors are paying a premium relative to yields they have been able to receive in the past.
Analyst Recommendations
North West Company has a Hold consensus rating based on three Holds assigned in the past three months. The average North West Company price target of $40.33 implies 12.1% upside potential.
Final Thoughts
Despite missing estimates for the quarter, North West Company is a safe and profitable business that is offering a pretty good dividend yield. In addition, although analysts have a Hold rating, they still expect to see upside potential.
