North West (NWC) AI Stock Analysis

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North West

(TSX:NWC)

Rating:72Outperform

Price Target:

C$55.00

▲(10.11%Upside)

North West's overall stock score is primarily supported by its strong financial performance and positive earnings call insights, which highlight growth and resilience. However, technical analysis indicates bearish momentum, which is a significant risk factor. Valuation is average, and corporate events add a slight positive influence.

Positive Factors

Earnings

The Q4 earnings were higher than expected, driven by strong same-store sales growth and gross margin expansion.

Growth Initiatives

The company's Next 100 initiative is anticipated to contribute positively to earnings, outpacing investments through the coming years.

Market Position

North West is rated as Outperform due to its attractive retail franchise with a high proportion of stores in defensive markets.

Negative Factors

Stock Price

Analyst recommends upgrading North West Company to Outperform with an increased target price, seeing an attractive entry point with the stock down approximately 12%.

Valuation

North West currently trades at a discount to its long-term average, with further potential for multiple expansion upside.

North West (NWC) vs. iShares MSCI Canada ETF (EWC)

Market Cap

C$2.39B

Dividend Yield3.2%

Average Volume (3M)125.01K

Price to Earnings (P/E)17.3

Beta (1Y)0.13

Revenue Growth4.19%

EPS Growth2.56%

CountryCA

Employees7,003

SectorUtilities

Sector Strength77

IndustryGrocery Stores

Share Statistics

EPS (TTM)0.64

Shares Outstanding47,802,856

10 Day Avg. Volume146,516

30 Day Avg. Volume125,012

Financial Highlights & Ratios

PEG Ratio2.29

Price to Book (P/B)2.71

Price to Sales (P/S)0.00

P/FCF Ratio17.35

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

C$60.00

Price Target Upside20.12% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering4

North West Business Overview & Revenue Model

Company DescriptionNorth West Company (NWC) is a leading retailer in Canada, specializing in serving remote and rural communities across Canada, Alaska, the South Pacific, and the Caribbean. The company operates under various banners, offering a diverse range of products including food, general merchandise, and everyday consumer goods. NWC is committed to providing essential services and products to underserved markets, focusing on convenience and community engagement.

How the Company Makes MoneyThe North West Company primarily generates revenue through the retail sale of food and everyday products in remote and rural communities. Its revenue model is based on operating a network of retail stores under various banners, each catering to the unique needs of the local communities they serve. Key revenue streams include grocery sales, which form the bulk of its income, and general merchandise, which includes clothing, appliances, and other household items. The company also earns revenue through financial services and fuel sales in select locations. NWC's strategic partnerships with local suppliers and logistics providers ensure efficient distribution and supply chain management, bolstering its ability to serve hard-to-reach areas effectively and sustain its business model.

North West Earnings Call Summary

Earnings Call Date:Jun 10, 2025

(Q1-2025)

% Change Since: -8.11%|

Next Earnings Date:Sep 03, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted a positive start to the fiscal year with strong sales and profit growth, particularly in international operations and through the Next 100 program. However, increased expenses and external challenges such as wildfires and changes in government funding programs present notable concerns. While the company remains optimistic, the balance between positive results and significant challenges suggests a cautious outlook.

Q1-2025 Updates

Positive Updates

Positive Start to Fiscal Year 2025

Consolidated sales were up 3.9%, and net earnings increased by 2.2% in the first quarter, following a 22.3% increase in net earnings from last year.

Strong Same-Store Sales Gains

Same-store food sales gains of 4% drove consolidated results, with Canadian operations showing a 5.1% increase in same-store food sales.

Gross Profit Growth

Gross profit dollars increased by 7.2% due to sales gains and a 103 basis point increase in gross profit rate.

International Operations Success

International operations delivered strong results with a 2.8% increase in same-store sales and an 11% increase in EBIT for the quarter.

Next 100 Program Progress

The program contributed to more effective promotions and operational improvements, with adjusted net earnings increasing by 14.2%.

Negative Updates

Increased Expenses

Expenses rose by 8.7% for the quarter due to higher staff and technology costs associated with the Next 100 program and increased share-based compensation.

Impact of Wildfires in Northern Canada

Wildfires affected approximately 10% of North West's locations, with minimized sales at these sites.

Challenges with Inuit Child First Initiative

A change in funding distribution under the Inuit Child First Initiative is expected to reduce funding compared to the previous year.

Decrease in Canadian Operations EBIT

Canadian Operations EBIT decreased by 6.2% compared to a 20.9% increase in the first quarter last year.

Company Guidance

During the North West Company Inc.'s First Quarter Results Conference Call, the company provided several key financial metrics and insights into their performance and outlook. Consolidated sales for the quarter increased by 3.9%, while net earnings rose by 2.2%, building on a 22.3% increase in the previous year. Same-store food sales showed a solid gain of 4%, contributing to a 7.2% rise in gross profit dollars, driven by a 103 basis point increase in the gross profit rate due to changes in sales blend and lower markdowns. However, expenses were up 8.7%, or 120 basis points as a rate to sales, primarily attributed to higher staff and technology costs linked to the Next 100 program. The company also incurred $2.1 million in onetime costs for professional fees related to this program. Adjusted net earnings, excluding share-based compensation and onetime costs, increased by 14.2% from the previous year. Despite a 6.2% decrease in Canadian Operations EBIT, adjusted EBITDA rose by 5.8%. The International Operations also reported a strong quarter with an 11% increase in EBIT, driven by a 2.8% rise in same-store sales and a 5.4% increase in gross profit. Looking forward, the company is optimistic but cautious due to uncertainties such as the impact of wildfires and changes in government programs affecting consumer demand.

North West Financial Statement Overview

Summary

North West demonstrates strong financial health with consistent revenue growth and solid margins. The balance sheet shows a prudent leverage strategy and effective equity utilization. Cash flow metrics reflect strong cash generation and efficient management of operational funds.

Income Statement

Very Positive

North West has shown consistent revenue growth over the years, with a notable increase in total revenue from 2024 to 2025. The gross profit margin for the latest annual report is approximately 33.71%, indicating stable profitability. The net profit margin has slightly improved from 5.23% in 2024 to 5.33% in 2025, reflecting efficient cost management and operational efficiency. EBIT and EBITDA margins of 8.13% and 12.64% respectively in 2025 show strong operational performance.

Balance Sheet

Positive

The company's debt-to-equity ratio for 2025 stands at 0.55, showing a balanced approach to leveraging. The return on equity (ROE) improved to 17.79% in 2025, indicating effective use of equity to generate profits. An equity ratio of 50.54% suggests a solid equity base, ensuring stability and reducing insolvency risk.

Cash Flow

Very Positive

North West's cash flow from operations is strong, with a 13.11% increase in operating cash flow from 2024 to 2025. Free cash flow also grew by 6.78% in the same period, demonstrating good cash generation capability. The operating cash flow to net income ratio is robust, indicating efficient cash conversion from earnings.

Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Breakdown
Income Statement		Total Revenue
2.58B	2.47B	2.35B	2.25B	2.36B
	Gross Profit
868.32M	704.14M	747.91M	737.75M	774.55M
	EBIT
209.55M	195.90M	180.31M	220.43M	209.35M
	EBITDA
325.37M	301.40M	278.99M	311.46M	301.05M
	Net Income Common Stockholders
137.30M	129.39M	122.19M	154.80M	139.87M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
67.39M	53.36M	58.81M	49.43M	71.54M
	Total Assets
1.53B	1.40B	1.34B	1.22B	1.19B
	Total Debt
422.18M	405.47M	402.53M	349.71M	402.04M
	Net Debt
354.80M	352.11M	343.72M	300.28M	330.50M
	Total Liabilities
732.79M	690.24M	688.99M	639.07M	685.94M
	Stockholders Equity
772.01M	684.69M	629.22M	563.63M	491.30M
Cash Flow		Free Cash Flow
114.27M	107.02M	65.73M	130.06M	263.47M
	Operating Cash Flow
260.63M	230.43M	182.84M	224.13M	338.72M
	Investing Cash Flow
-131.00M	-107.70M	-106.80M	-75.86M	-66.90M
	Financing Cash Flow
-119.05M	-128.27M	-68.30M	-170.20M	-227.06M

North West Technical Analysis

Technical Analysis Sentiment

Negative

Last Price49.95

Price Trends

50DMA

54.52

Negative

100DMA

50.60

Negative

200DMA

50.23

Negative

Market Momentum

MACD

-0.81

Positive

RSI

27.21

Positive

STOCH

7.35

Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:NWC, the sentiment is Negative. The current price of 49.95 is below the 20-day moving average (MA) of 55.39, below the 50-day MA of 54.52, and below the 200-day MA of 50.23, indicating a bearish trend. The MACD of -0.81 indicates Positive momentum. The RSI at 27.21 is Positive, neither overbought nor oversold. The STOCH value of 7.35 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:NWC.

North West Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
EMP.A	79 Outperform	C$12.03B	18.41	12.64%	1.54%	1.05%	-6.94%
L	78 Outperform	$65.76B	30.38	20.10%	1.01%	2.42%	7.04%
MRU	77 Outperform	C$22.83B	23.36	14.26%	1.42%	2.31%	4.45%
WN	76 Outperform	C$34.51B	30.20	19.58%	1.33%	2.36%	-6.97%
NWC	72 Outperform	C$2.39B	17.35	18.85%	3.20%	4.19%	2.56%
SPB	65 Neutral	C$1.88B	37.47	2.90%	2.22%	5.71%	320.62%
Sector *	64 Neutral	$8.57B	10.35	4.24%	4.64%	4.07%	-13.04%

* Utilities Sector Average

Performance Comparison

TSE:NWC

North West

49.50

9.19

22.80%

TSE:L

Loblaw Companies

220.41

66.18

42.91%

TSE:MRU

Metro Inc.

104.34

31.57

43.38%

TSE:WN

George Weston

265.12

78.04

41.71%

TSE:EMP.A

Empire Co Cl A NV

51.51

19.81

62.49%

TSE:SPB

Superior Plus

8.18

-0.32

-3.76%

North West Corporate Events

Executive/Board ChangesShareholder Meetings

North West Company Announces Successful Election of Directors

Positive

Jun 13, 2025

The North West Company Inc. announced that its shareholders voted in favor of all items at the annual general meeting, including the election of all nominee directors. This decision reflects strong shareholder support and ensures continuity in the company’s leadership, potentially reinforcing its market position and strategic direction.

The most recent analyst rating on (TSE:NWC) stock is a Buy with a C$58.00 price target. To see the full list of analyst forecasts on North West stock, see the TSE:NWC Stock Forecast page.

DividendsBusiness Operations and StrategyFinancial Disclosures

North West Company Reports Strong Q1 Earnings and Declares Dividend

Positive

Jun 11, 2025

North West Company Inc. reported a strong first quarter with a 3.9% increase in consolidated sales, driven by same-store sales growth and strategic initiatives under the Next 100 program. The company declared a quarterly dividend, reflecting confidence in its operational strategy, despite increased expenses due to investments in staff and technology. The company’s focus on operational excellence and improved merchandise assortment has positively impacted its earnings and market positioning.

The most recent analyst rating on (TSE:NWC) stock is a Buy with a C$58.00 price target. To see the full list of analyst forecasts on North West stock, see the TSE:NWC Stock Forecast page.

DividendsBusiness Operations and StrategyFinancial Disclosures

North West Company Reports Strong Q4 Earnings and Declares Dividend

Positive

Apr 9, 2025

North West Company Inc. reported strong financial performance for the fourth quarter of 2024, with a 4.9% increase in sales driven by same store sales growth and favorable foreign exchange impacts. The company’s Next 100 program has shown early success, enhancing product availability and expanding private label offerings, which is crucial in the current economic climate. The Board declared a quarterly dividend of $0.40 per share, reflecting a continued commitment to shareholder returns. The company’s strategic focus on expanding its private label products and leveraging new technologies positions it well for future growth, benefiting stakeholders and reinforcing its market position.

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.