LIQUOR STORES NA LTD 4.70 PCT DEBS T.LIQ.DB.B

RE:RE:RE:RE:RE:RE:RE:I'm out at $7.90

[Goldbuggy1]

patenright111 wrote: first off I said 1-2 years. 2nd it is about cashflow, you seem overly fixated on eps, business is valued on cashflow not eps. so , in 1-2 years time, company will not need 18M/year for expansion and remodelling, maybe 5M. company in 2015 generated 30M in cashflow ( 1.13/shr). this will be $1.33 in 2016 or 36M less 5M for capx ( remodel, ect) so that leaves 31M of FREE cashflow to either pay down debt or return to shareholders as a dividend. using 90% pay our ratio = 28M of dividends or $1 /share and using a 8% dividend yield ( company's historic yield) gives a stock price of $12.5 ( 1/.08)

My Friend! It is you fixated on "Cash Flow" of this company which is wrong here. You are not describing a LIQ Stock one year down the road. You are describing a LIQ Stock from last year! In April 2015 this stock was trading at $15. They were paying a Dividend of $1.08 or at this price a 7.2% Yield. There Cask Flow was as you said $1.13 per share so the payout ratio to Cash Flow was 95%. So if that is the secret to tis companies success then why did this stock price drop from $15 t0 $6.40 in only 6 months? You seem to understand that Dividends Payments come out of Cash Flow, but yet you keep using the Term Free Cash Flow, and money the company can use anyway they want to. This is False! Many other expenses come out of this Cash Flow besides Dividends. Perhaps one of the most important as it has to be paid for the company to remain solvent is Debt Financing. The company owes at least $195 M. They owe $67.5 M on Debenture. Then $5 M USD ($6.5 M CAD) in the US for there Credit Line there. Then another $122 M on the Revolving Credit Line in Canada. It may be higher than this as we don't know if LIQ borrowed this $19.5 M CAD to pay for this New Jersey Deal after December 31st and on closing this deal in the first week of January. But without this New Jersey Deal it still places this companies debt at $196 M CAD. The yearly interest paying on that is about $12.5 M and without paying down any debt down as this is just covering the interest rate cost. So if the company doesn't pay this yearly debt from Cash Flow, then where does this extra money come from to pay that? So now you can subtract these Dividend Payments and also Interest Payments from your Free Cash Flow. Also CAPEX as you all ready pointed out. You also have extraordinary Legal & Accountant Fees, Severances Pay, and any other expenses that comes there way, plus finally there Income Tax Payment with Federal & Provincial running around 27%. So what you have left from this FREE Cash Flow is $30 M - $12.5 M (Debt Repayment) - $9.9 M (After Tax Dividend Payment) - $4.5 M (Income Taxes) = $3.1 M. This extra $3.1 M is not including other expenses or CAPEX. I personally like to use Adjusted Operating Margin instead of your term Cash Flow, and Adjusted Net Earning per share. You don't seem to think EPS is important at all, which confuses me. Let me explain something to you and some differences between Cash Flow and Earnings. If LIQ sold all of it's B.C. Stores it would receive a lot of Cash, so there Cash Flow would rise significantly. But then they would also have far less stores to make a profit so there Earnings per share would also drop off significantly. Can you see the difference now?