Post by
d_trump on Jan 19, 2016 11:20pm
huge exchange profit is excluded from earnings
As the CAD depreciates, LIQ's US assets generate a significant exchange gain (ie value of inventory held in US). Under GAAP this amount is NOT included in earnings but rather added directly to retained earnings. If you look at the Q3 income statement you will see their ytd net earnings of $6,416 and then "other comprehensive income" of $13,089 for total "comprehensive income" of $19,505. Even though it is not technically included in EPS, it is real and it bolsters the balance sheet significantly.
Their balance sheet is in great shape - their long term debt is almost entirely offset by their working capital surplus (largely inventory). Market cap is now $180M or about $720,000 per store. The average store sells $3M annually. $720M for $3M sales is a joke. Retail businesses are usually valued at about 1 times sales.
Unless their sales are cratering I see no need for a dividend cut.
Comment by
kijiji on Jan 20, 2016 8:16am
keep pumping boys... the market will need a stiff drink soon with all the turbulence going on....and today looks like it will be rough too...