Post by
IRAM99 on Apr 13, 2023 11:07pm
Overall Summary of Positive Earnings
After going through the MD&A and notes to the financials, I have put together a quick summary of the important points.
Overall, the large income tax recovery makes the reported numbers fairly messy. To start with, the company made a change in unrecognized deferred tax assets of $43 million (note 12). This occured because management revised its estimates of future taxable profits higher, which is a good thing. "This resulted in the recognition of $43m of previously unrecognized deferred tax assets as it is probable that sufficient future taxable profits will be available from the Canadian operations to utilize the benefits." Meaning management believes the company is strong enough to utilize tax assets which will now increase assets on the balance sheet and reduce future income tax payable.
I think the most important metric to track with Reitmans in Cash Flow from Operations after Lease payments. For Q4, the company generated $11m in Cash Flow under this scenario and $84m for cash flow for the year under this scenario. Additions to PPE (CAPEX in other words) was roughly $11m, leaving $73m in free cash flow.
There's obviously more details but considering the market cap of the company is $210m, they now have $106m in cash and real estate worth more than $200m and generated $73m in free cash, the stock is extremely undervalued. Porbably the cheapest I've ever seen. Personally, I believe this is an opportunity that doesn't come around very often and occured due to the CCAA process.
This quarter should reinforce the strength of the business but I believe the next step will be for the company to uplist back to the TSX. I think the stock should go above $7/share fairly quickly and then work its way toward $10/share as they uplist and potentially start to look at ways of monetize the real estate.
Comment by
Trooper01 on Apr 13, 2023 11:33pm
Very good post, true this kind of opportunity doesnt come very often in an investor life.. just look at bombardier last year nice turnaround too , stock was at 20$ now sitting at 70$
Comment by
flamingogold on Apr 14, 2023 8:15am
One more note to add regarding "recession" fears being overblown. US earnings started today with the banks and they are topping estimates. Wasn't it just a month ago that headlines were screaming a banking crises. Always be leary of the headlines. Usually the opposite happens. This is why I stick to contrarian investing. It's also why I bought BBD.