Andrew Peller Posts 9% Revenue Growth and 6.1% Dividend, Poised to Benefit from Ontario’s Retail Expansion

Andrew Peller demonstrates robust financial health with a 9.0% revenue increase. The company’s retail strategy has proven successful, particularly during the LCBO strike, while operational efficiencies continue to improve despite inflationary pressures.

While the share price performance has been poor, the combination of the high dividend yield and strong market positioning makes this an attractive investment opportunity, especially as the company benefits from Ontario’s retail expansion plans and government support programs.

Meanwhile, the stock trades at 25.3 times the company’s forward earnings forecast.

ANDREW PELLER LTD. (Toronto symbols ADW.A (non-voting) and ADW.B) is Canada’s second-largest wine producer, after Arterra Wines. It also has a long-term licensing deal with hockey star Wayne Gretzky to make both wine and whisky under the Gretzky brand.

Peller last raised your quarterly dividend by 10% with the July 2021 payment. The new annual rate of $0.246 per class A share yields a high 6.1%.

In its fiscal 2025 second quarter, ended September 30, 2024, Peller’s sales rose 9.0%, to $109.2 million from $100.2 million a year earlier. That increase is largely due to higher sales through Peller’s own retail stores during a strike at Ontario’s government-owned stores in July. It also received $2.9 million under the province of Ontario’s plan to support the wine industry as it opens up the market for alcoholic beverages to include more retail outlets, such as supermarkets and convenience stores.

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Andrew Peller: Earnings topped estimates despite recent setback

Earnings in the quarter fell 15.4%, to $0.11 a share (or a total of $4.56 million) from $0.13 a share (or $5.39 million). That’s mainly due to a $1.5 million unrealized loss on contracts it uses to hedge its interest rate and foreign currency exposure. Despite that drop, the latest earnings still topped the $0.05-a-share consensus estimate.

In response to rising costs for glass bottles, packaging materials and other materials, Peller continues to improve its efficiency.

As a result, Peller will probably earn $0.16 a share for all of fiscal 2025, compared to its $0.07-a-share loss in 2024. The class A shares trade at a reasonable 25.3 times that 2025 estimate.

The company has paid dividends since 1979. It has also increased the annual rate by an average 2.7% each year for the past five years. Andrew Peller has an Above Average TSI Dividend Sustainability Rating.

Recommendation in The Successful Investor: Andrew Peller Ltd. is a buy.

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Jim Bates

Jim is an associate editor at TSI Network. He is the lead reporter and analyst for The Successful Investor and Wall Street Stock Forecaster and a member of the Investment Planning Committee. Jim has held the Chartered Financial Analyst designation since 1992 and spent more than a decade at the Financial Post DataGroup before joining TSI Network. He has a Bachelor of Commerce degree from the University of Toronto.

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