BMTC GROUP $13.20 (Toronto symbol GBT.A; TSINetwork Rating: Extra Risk) (514-648-5757; No website; Shares outstanding: 47.5 million; Market cap: $601.3 million; Dividend yield: 1.8%) is one of Quebec’s biggest retailers of furniture, electronics and appliances, with 33 stores. It mainly sells these products through its two affiliates: Brault & Martineau and Ameublements Tanguay.
In March 2012, BMTC introduced a new banner, EconoMax, which offers lower-priced products. The company rebranded four outlets that had operated as Brault & Martineau liquidation centres. It has opened one new EconoMax so far this year and plans to open three more by the end of 2013.
In the three months ended June 30, 2013, BMTC’s sales fell 2.4%, to $181.4 million from $185.8 million a year earlier. Earnings per share were $0.29 in the latest quarter, unchanged from a year ago.
In the first half of this year, BMTC bought back 1.9% of its shares. In 2012, it repurchased 2.4%. It plans to continue these buybacks. Share repurchases reduce the number of shares outstanding, which means per-share earnings rise because net income is divided by fewer shares. That helps boost share prices.
Even so, the company’s outlook is uncertain, and the stock trades at 13.2 times BMTC’s latest 12 months of earnings. That’s high for a retailer with limited near-term growth prospects.
BMTC Group is a hold.
