BMTC GROUP $16.90 - Toronto symbol GBT.A

BMTC GROUP $16.90 (Toronto symbol GBT.A; TSINetwork Rating: Extra Risk) (514-648-5757; No website; Shares outstanding: 47.5 million; Market cap: $802.8 million; Dividend yield: 1.4%) is one of Quebec’s largest retailers of furniture, electronics and household appliances. It sells these products through its two affiliates: Brault & Martineau Inc. and Ameublements Tanguay.

The company has 20 large stores in the Montreal, Quebec City, Repentigny, Laval, Saint-Georges, Chicoutimi, Sainte-Therese, Trois-Rivieres, Sherbrooke, Rimouski, Riviere-du-Loup and Gatineau areas. It also has six liquidation centres and six Sleep Gallery stores.

In July 2012, BMTC opened a new store in Levis to replace the old one. The company is also building a warehouse-style outlet in St-Hubert that will offer lower-priced products and operate under a new banner—EconoMax.

In the three months ended June 30, 2012, BMTC’s sales fell 4.3%, to $185.8 million from $194.1 million a year earlier. Lower consumer spending hurt the company’s sales. Earnings per share fell 29.3%, to $0.29 from $0.41.

BMTC bought back 4.8% of its shares in 2011. In the first half of this year, it repurchased a further 1.5%. The company plans to continue these buybacks. Repurchasing stock lowers the number of shares outstanding, which increases per-share earnings because net income is divided by fewer shares. That helps boost stock prices.

Even so, the company’s near-term outlook is uncertain, and the shares trade at 16.8 times BMTC’s latest 12 months of earnings.

BMTC Group is a hold.

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