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  5. NWC: How do the last 4 Q's results of NWC look to your analytical eyes? [North West Company Inc. (The)]
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Q: How do the last 4 Q's results of NWC look to your analytical eyes? Can you give me your views on the bull/bear case going forward?

Many thanks for your help.
Asked by Arthur on June 14, 2024
5i Research Answer:

NWC slightly missed EPS forecasts of 60c coming in at 57c. Revenue marginally beat estimates of $617.16M coming in at $617.5M displaying growth of 4% year-over-year. Same-store-sales growth was 3.8%. Adjusted profit increased 13% to $29.4M, from $26.1M last year due to due to gross profit and expense factors. It was a solid quarter for NWC displaying signicant EPS growth year-over-year that was largely in line with expectations. Over the last four quarters, sales growth was declining and margins were declining, but the most recent quarter shook off these issues. Being a consumer staples company, the bull case relies on strength of the consumer. If the company's target consumer becomes stronger paired with NWC opening more stores in target markets, it could see solid top and bottom line growth. On the flip side, the bear case is more conservative due to the defensive nature of the industry however, the stock has seen some big dips in March 2020 and June 2023 which are possible if sales/profitability meaningfully comes under pressure. We think it is a relatively safe company that trades at an attractive valuation, and pays a nice yield.