Opinions Robert McWhirter
Dollarama Inc.DOL.TOCOMMENTDec 29, 2015
Robert McWhirterStock price when the opinion was issued
As of Jun 05, 2026. Market Open.
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Seeing slight upward technical trend from the March/April pullback. One of the strongest, long-term retail stories in Canada, especially as we might be heading into a tougher environment. Margins under some pressure.
Still room to expand store count meaningfully over time. Becoming more international via Latin American and Australia. Potential upside of ~15%, price target over $200. Yield is 0.27%.
Brianne GardnerHasn't been adding due to valuation, and so it's one of his lowest-weight positions. Lots to like, but approaching saturation in Canada. Retail expanding internationally often doesn't work out. Latin American expansion is "so far, so good", but doesn't really move the needle (only 3-5% of profits).
Likes it long term. Expects a better buying opportunity.
Martin Cobb, ASIPSideways and slightly downward lately. Still the dominant model in Canada. Higher energy and softness in Canadian economy are making consumers more value-focused. Expansion should help revenues and margins.
Main issue is valuation at 34x forward PE.
Stan Wong
Consumer’s hurting a bit at the lower end. Huge fan of this company. Classified as Consumer Discretionary, but it’s more a Consumer Staple. Performs well in both up and down business cycles. Choppy recently. Premium valuation, warranted. Core holding that helps stabilize your portfolio.
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Premium contentWhen they reported their Q4 last week, same-store sales missed estimates and shares plunged nearly 8%. Are things that bad? Canadian same-store sales increased 1.5% and not the expected 2.8%, and fell 1.6% in traffic though rose 3.1% rise in basket size. Keep in mind that parts of Canada (i.e. Ontario) suffered an unusually cold January which impacted sales. Q4 sales rose 11.7%, including $234 million in sales from 402 Australian stores. EPS climbed 2.1% year-over-year, though gross margins of 45.5% paled next to 46.8% from the previous year.Meanwhile, DOL guides full-year same-stores sales at 3-4% compared to the just-reported 4.2%. A mixed bag, for sure. Further, the chain plans to open 60-70 new Canadian stores in the coming year, a $46.7 million warehouse in Calgary to support Western Canadian growth, open stores in Mexico, Peru, Colombia, El Salvador and Guatemala while converting an Australian chain to its own brand.
Whole witches' brew of things in the global economy that are impacting consumer spending. Higher interest rates, lack of rate cuts. Stock's still 33x PE. Higher valuation stocks tend to get hurt the most with interest rates rising.
On the other side of a phenomenal growth runway. Not opening as many stores, and those returns aren't as good. Mature company, growth hard to come by, so it's going international (less profitable). Don't buy the dip at this point.
It recently touched 40x PE, but has fallen to the mid-30s. Is a great business and likes it long term. He has scaled back his weighting over time because of valuation. Also, it is priced for perfection, so even good, but imperfect earnings impact the stock. He may add to it when its PE returns to the mid-20s.
Martin Cobb, ASIP
In the retail space, likes the more defensive profile of this name.
Brianne Gardner
Not cheap, which is why it has paused and declined by about 10%. Numbers reported were better than expected. Management indicated the outlook was not quite as rosy because of currency, and they were going to be a little more cautious on their outlook. Trading at 25X 2016 earnings estimates, which are expected to grow at 11%, so you have growth rate of 2.3X. ROE is huge at 65%, but the forecast for 2017 is 15% against a 22% PE.