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Gold/Mining/Energy : Daytrading Canadian stocks in Realtime
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To: Vitalsigns who wrote (59578)11/18/2002 11:32:17 AM
From: Vitalsigns  Read Replies (2) of 62348
 
Tuesday August 27 2002 In the News
The Globe and Mail reports in its Tuesday edition that shares of Wal-Mart, the downscale retail juggernaut, trade at a rich multiple of 32 times earnings while Hudson's Bay shares trade at a bargain-bin price-to-earnings ratio of 12. The Globe's Fabrice Taylor writes that the valuation gap is a lesson in the dangers of using book value as a guide to stock buying. HBC's book value is about $25 a share. The shares trade at $8 and change. That two-thirds discount makes the shares look awfully interesting on a price-to-book basis, but only if you are getting more than $8 worth of value. The numbers suggest otherwise. In the 12 months ended Jan. 31, HBC returned 3 per cent on equity. The return was 5.5 per cent in the previous year, and 4.5 in the year before that. Investors are obviously not impressed. Short-term issues seem to be under control. In the long term, the sad truth is that HBC must either shrink or invest heavily in order to survive. Both options are expensive, and the latter does not seem like much of a choice anymore, since the company has to scramble to improve cash flow and pay down debts just to avoid rolling them over into the teeth of a junk bond market.
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