The winery business Andrew Peller Limited, founded in 1965 by a Hungarian immigrant, has had spirited growth ever since.
Now a third-generation operation, Andrew Peller has grown to wineries in Ontario, British Columbia and Nova Scotia.
Some popular brands among the 59 sold are Andrew Peller Estates, Trius Winery, Thirty Blend, Wayne Gretzky, Ground Hog, Red Rooster and Calona.
The products which include cider, vodka and whiskey are distributed to 9,000 points of sale in Canada, the United States, the United Kingdom, New Zealand and Australia.
In Ontario, Andrew Peller operates 100 retail wine stores, which have been hurt, some by the spread of Ontario liquor sales into grocery and convenience stores.
The business has managed a five per cent increase in revenues this last year with sales to big box stores.
Currently trading at $5.79 the Class A shares recently popped up from the $4.90 level on good financial reports.
The shares hit a high of $12.55 in April 2021 just after the COVID-19 lockdown began.
Even though the company fared well throughout the lockdown, share price kept falling to a low $4.78 in April last year.
The share price has sparkled since with announced goals to increase gross profit margins, reduce debt and save $30 million in costs over a period of years. Debt amounts to .82 times equity.
In the first nine months of this fiscal year, gross margin increased to 40.4 per cent from 38.7 and made a similar increase in the previous year.
Shares sell at a reasonable four times cash flow, and 21 times earnings. The dividend yields about 3.7 per cent.
The outlook is bright with two downside risks.
One: continued loss of sales in Ontario wine stores from competing grocery and convenience stores.
Two: loss of markets in the United States, should the tariff war impact the alcohol sector.
Investors should not try to load up on shares of Andrew Peller. Selling or buying large amounts isn’t that easy.
The company’s 43.4 million shares are split into two classes. The most popular Class A shares do not carry a vote and just over eight million exist.
The other 74 per cent are Class B shares with voting rights owned by the family.
Notable is the fact that dividends and earnings per share are less for the B shares than the more popular A, indicating tremendous regard for public investors.
With only eight million A shares, trading volumes are light, averaging 200,000 a month — or 666 a day.
The voting shares, held by the family, trade about 2,200 a month.
Andrew Peller Class A shares should be on small investor watch lists. A market correction caused by the Trump tariff wars could give investors a better entry point.
CAUTION: Remember when investing, consult your adviser and do your homework before buying any security. Bizworld does not recommend investments.
Ron Walter can be reached at [email protected]
