Jewett-Cameron is doing well, and is still cheap.

by It will fluctuate

Jewett-Cameron’s annual report just came out.

The company did well: book value increased by 18% to $20.6m, despite the idle cash pile, which throughout the year probably averaged something like $7m. That’s pretty good, and Mr. Boone (the CEO) should be congratulated.

Is the company cheap?  This is why I thought the company was cheap back in May:

So, today the whole company sells for $26m ($30m mkt cap + $0 debt – $4m cash), or about 6x the $4.5m TTM pre-tax earnings, which have been growing, and might possibly grow a lot more if their wood distribution business eventually improves. This is in a company managed by a CEO (Donald Boone) who owns over 30% of the shares but pays himself only $40k, who has done a great job of containing the costs of the business that is suffering while growing the business that is thriving, and who repurchases shares like a madman when they’re cheap. Can you ask for better management?

Today, I think Jewett is still cheap, and for the same reasons: even though its market cap has gone up, it still sells for about $26m once you subtract the $8.3m in cash. And it sells at less than 6 times the (growing) operating earnings. And one still gets the great management.

Additionally, since practically all the earnings come from one division (lawn, gardening and pet), at today’s price the other three divisions are thrown in for free. One of them used to make $1.7m in operating income a few years back, and it’s resuscitation, however remote, is at least possible.

One thing I would have liked to see is a lot more buybacks, of which Jewett had previously been doing quite a bit.

Long JCTCF.

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