The North West Company Inc. (NWC.TO) | Investment Case

1. Company Snapshot

1.a. Company Description

The North West Company Inc., through its subsidiaries, engages in the retail of food and everyday products and services to rural communities and urban neighborhood markets in northern Canada, rural Alaska, the South Pacific, and the Caribbean.The company's Canadian operations comprise 118 Northern stores, which offers food, financial services, and general merchandise; 5 NorthMart stores that provides fresh foods, apparel, and health products and services; 26 Quickstop convenience stores that provides ready-to-eat foods, and fuel and related services; 5 Giant Tiger junior discount stores, which offers family fashion, household products, and food; 2 Valu Lots discount center and direct-to-customer food distribution outlet; 1 solo market, a store in remote market; 3 Pharmacy and Convenience stores; and 1 North West Company motorsports dealership offering sales, service, parts and accessories for Ski-doo, Honda, Can-am and other premier brands.The Canadian operations also provides contract tele-pharmacist services to rural hospitals and health centers; water and air-based transportation services; and produce and fresh meats to independent grocery stores.

Its international operations include 30 Alaska Commercial Company stores that provides food and general merchandise to remote and rural regions; 12 Cost-U-Less mid-size warehouse stores, which offers discount food and general merchandise; 4 Quickstop convenience stores; 9 Riteway food markets; and Pacific Alaska wholesale, a distributor to independent grocery stores, commercial accounts, and individual households in rural Alaska.The North West Company Inc.was founded in 1668 and is headquartered in Winnipeg, Canada.

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1.b. Last Insights on NWC

The recent performance of The North West Company Inc. was driven by a strong first quarter, with revenue increasing 3.9% year-over-year to CA$641.4 million. The company's earnings per share (EPS) also beat expectations, reflecting the continued momentum across its business. Additionally, the Board of Directors declared a quarterly dividend of $0.40, providing a reliable source of income for shareholders. The company's resilience in navigating trade uncertainties and its ability to leverage strategic supply chain adjustments have contributed to its strong performance.

1.c. Company Highlights

Last Price	50.94
Change Percentage	2.43%
Open	49.73
Previous Close	49.73
Market Cap ( Millions)	2432
Volume	141194
Year High	57.95
Year Low	44.48
M A 50	49.13
M A 200	49.78

FCF Yield	4.73%
Dividend Yield	3.18%
ROE	18.44%
Debt / Equity	60.08%
Net Debt / EBIDTA	118.00%
Price To Book	3.06
Price Earnings Ratio	17.02
Price To FCF	21.15
Price To sales	0.94
EV / EBITDA	8.45

2. The North West Company Inc. Posts Solid Earnings Gains Despite Sales Decline

The North West Company Inc. reported a 12.9% increase in net earnings, driven by improved gross profit rates from its Next 100 work and lower expenses. However, sales decreased 0.5% due to reduced Child and Family services funding in Canada and a lower permanent fund dividend in Alaska. Earnings per share (EPS) came in at $0.852, beating estimates of $0.805. Revenue decline was largely attributed to a 2% decrease in Canadian sales, with same-store sales down 2.8%. The company's gross margin expansion and cost-saving initiatives helped offset the sales decline, as noted by John King, "the biggest impact was the money in market."

Publication Date: Dec -20

                                    📋 Highlights
                                    Net Earnings Growth::
                                                12.9% increase in net earnings YoY despite 0.5% sales decline.
Canadian Sales Decline::
                                                2% drop driven by Inuit Child First program elimination (-2.8% same-store sales) and Jordan’s Principle funding cuts.
Next 100 Program Impact::
                                                50% of benefits expected in 2025, 75-80% in 2026, with full realization in 2027.
Settlement Payments::
                                                Jordan’s Principle payments to drive 60% community impact and $23B total future inflows, with 1% ramped up in Q3 2024.

                                

Segment Performance

In Canada, the sales decline was primarily due to the elimination of funding for the Inuit Child First food voucher program and a reduction in funding for Jordan's Principle programs. The international business saw a decrease in same-store sales growth due to the permanent fund dividend and weaker economic conditions in the South Pacific. However, there was an increase in big-ticket sales in Alaska and a new store in Barrow, Alaska. The company's Next 100 initiative is expected to drive future growth, with 50% of the total benefit to be realized in 2025 and 75-80% in 2026.

Valuation and Outlook

The company's valuation metrics indicate a relatively stable position, with a P/E Ratio of 16.44, P/B Ratio of 2.96, and EV/EBITDA of 8.22. The Dividend Yield stands at 3.27%, and the Free Cash Flow Yield is 4.88%. The company's return on equity (ROE) is 18.44%, indicating a strong ability to generate profits. With a healthy balance sheet and a plan to invest in its business, The North West Company Inc. is well-positioned for future growth. Analysts estimate next year's revenue growth at 0.0%, but the company's initiatives and cost-saving measures are expected to drive future profitability.

Growth Initiatives

The North West Company Inc. is focused on executing its Next 100 program, with a focus on operational excellence and cost efficiencies. The company has implemented store-based inventory forecasting replenishment technology and a new warehouse management system, which are expected to improve shelf availability for customers and streamline merchandise ordering processes. With a strong balance sheet and a commitment to investing in its business, the company is optimistic about its future prospects.

3. NewsRoom

Undiscovered Canadian Gems To Watch This January 2026

Jan -26

Source:

Uncovering Undiscovered Gems In Canada This December 2025

Dec -26

Source:

North West (TSE:NWC) Has Announced A Dividend Of CA$0.41

Dec -13

Source:

The North West Co Inc (NNWWF) Q3 2025 Earnings Call Highlights: Navigating Sales Challenges ...

Dec -10

Source:

The North West Company Inc. Announces Third Quarter Earnings and a Quarterly Dividend

Dec -10

Source:

Posthaste: A market phenomenon not seen in 50 years is raising red flags at the world's central bank

Dec -09

Source:

Is North West (TSX:NWC) Undervalued After Its Recent 10% Monthly Share Price Gain?

Dec -04

Source:

The North West Company Inc. Third Quarter Results and Conference Call

Dec -03

Source:

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.27%)

6. Segments

Food

Expected Growth: 4.5%

The North West Company Inc.'s Food segment growth of 4.5% is driven by increasing demand for fresh produce and meat in rural Canada, expansion of store formats, and strategic pricing. Additionally, the company's focus on private label products and loyalty programs contributes to the growth. Furthermore, investments in e-commerce and digital capabilities enhance customer experience, driving sales and revenue growth.

General Merchandise and Other

Expected Growth: 3.5%

The 3.5% growth in General Merchandise and Other segment of The North West Company Inc. is driven by increasing demand for everyday essentials, expansion into new markets, and strategic pricing initiatives. Additionally, the company's focus on improving in-store experience, investing in e-commerce capabilities, and enhancing supply chain efficiency have contributed to the growth.

7. Detailed Products

Food

The North West Company Inc. offers a wide range of food products, including dry goods, meat, dairy products, and fresh produce, catering to the needs of remote and rural communities.

General Merchandise

The company provides a variety of general merchandise, including clothing, footwear, and household essentials, to meet the daily needs of its customers.

Pharmacy and Health Services

The North West Company offers pharmacy services and health products, including prescription medication, over-the-counter medications, and health supplements.

Financial Services

The company provides financial services, including credit, debit, and gift cards, as well as money transfer services.

Lottery and Gaming

The North West Company offers lottery tickets and gaming products, providing entertainment options for its customers.

Fuel and Petroleum Products

The company supplies fuel and petroleum products, including gasoline, diesel, and heating fuel, to meet the energy needs of its customers.

8. The North West Company Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for The North West Company Inc. is medium due to the availability of alternative products and services in the market.

Bargaining Power Of Customers

The bargaining power of customers for The North West Company Inc. is low due to the lack of concentration of buyers in the market.

Bargaining Power Of Suppliers

The bargaining power of suppliers for The North West Company Inc. is medium due to the moderate concentration of suppliers in the market.

Threat Of New Entrants

The threat of new entrants for The North West Company Inc. is high due to the low barriers to entry in the market.

Intensity Of Rivalry

The intensity of rivalry for The North West Company Inc. is high due to the high level of competition in the market.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	30.54%
Debt Cost	6.43%
Equity Weight	69.46%
Equity Cost	7.05%
WACC	6.86%
Leverage	43.96%

11. Quality Control: The North West Company Inc. passed 5 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Inefficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

CHS

A-Score: 6.7/10

Value: 6.3

Growth: 5.2

Quality: 3.6

Yield: 10.0

Momentum: 5.0

Volatility: 10.0

1-Year Total Return ->

Village Super Market

A-Score: 6.6/10

Value: 7.9

Growth: 4.9

Quality: 4.7

Yield: 7.0

Momentum: 7.5

Volatility: 7.7

1-Year Total Return ->

Ingles Markets

A-Score: 6.2/10

Value: 6.7

Growth: 8.6

Quality: 4.4

Yield: 2.0

Momentum: 7.0

Volatility: 8.7

1-Year Total Return ->

North West Company

A-Score: 6.1/10

Value: 5.5

Growth: 5.2

Quality: 5.4

Yield: 7.0

Momentum: 4.5

Volatility: 9.0

1-Year Total Return ->

Weis Markets

A-Score: 5.6/10

Value: 7.8

Growth: 4.7

Quality: 5.0

Yield: 4.0

Momentum: 4.0

Volatility: 8.0

1-Year Total Return ->

Natural Grocers

A-Score: 4.9/10

Value: 6.9

Growth: 5.9

Quality: 4.7

Yield: 6.0

Momentum: 2.0

Volatility: 3.7

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

3.14%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

6.86%

The North West Company Inc. - CA6632782083

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on NWC

1.c. Company Highlights

Higher Yield

Less Volatile

Average Quality

Earnings Beats

Earnings Miss

Revenues Miss

Strong Momentum

Stable Momentum

Revenues Beats

Average Yield

Fairly Valued

Medium Volatility

2. The North West Company Inc. Posts Solid Earnings Gains Despite Sales Decline

Segment Performance

Valuation and Outlook

Growth Initiatives

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.27%)

6. Segments

Food

Expected Growth: 4.5%

General Merchandise and Other

Expected Growth: 3.5%

7. Detailed Products

Food

General Merchandise

Pharmacy and Health Services

Financial Services

Lottery and Gaming

Fuel and Petroleum Products

8. The North West Company Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: The North West Company Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

50.94$

Current Price

50.94$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA