When Richard Lord took over as CEO in 1988, the company had one distribution center and sales of $27 million. Thirty-five years later, it has three factories, 112 centers - more than half of them in the USA - and sales of $1.8 billion.

Shareholders have been admirably rewarded over the period, of course, and its management excellence has always earned the group a certain valuation premium. But there is great concern that it has now reached a plateau, as evidenced by its market capitalization, which has stagnated over the past five years.

Economic performance, it's true, had gone into overdrive during the pandemic, and margins had reached unsustainable levels; a return to normal was therefore inevitable. More critically, however, organic growth had been sluggish for several quarters, so that it was acquisitions that were stabilizing business volumes.

Investors had correctly anticipated this contraction. During the post-pandemic reopening, from an average of twenty times earnings, Richelieu Hardware's valuation had suddenly fallen to just twelve times earnings. And rightly so, since earnings per share fell by a third in the months that followed.

As we all know, the Canadian economy is in a bad way these days. But in a country whose population has doubled in twenty years, and which faces a structural shortage in its housing supply, the markets addressed by Richelieu should remain buoyant for the long term.

Indeed, the Group seems to feel that the current share price does not do justice to its long-term growth prospects. This is evidenced by the modest share buyback program initiated this year.