Etienne Ricard, an analyst from BMO Capital, maintained the Hold rating on Empire Co Cl A NV. The associated price target remains the same with C$55.00.
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Etienne Ricard has given his Hold rating due to a combination of factors influencing Empire Co Cl A NV’s current market position. Fundamentally, the company is experiencing a slow recovery in its tonnage, with consumer improvements being marginal and discount banners maintaining their strength. This situation is compounded by the company’s earnings valuation, which, while consistent with historical averages, shows a notable discount compared to its peers, Metro Inc. and Loblaw Companies Limited.
On the tactical side, Empire’s ability to consistently deliver an 8-11% annual EPS growth remains uncertain, which contributes to the Hold rating. The revised earnings per share estimate for the upcoming quarter has been adjusted downward due to unexpected costs from a distribution center lockout and lower share repurchases than anticipated. Additionally, while there is potential for gross margin expansion, the company’s operational expenses are expected to grow, albeit at a slightly reduced rate. These factors collectively suggest a cautious approach, justifying the Hold recommendation.