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Loblaw Companies (TSE:L)
TSX:L
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Loblaw Companies
(TSX:L)
78Outperform
Positive Factors
Earnings Growth
Analyst assumes good gross margin expansion and forecasts 9% year-over-year EPS growth for 2025.
Store Expansion
Management has indicated a larger number of new food stores will be opened in 2025, contributing to sales growth.
Negative Factors
Pre-Opening Costs
Higher start-up costs from a new automated distribution center and accelerated new store openings contribute to a moderate slowdown in EPS growth.
Loblaw Companies (L) vs. S&P 500 (SPY)
Market Cap
$56.19B
Dividend Yield1.11%
Average Volume (3M)466.59K
Price to Earnings (P/E)26.4
Beta (1Y)0.63
Revenue Growth2.49%
EPS Growth7.16%
CountryCA
Employees220,000
SectorConsumer Defensive
Sector Strength79
IndustryRetailers - Staples
Share Statistics
EPS (TTM)7.06
Shares Outstanding300,962,600
10 Day Avg. Volume520,197
30 Day Avg. Volume466,588
Financial Highlights & Ratios
PEG Ratio3.69
Price to Book (P/B)N/A
Price to Sales (P/S)0.93
Price to Cash Flow (P/CF)8.90
P/FCF Ratio10.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$199.66Price Target Upside6.69% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
Loblaw Companies Business Overview & Revenue Model
Company DescriptionLoblaw Companies Limited is a leading Canadian food retailer and the largest in the country, operating under various store banners such as Loblaws, Zehrs, and Real Canadian Superstore. The company is involved in the retailing sector, focusing on grocery stores, pharmacies, and clothing. In addition to its retail operations, Loblaw offers financial services through its subsidiary, President's Choice Financial, and provides a variety of private-label products under the President's Choice and No Name brands.
How the Company Makes MoneyLoblaw Companies Limited generates revenue primarily through its extensive network of retail stores offering food, health and wellness products, apparel, and general merchandise. The company's key revenue streams include sales from its grocery stores, pharmacy operations, and private-label products. Additionally, Loblaw benefits from its financial services offerings, which include credit card services, insurance, and loyalty programs. Significant partnerships with suppliers and manufacturers help Loblaw maintain competitive pricing and product availability, further driving sales and revenue growth.
Loblaw Companies Financial Statement Overview
Summary
Loblaw Companies has demonstrated strong financial performance with consistent revenue growth and operational efficiency. The company has a solid profit margin and cash flow generation, though it carries moderate leverage.Income Statement
Loblaw Companies has demonstrated solid financial performance with consistent revenue growth and profitability. The revenue growth rate for 2024 is 2.50%, indicating steady growth. The gross profit margin stands at 32.33%, and the net profit margin is 3.56%, reflecting effective cost management and profitability. The EBIT margin is 6.39%, and the EBITDA margin is 11.32%, showcasing strong operational efficiency.85
Very Positive
Balance Sheet
The balance sheet shows a stable financial position with a debt-to-equity ratio of 1.73, indicating moderate leverage. The equity ratio is 27.13%, reflecting a solid equity base to support assets. Return on equity (ROE) is 19.57%, demonstrating effective utilization of shareholders' equity to generate profits. However, the company carries a significant amount of debt, which could pose risks in a more volatile market environment.78
Positive
Cash Flow
Loblaw Companies has exhibited robust cash flow generation, with a free cash flow growth rate of 0.56% and strong operating cash flow. The operating cash flow to net income ratio is 2.67, indicating efficient cash flow utilization relative to profits. The free cash flow to net income ratio is 1.66, highlighting a healthy conversion of net income to free cash flow, supporting ongoing investments and debt servicing.82
Very Positive
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 53.92B | 61.01B | 59.53B | 56.50B | 53.17B | 52.71B | Gross Profit |
| 17.16B | 19.73B | 19.04B | 17.98B | 16.73B | 15.99B | EBIT |
| 3.05B | 3.90B | 3.70B | 3.34B | 2.94B | 2.37B | EBITDA |
| 5.96B | 6.91B | 6.64B | 6.17B | 5.79B | 4.96B | Net Income Common Stockholders |
| 2.00B | 2.17B | 2.10B | 1.92B | 1.88B | 1.11B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 2.11B | 2.11B | 1.95B | 1.93B | 2.44B | 1.94B | Total Assets |
| 40.88B | 40.88B | 38.98B | 38.15B | 36.61B | 35.87B | Total Debt |
| 19.18B | 19.18B | 18.17B | 17.61B | 16.55B | 16.61B | Net Debt |
| 17.72B | 17.72B | 16.68B | 16.00B | 14.58B | 14.94B | Total Liabilities |
| 29.61B | 29.61B | 27.36B | 26.69B | 24.88B | 24.75B | Stockholders Equity |
| 11.09B | 11.09B | 11.46B | 11.30B | 11.57B | 10.99B |
| Cash Flow | Free Cash Flow | ||||
| 3.24B | 3.60B | 3.58B | 3.18B | 3.65B | 4.03B | Operating Cash Flow |
| 4.45B | 5.80B | 5.65B | 4.75B | 4.83B | 5.19B | Investing Cash Flow |
| -1.91B | -2.02B | -1.84B | -2.37B | -1.27B | -1.38B | Financing Cash Flow |
| -2.95B | -3.82B | -3.93B | -2.75B | -3.25B | -3.28B |
Loblaw Companies Technical Analysis
Positive
187.14
Price Trends
183.45
Positive
183.38
Positive
175.37
Positive
Market Momentum
2.04
Negative
53.77
Neutral
55.40
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:L, the sentiment is Positive. The current price of 187.14 is above the 20-day moving average (MA) of 184.15, above the 50-day MA of 183.45, and above the 200-day MA of 175.37, indicating a bullish trend. The MACD of 2.04 indicates Negative momentum. The RSI at 53.77 is Neutral, neither overbought nor oversold. The STOCH value of 55.40 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:L.
Loblaw Companies Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | C$20.46B | 22.30 | 13.78% | 1.48% | 1.59% | -1.98% | |
80 Outperform | C$10.23B | 16.46 | 12.33% | 1.80% | 0.31% | -7.47% | |
78 Outperform | $56.19B | 26.43 | 19.33% | 1.11% | 2.49% | 7.16% | |
76 Outperform | C$65.98B | 18.95 | 18.67% | 1.03% | 7.57% | -12.56% | |
75 Outperform | $41.88B | 38.45 | 142.11% | 0.25% | 8.24% | 17.99% | |
69 Neutral | C$2.21B | 16.87 | 18.50% | 3.42% | 3.28% | 1.42% | |
63 Neutral | $20.77B | 13.59 | -10.67% | 7.41% | 1.48% | 9.07% |
* Consumer Defensive Sector Average
Performance Comparison
TSE:L
Loblaw Companies
187.14
38.21
25.66%
TSE:DOL
Dollarama
149.43
45.19
43.35%
TSE:MRU
Metro Inc.
93.36
20.45
28.05%
TSE:EMP.A
Empire Co Cl A NV
44.45
12.18
37.74%
TSE:NWC
North West
46.76
9.56
25.70%
TSE:ATD
Alimentation Couche-Tard Inc
69.62
-12.16
-14.87%
Loblaw Companies Earnings Call Summary
Earnings Call Date: Feb 20, 2025 | % Change Since: 4.28% | Next Earnings Date: Apr 30, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong financial performance with record revenue and significant shareholder returns. However, it also acknowledged challenges such as a decline in net earnings due to revaluation charges, inflationary pressures, and the impact of the Canada Post strike on sales. The company's aggressive expansion and investment plans, along with strong online sales growth, indicate a positive outlook despite some hurdles.Highlights
Record Revenue and Growth
Loblaw Companies Limited achieved a record revenue of $61 billion for the fiscal year 2024, surpassing $60 billion for the first time, with adjusted earnings of more than $2.6 billion and adjusted EPS growth of 10.3%.
Significant Shareholder Returns
The company repurchased $1.8 billion worth of shares and increased its dividend per share by 13.9%.
Expansion and Investment
Loblaw accelerated capital investments by adding 52 new Food and Drug Retail stores and 78 pharmacy care clinics, representing a 1.1% square footage growth, and plans to reinvest over $10 billion into the Canadian economy over the next five years.
Strong Online Sales Growth
Online sales increased by 18.4% in Q4, with full-year sales growing 16.9% to $3.9 billion.
T&T Supermarket Success
The first T&T supermarket in Seattle, Washington, set a new sales record, being the fastest-growing banner in the company's network.
Lowlights
Decrease in Net Earnings
GAAP net earnings decreased by 14.6% due to a non-cash charge of $129 million related to the revaluation of the PC Optimum program liability.
Challenges in Drug Retail
Front store same-store sales declined by 3.1%, impacted by the Canada Post strike and the decision to exit electronics categories.
Inflationary Pressures
Higher than normal price increases from global vendors and a 5% decline in the Canadian dollar against the US dollar added inflationary pressure.
Impact of Canada Post Strike
The Canada Post strike affected traffic and sales performance of outlets, impacting overall results in Q4.
Company Guidance
During the Loblaws Inc. call discussing the fourth quarter of fiscal year 2024, the company reported a robust financial performance with full-year revenue reaching $61 billion and adjusted earnings exceeding $2.6 billion. The guidance highlighted a strategic plan to reinvest over $10 billion into the Canadian economy over the next five years, including opening 80 new stores and 100 pharmacy clinics in 2025. For the quarter, revenue grew 2.9% to $14.9 billion, while adjusted EBITDA rose by 4%. The company noted a 3.7% increase in absolute food sales and adjusted diluted net earnings per share rose by 10% to $2.20. Despite a 14.6% decrease in GAAP net earnings due to a $129 million non-cash charge from the PC Optimum program, customer engagement and redemption rates have increased. The company also recorded double-digit growth in its discount network and online sales rose by 18.4%. Looking forward to 2025, Loblaws expects earnings growth to outpace sales and plans to invest $2.2 billion in capital expenditures, returning most free cash flow to shareholders.Loblaw Companies Corporate Events
Business Operations and StrategyFinancial Disclosures
Loblaw Reports Strong Earnings Growth and Expansion Plans for 2025
Positive
Feb 20, 2025
Loblaw Companies Limited reported a significant growth in adjusted diluted net earnings per common share for the fourth quarter and fiscal year 2024, driven by strong operational and financial results. The company experienced increased customer engagement through personalized loyalty offers and effective in-store promotions, leading to higher traffic and market share gains in Food Retail. Drug Retail also performed well, with growth in beauty categories despite the exit from certain electronics sales. Over the year, Loblaw expanded its network by opening new stores and clinics and plans further expansions in 2025. The opening of its first T&T Supermarket in the United States marked a major milestone, highlighting Loblaw’s strategic positioning to meet diverse consumer needs.
Loblaw Implements Automatic Share Purchase Plan
Dec 27, 2024
Loblaw Companies Limited has implemented an automatic share purchase plan to facilitate the repurchase of its common shares under its normal course issuer bid. This move allows Loblaw to buy back shares during periods when it is unable to be active in the market due to insider trading rules and internal blackout periods.
Loblaw Introduces New Healthcare Committee
Dec 17, 2024
Loblaw Companies has launched a new Patient Care and Quality Committee to enhance its healthcare services and improve patient outcomes across Canada. This initiative will involve collaboration with healthcare experts and regulators to ensure high standards in their operations, including Shoppers Drug Mart, Loblaw Pharmacies, and Lifemark. The move reflects the growing role of pharmacists in primary care, aiming to ease pressure on the healthcare system.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.