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Loblaw Companies (TSE:L)
:L
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Loblaw Companies (L) AI Stock Analysis

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Loblaw Companies

(OTC:L)

Rating:78Outperform
Price Target:
C$259.00
â–²(17.56%Upside)
Loblaw Companies' strong financial performance and strategic expansions drive its high stock score. Despite bullish technical indicators, high valuation metrics and inflationary pressures pose risks. Continued monitoring of debt levels is advised.
Positive Factors
Expansion and Growth
Management has indicated a larger number of new food stores will be opened in 2025, contributing to sales growth.
Sales Performance
Analyst expects good quarter-over-quarter acceleration in food same-store sales, driven by higher food inflation and better tonnage.
Negative Factors
Financial Concerns
Estimates are being trimmed due to balance sheet concerns, indicating potential financial challenges.
Operating Expenses
Loblaw is facing two material company-specific headwinds on operating expenses this year with more new store launches and distribution center ramp.

Loblaw Companies (L) vs. iShares MSCI Canada ETF (EWC)

Loblaw Companies Business Overview & Revenue Model

Company DescriptionLoblaw Companies Limited is Canada's largest food retailer and a leading provider of pharmacy, health and beauty, apparel, general merchandise, financial services, and wireless mobile products and services. Operating through a network of corporate and independently operated stores, Loblaw offers a wide range of products under various banners, including Loblaws, No Frills, and Shoppers Drug Mart. The company is known for its private label brands such as President's Choice and No Name, which are staples in Canadian households.
How the Company Makes MoneyLoblaw Companies Limited generates revenue primarily through the sale of groceries and other consumer goods in its extensive network of retail stores across Canada. The company's key revenue streams include food retailing, which encompasses both perishable and non-perishable goods, pharmacy sales through Shoppers Drug Mart, and financial services offered via its PC Financial brand. Loblaw also earns income from its private label products, which often have higher margins than national brands. Additionally, the company benefits from its loyalty program, PC Optimum, which drives customer retention and spending. Strategic partnerships, such as those with healthcare providers and technology companies, enhance its service offerings and contribute to overall profitability.

Loblaw Companies Earnings Call Summary

Earnings Call Date:Apr 30, 2025
(Q1-2025)
|
% Change Since: 1.15%|
Next Earnings Date:Jul 24, 2025
Earnings Call Sentiment Neutral
Loblaw has demonstrated strong growth and operational performance in the first quarter of 2025, with significant expansions and strategic investments driving revenue. However, challenges such as increased costs, tariff impacts, and pressures on profit margins temper the results.
Q1-2025 Updates
Positive Updates
Strong Revenue and Earnings Growth
Loblaw reported a consolidated revenue growth of 4.1%, reaching $14.1 billion. Adjusted diluted net earnings per share grew by 9.3% to $1.88, and on a GAAP basis, net earnings per share increased by 12.9%.
Solid Performance in Retail and Drug Segments
In Food Retail, same-store sales increased by 2.2% with absolute sales growing by 4%. Drug Retail reported absolute sales growth of 4.4% and same-store sales growth of 3.8%, with strong performance in pharmacy and healthcare services.
Online Sales Growth
Online sales increased by 17.4% across Loblaw's retail businesses, with delivery leading growth in the online grocery channel.
Successful Store Expansions
Loblaw opened 10 new stores in Q1, with more planned throughout the year. Hard discount banners continue to outperform, driving double-digit growth in absolute sales and tonnage.
Negative Updates
Impact of Higher Costs and Inflation
Higher-than-normal cost increases from global vendors and higher commodity prices, compounded by a lower Canadian dollar, are pressuring Loblaw's cost structure.
Challenges with Tariffs
Newly introduced tariffs and counter tariffs are beginning to affect pricing, although Loblaw is working with suppliers to mitigate the impacts.
Pressure on SG&A and Gross Margin
Despite improvements, SG&A and gross margins are under pressure due to new store openings and the ramp-up of the new distribution center.
PC Financial Earnings Decrease
PC Financial's adjusted earnings before tax decreased by $14 million or 31.8%, despite higher revenue and interchange income.
Company Guidance
In the Loblaw Inc. First Quarter 2025 Results Conference Call, the company reported strong financial and operational performance, setting a robust foundation for the year. Key metrics included a consolidated revenue growth of 4.1% reaching $14.1 billion, and an adjusted EBITDA increase of 3%. Adjusted diluted net earnings per share rose by 9.3% to $1.88, while GAAP net earnings per share increased by 12.9%. The Food Retail segment saw a 4% increase in absolute sales, with same-store sales growing by 2.2%. The Drug Retail segment reported a 4.4% rise in absolute sales and a 3.8% increase in same-store sales, driven by a 6.4% growth in Pharmacy and Healthcare services. Online sales surged by 17.4%, with delivery leading the growth in the online grocery channel. The company also highlighted a 10% dividend increase and a return on equity of 24.4%, supported by strategic investments in new stores and banner conversions. Looking ahead, Loblaw remains confident in maintaining momentum into the second quarter, with a strong start in same-store sales and continued expansion efforts.

Loblaw Companies Financial Statement Overview

Summary
Loblaw Companies exhibits strong financial health with consistent revenue and earnings growth, stable margins, and robust cash flow generation. Despite balanced leverage, increasing debt levels require monitoring.
Income Statement
85
Very Positive
Loblaw Companies shows strong financial performance with consistent revenue growth, increasing from $52.7 billion in 2020 to $61.6 billion in TTM 2025. The gross profit margin has remained stable, indicating efficient cost management. The net profit margin improved slightly over the period, reflecting better operational efficiency. EBIT and EBITDA margins have also shown improvement, suggesting effective management of operational expenses.
Balance Sheet
78
Positive
The company's balance sheet reflects a moderate debt-to-equity ratio, which suggests a balanced approach to leveraging. Stockholders' equity has been stable, indicating financial resilience. The equity ratio is healthy, showcasing a strong asset base. However, the increasing total debt over the years poses a potential risk that needs to be monitored.
Cash Flow
82
Very Positive
Loblaw Companies demonstrates robust cash flow management, with a steady increase in operating cash flow and free cash flow over the years. The free cash flow to net income ratio is strong, indicating efficient conversion of earnings into cash. The free cash flow growth rate is positive, supporting potential future investments and debt servicing.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue61.57B61.01B59.53B56.50B53.17B52.71B
Gross Profit19.89B19.73B19.04B17.98B16.73B15.99B
EBITDA6.94B6.90B6.64B6.17B5.79B4.96B
Net Income2.21B2.17B2.10B1.92B1.88B1.11B
Balance Sheet
Total Assets40.00B40.88B38.98B38.15B36.61B35.87B
Cash, Cash Equivalents and Short-Term Investments1.94B2.11B1.95B1.93B2.44B1.94B
Total Debt19.37B19.18B18.17B17.61B16.55B16.61B
Total Liabilities28.89B29.61B27.36B26.69B24.88B24.75B
Stockholders Equity10.96B11.09B11.46B11.30B11.57B10.99B
Cash Flow
Free Cash Flow3.75B3.60B3.58B3.18B3.65B4.03B
Operating Cash Flow5.80B5.80B5.65B4.75B4.83B5.19B
Investing Cash Flow-2.37B-2.02B-1.84B-2.37B-1.27B-1.38B
Financing Cash Flow-3.79B-3.82B-3.93B-2.75B-3.25B-3.28B

Loblaw Companies Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price220.32
Price Trends
50DMA
223.37
Negative
100DMA
211.01
Positive
200DMA
195.98
Positive
Market Momentum
MACD
-0.02
Positive
RSI
44.45
Neutral
STOCH
39.65
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:L, the sentiment is Neutral. The current price of 220.32 is below the 20-day moving average (MA) of 223.66, below the 50-day MA of 223.37, and above the 200-day MA of 195.98, indicating a neutral trend. The MACD of -0.02 indicates Positive momentum. The RSI at 44.45 is Neutral, neither overbought nor oversold. The STOCH value of 39.65 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TSE:L.

Loblaw Companies Peers Comparison

Overall Rating
UnderperformOutperform
Sector (65)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
80
Outperform
C$12.88B18.8813.02%1.44%1.77%0.77%
TSL
78
Outperform
C$65.74B30.3720.10%1.02%2.42%7.04%
TSMRU
78
Outperform
C$22.69B23.2914.26%1.42%2.31%4.45%
TSWN
76
Outperform
C$34.64B30.3819.58%1.36%2.36%-6.97%
TSSAP
70
Outperform
C$11.38B42.30-2.51%2.76%9.91%-165.83%
65
Neutral
$26.77B15.22-4.18%3.21%1.01%1.53%
TSNWC
65
Neutral
C$2.30B16.6818.85%3.33%4.19%2.56%
* Consumer Defensive Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:L
Loblaw Companies
222.00
58.27
35.59%
TSE:MRU
Metro Inc.
104.80
26.03
33.05%
TSE:WN
George Weston
266.85
62.41
30.53%
TSE:EMP.A
Empire Co Cl A NV
56.29
21.10
59.96%
TSE:NWC
North West
47.54
5.54
13.19%
TSE:SAP
Saputo Inc.
27.56
-3.16
-10.29%

Loblaw Companies Corporate Events

Executive/Board ChangesShareholder Meetings
Loblaw Companies Confirms Board of Directors Election
Positive
May 7, 2025

Loblaw Companies Limited announced the election of its board of directors at the annual shareholders’ meeting. All nominated directors were elected, indicating strong shareholder support and stability in the company’s governance. This election is crucial for maintaining strategic direction and ensuring continued leadership in the Canadian retail market.

Business Operations and StrategyFinancial Disclosures
Loblaw Reports Strong Q1 2025 Financial Results with Strategic Expansion
Positive
Apr 30, 2025

Loblaw Companies Limited reported a 4.1% revenue growth and a 9.3% increase in adjusted diluted net earnings per share for the first quarter of 2025. The company achieved strong sales momentum through customer response to value offerings and loyalty programs, with notable growth in both food and drug retail segments. Loblaw’s strategic expansion included opening new stores and clinics, contributing to its market share gains and financial performance.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: May 07, 2025