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Metro Inc. (TSE:MRU)
TSX:MRU
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Metro Inc.
(TSX:MRU)
80Outperform
Positive Factors
Earnings Outlook
The company's earnings outlook appears favourable as it exited a significant DC project.
Operational Efficiency
Key benefits include labour savings, improved productivity and efficiency over the longer term as volume grows, less reliance on direct store delivery, and sales uplift from improved on-shelf availability.
Sales Performance
Very strong food SSS of +2.4% vs. BMO's +0.2%.
Negative Factors
Consumer Behavior
MRU noted traffic is up y/y across its banners, but basket is slightly down.
Trade/Tariff Concerns
There is concern about the possibility of trade/tariff headwinds with the U.S., which could negatively impact Canada's economic growth.
Valuation
Premium valuation leaves little upside without deteriorating macro conditions.
Metro Inc. (MRU) vs. S&P 500 (SPY)
Market Cap
C$20.46B
Dividend Yield1.48%
Average Volume (3M)586.70K
Price to Earnings (P/E)22.3
Beta (1Y)0.59
Revenue Growth1.59%
EPS Growth-1.98%
CountryCA
Employees97,000
SectorConsumer Defensive
Sector Strength79
IndustryRetailers - Staples
Share Statistics
EPS (TTM)4.30
Shares Outstanding220,716,770
10 Day Avg. Volume644,427
30 Day Avg. Volume586,697
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.96
Price to Cash Flow (P/CF)31.00
P/FCF Ratio50.70
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$95.57Price Target Upside2.37% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
Metro Inc. Business Overview & Revenue Model
Company DescriptionMetro is one of the largest grocery retailers in Canada and, following its 2018 acquisition of the Jean Coutu Group, also boasts a meaningful drugstore footprint. Noteworthy grocery banners include Metro, Metro Plus, Super C, and Food Basics, while its pharmacies primarily operate under the Jean Coutu and Brunet trademarks. It utilizes an array of business models, but it most frequently acts as either a retailer, operating individual stores, or a franchisor, licensing its trademarks and supplying merchandise to franchisees. The firm also acts as a distributor, leveraging its supply chain capabilities to service smaller, neighborhood grocery stores. The preponderance of its operations are in Quebec, which houses over 70% of both its owned and franchised food and drug outlets.
How the Company Makes MoneyMetro Inc. generates revenue primarily through the sale of groceries and pharmaceutical products. The company operates a large network of retail stores where consumers purchase food items and health-related products. Key revenue streams include direct sales from its grocery stores and pharmacies. Additionally, Metro Inc. benefits from private label products, which offer higher margins than national brands. The company also leverages its loyalty programs to drive customer retention and increase sales. Strategic partnerships with suppliers and investments in supply chain efficiency contribute to cost control, enhancing profitability. Metro Inc. continuously explores opportunities in e-commerce to expand its market reach and capitalize on the growing trend of online shopping.
Metro Inc. Financial Statement Overview
Summary
Metro Inc. presents a strong financial profile characterized by consistent revenue growth, solid profitability, and efficient cash flow management. The company's moderate leverage and effective equity utilization contribute to its financial stability. While the company shows strengths in profitability and cash generation, maintaining these metrics as market conditions evolve will be key to sustained success.Income Statement
Metro Inc. demonstrates strong profitability with a consistent gross profit margin of approximately 18-19% and a net profit margin of around 4.5% for the TTM. Revenue growth is positive, with a 2.5% increase from the previous year, indicating steady growth in sales. The EBIT and EBITDA margins also reflect healthy operational efficiency, with an EBIT margin of 4.3% and an EBITDA margin of 9.3% for the TTM.85
Very Positive
Balance Sheet
The balance sheet reflects a solid financial structure with a debt-to-equity ratio of 0.62, indicating moderate leverage. Return on Equity stands at 13.5% for the TTM, showcasing effective utilization of shareholder funds. The equity ratio is 49.2%, implying a balanced approach to financing with a good portion of assets funded by equity.80
Positive
Cash Flow
Metro's cash flow is robust with a free cash flow growth rate of 19.9% for the TTM, suggesting strong cash generation capability. The operating cash flow to net income ratio is 1.68, indicating efficient conversion of net income to cash. The free cash flow to net income ratio is also favorable at 1.10, highlighting strong cash flow relative to earnings.78
Positive
| Breakdown | |||||
| TTM | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 21.36B | 21.22B | 20.72B | 18.89B | 18.28B | 18.00B | Gross Profit |
| 3.91B | 4.18B | 4.08B | 3.78B | 3.65B | 3.58B | EBIT |
| 924.30M | 20.80M | 1.97B | 1.33B | 1.27B | 1.24B | EBITDA |
| 1.99B | 1.99B | 2.00B | 1.79B | 1.74B | 1.69B | Net Income Common Stockholders |
| 960.60M | 928.80M | 1.01B | 846.10M | 823.00M | 795.20M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 0.00 | 29.40M | 29.50M | 13.40M | 445.80M | 441.50M | Total Assets |
| 14.47B | 14.14B | 13.87B | 13.40B | 13.59B | 13.42B | Total Debt |
| 4.43B | 4.31B | 4.32B | 4.12B | 4.56B | 4.70B | Net Debt |
| 4.43B | 4.28B | 4.29B | 4.11B | 4.12B | 4.26B | Total Liabilities |
| 7.34B | 7.10B | 7.05B | 6.78B | 7.18B | 7.27B | Stockholders Equity |
| 7.12B | 7.02B | 6.80B | 6.60B | 6.40B | 6.14B |
| Cash Flow | Free Cash Flow | ||||
| 1.06B | 1.10B | 883.60M | 840.30M | 984.00M | 963.40M | Operating Cash Flow |
| 1.61B | 1.68B | 1.56B | 1.46B | 1.58B | 1.47B | Investing Cash Flow |
| -434.70M | -456.40M | -572.50M | -477.80M | -471.60M | -444.10M | Financing Cash Flow |
| -1.23B | -1.22B | -974.90M | -1.42B | -1.11B | -861.90M |
Metro Inc. Technical Analysis
Positive
93.36
Price Trends
91.98
Positive
89.98
Positive
84.89
Positive
Market Momentum
0.78
Positive
48.12
Neutral
34.06
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:MRU, the sentiment is Positive. The current price of 93.36 is below the 20-day moving average (MA) of 94.34, above the 50-day MA of 91.98, and above the 200-day MA of 84.89, indicating a neutral trend. The MACD of 0.78 indicates Positive momentum. The RSI at 48.12 is Neutral, neither overbought nor oversold. The STOCH value of 34.06 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:MRU.
Metro Inc. 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% | |
76 Outperform | C$65.98B | 18.95 | 18.67% | 1.03% | 7.57% | -12.56% | |
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:MRU
Metro Inc.
93.36
20.45
28.05%
LBLCF
Loblaw Companies
129.72
19.58
17.78%
DLMAF
Dollarama
104.08
26.96
34.96%
TSE:ATD
Alimentation Couche-Tard Inc
69.62
-12.16
-14.87%
TSE:EMP.A
Empire Co Cl A NV
44.45
12.18
37.74%
TSE:NWC
North West
46.76
9.56
25.70%
Metro Inc. Earnings Call Summary
Earnings Call Date: Jan 28, 2025 | % Change Since: 2.39% | Next Earnings Date: Apr 16, 2025
Earnings Call Sentiment Positive
The earnings call presented a generally positive outlook with strong revenue growth in both food and pharmacy segments, successful expansion of online sales, and effective tax management. However, challenges such as increased operating expenses and inflationary pressures were noted, along with the impact of calendar shifts on sales.Highlights
Solid Revenue Growth
Total sales increased by 2.9% to reach $5.12 billion compared to the same period last year, with food same-store sales up 2.4% after calendar adjustments.
Pharmacy Segment Performance
Pharmacy same-store sales grew by 5.1%, with prescription sales up 7.3% due to organic growth and specialty medications.
Online Sales Expansion
Online sales grew by 18% for the quarter, supported by third-party partnerships and the expansion of click-and-collect services.
Dividend Growth
The Board declared a quarterly dividend of $0.37 per share, a 10.4% increase from last year, marking the 31st consecutive year of dividend growth.
MOI Rewards Program Success
The MOI Rewards program launched in Ontario showed positive results with over 4 million members, leading to increased traffic and spending.
Effective Tax Management
The company benefited from a resolution of a prior income tax position, resulting in a $20.6 million gain, and a $6.1 million provincial tax holiday.
Lowlights
Operating Expense Increase
Operating expenses increased by 4.4% to $528.5 million, influenced by the launch of the MOI Rewards program and professional fees related to a tax gain.
Impact of Calendar Shift
Sales were negatively impacted due to the transfer of two significant pre-Christmas shopping days to the second quarter.
Inflationary Pressures
The company faced inflationary pressures on commodity prices and the impact of a weaker Canadian dollar, affecting cost management.
Company Guidance
During Metro Inc.’s 2025 first quarter call, the company provided several key financial metrics and updates. Total sales reached $5.12 billion, a 2.9% increase from the previous year. Food same-store sales rose by 1%, or 2.4% when adjusted for calendar shifts, while pharmacy same-store sales increased by 5.1%. The gross margin slightly improved to 19.7% from 19.6% last year. Operating expenses were $528.5 million, representing 10.2% of sales, unchanged from the prior year. Adjusted net earnings rose by 4.4% to $245.4 million, with an adjusted net earnings per share of $1.10, up 7.8%. The company completed two store conversions and expanded its food retail network by 18,300 square feet. Additionally, Metro repurchased 1.425 million shares at an average price of $9.95 and announced a 10.4% increase in its quarterly dividend to $0.37 per share. The company reaffirmed its long-term growth target of 8% to 10% in adjusted net earnings per share.Metro Inc. Corporate Events
Business Operations and StrategyFinancial Disclosures
Metro Inc. Reports Strong Q1 2025 Results with Growth Across Key Sectors
Positive
Jan 28, 2025
Metro Inc. reported strong results for the first quarter of Fiscal 2025, with sales increasing by 2.9% to $5,117.1 million and net earnings up 13.6% to $259.5 million. This performance was supported by solid revenue growth, successful marketing initiatives, and a strategic focus on cost management. The company’s food and pharmacy sectors both showed growth, with notable increases in online food sales and pharmacy same-store sales. The positive results are expected to create long-term shareholder value and strengthen Metro’s market positioning.
METRO Inc. to Announce Q1 2025 Financial Results
Jan 6, 2025
METRO Inc. announced it will release its first quarter financial results for fiscal 2025 on January 28, 2025, followed by a conference call hosted by its President & CEO and Executive Vice President & CFO. This event will provide investors and financial analysts with insights into the company’s financial performance, which could impact its operational strategies and stakeholder interests.
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.