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Metro Inc. (TSE:MRU)
TSX:MRU
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Metro Inc.
(TSX:MRU)
77Outperform
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$22.40B
Dividend Yield1.35%
Average Volume (3M)597.49K
Price to Earnings (P/E)22.9
Beta (1Y)0.46
Revenue Growth2.31%
EPS Growth4.45%
CountryCA
Employees97,870
SectorConsumer Defensive
Sector Strength96
IndustryGrocery Stores
Share Statistics
EPS (TTM)4.47
Shares Outstanding219,431,350
10 Day Avg. Volume689,275
30 Day Avg. Volume597,489
Financial Highlights & Ratios
PEG Ratio5.14
Price to Book (P/B)N/A
Price to Sales (P/S)0.98
Price to Cash Flow (P/CF)31.80
P/FCF Ratio51.90
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$101.00Price Target Upside-1.06% Downside
Rating ConsensusModerate Buy
Number of Analyst Covering6
Metro Inc. Business Overview & Revenue Model
Company DescriptionMetro Inc. operates as a retailer, franchisor, distributor, and manufacturer in the food and pharmaceutical sectors in Canada. It operates supermarkets and discount stores that provide fresh and grocery products, baked goods, prepared foods, meats, dairy products, fruits and vegetables, frozen foods, bakery products, and pastries, as well as Mediterranean and Middle Eastern products. As of September 25, 2021, the company operated a network of approximately 963 food stores under various banners, including Metro, Metro Plus, Super C, and Food Basics, Adonis, and Premiere Moisson as well as approximately 649 drugstores primarily under the Jean Coutu, Brunet, Metro Pharmacy, and Food Basics Pharmacy banners. It also manufactures generic drugs; and provides online grocery shopping services. Metro Inc. was founded in 1947 and is headquartered in Montréal, Canada.
How the Company Makes MoneyMetro Inc. generates revenue through multiple streams primarily centered around its grocery and pharmacy operations. The company's core revenue comes from the sale of food and related products through its extensive network of supermarkets and discount stores. Additionally, Metro earns significant income from its pharmacy segment, which includes the sale of prescription drugs, over-the-counter medications, and health and beauty products. The company also benefits from private label brands, which offer higher margins compared to national brands. Strategic partnerships with suppliers and a focus on operational efficiency further enhance its profitability. Metro's earnings are also supported by its real estate operations, as it owns and leases retail properties, providing an additional revenue stream.
Metro Inc. Financial Statement Overview
Summary
Metro Inc. demonstrates strong financial health with robust profitability, consistent revenue growth, and efficient equity utilization. Despite a slight decline in EBIT margin and free cash flow growth, the overall financial position is solid and competitive within the grocery industry.Income Statement
Metro Inc. shows strong profitability with a gross profit margin of 18.94% and a net profit margin of 4.59% for TTM (Trailing-Twelve-Months). The company exhibits consistent revenue growth, with a 1.87% increase in the latest TTM period. However, there is a slight decline in EBIT margin from the previous year, indicating some pressure on operational efficiency.85
Very Positive
Balance Sheet
The balance sheet is robust with a debt-to-equity ratio of 0.63, suggesting a balanced leverage position. Return on equity stands at 14.04%, reflecting efficient use of shareholders' equity. The equity ratio of 49.65% indicates a stable financial structure, though slightly lower leverage could be beneficial.80
Positive
Cash Flow
Metro Inc. maintains healthy cash flows, with a stable operating cash flow to net income ratio of 1.56 and a free cash flow to net income ratio of 1.03. There is a slight decrease in free cash flow growth of -7.09% in the TTM period, which could be an area of concern if it persists.78
Positive
| Breakdown | |||||
| TTM | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 21.62B | 21.22B | 20.72B | 18.89B | 18.28B | 18.00B | Gross Profit |
| 4.09B | 4.18B | 4.08B | 3.78B | 3.65B | 3.58B | EBIT |
| 1.29B | 1.41B | 1.97B | 1.33B | 1.27B | 1.24B | EBITDA |
| 2.02B | 1.99B | 2.00B | 1.79B | 1.74B | 1.69B | Net Income Common Stockholders |
| 993.00M | 928.80M | 1.01B | 846.10M | 823.00M | 795.20M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 38.60M | 29.40M | 29.50M | 13.40M | 445.80M | 441.50M | Total Assets |
| 14.25B | 14.14B | 13.87B | 13.40B | 13.59B | 13.42B | Total Debt |
| 4.48B | 4.31B | 4.32B | 4.12B | 4.56B | 4.70B | Net Debt |
| 4.44B | 4.28B | 4.29B | 4.11B | 4.12B | 4.26B | Total Liabilities |
| 7.16B | 7.10B | 7.05B | 6.78B | 7.18B | 7.27B | Stockholders Equity |
| 7.07B | 7.02B | 6.80B | 6.60B | 6.40B | 6.14B |
| Cash Flow | Free Cash Flow | ||||
| 1.02B | 1.10B | 883.60M | 840.30M | 984.00M | 963.40M | Operating Cash Flow |
| 1.55B | 1.68B | 1.56B | 1.46B | 1.58B | 1.47B | Investing Cash Flow |
| -418.90M | -456.40M | -572.50M | -477.80M | -471.60M | -444.10M | Financing Cash Flow |
| -1.15B | -1.22B | -974.90M | -1.42B | -1.11B | -861.90M |
Metro Inc. Technical Analysis
Positive
102.08
Price Trends
96.00
Positive
93.49
Positive
88.14
Positive
Market Momentum
1.72
Negative
72.72
Negative
91.20
Negative
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 102.08 is above the 20-day moving average (MA) of 99.09, above the 50-day MA of 96.00, and above the 200-day MA of 88.14, indicating a bullish trend. The MACD of 1.72 indicates Negative momentum. The RSI at 72.72 is Negative, neither overbought nor oversold. The STOCH value of 91.20 is Negative, 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$2.51B | 18.23 | 18.85% | 2.94% | 4.23% | 6.08% | |
78 Outperform | C$11.47B | 17.47 | 12.64% | 1.59% | 1.05% | -6.94% | |
77 Outperform | C$22.40B | 22.86 | 14.26% | 1.35% | 2.31% | 4.45% | |
76 Outperform | C$67.60B | 18.98 | 18.66% | 1.04% | 11.62% | -8.08% | |
63 Neutral | $9.30B | 14.71 | 4.11% | 187.31% | 3.96% | 6.50% |
* Consumer Defensive Sector Average
Performance Comparison
TSE:MRU
Metro Inc.
103.76
35.33
51.63%
LBLCF
Loblaw Companies
154.13
45.20
41.49%
DLMAF
Dollarama
121.23
38.24
46.08%
TSE:ATD
Alimentation Couche-Tard Inc
71.95
-5.06
-6.57%
TSE:EMP.A
Empire Co Cl A NV
49.50
18.12
57.74%
TSE:NWC
North West
54.31
16.73
44.52%
Metro Inc. Earnings Call Summary
Earnings Call Date: Apr 16, 2025 | % Change Since: 1.19% | Next Earnings Date: Aug 13, 2025
Earnings Call Sentiment Positive
The earnings call reflects a generally positive outlook with strong sales growth, improved margins, and net earnings increases. However, there are challenges related to increased operating expenses and an uncertain economic environment, particularly regarding inflationary pressures and tariffs.Highlights
Increased Total Sales
Total sales reached $4.9 billion in the second quarter, an increase of 5.5% versus the same period last year.
Strong Same-Store Sales Growth
Food same-store sales were up 5.2%, with an adjusted increase of 3.9% accounting for a calendar shift. Pharmacy same-store sales were up 7%.
Improved Gross Margin
Gross margin stood at 20% of sales, up from 19.9% in the same quarter last year.
EBITDA Growth
EBITDA for the quarter totaled $461 million, up 5% year-over-year and 6.8% when excluding asset disposal effects.
Increased Net Earnings
Adjusted net earnings rose to $226.6 million, a 9.8% increase from last year, with adjusted net earnings per share up 12.1%.
Pharmacy Segment Success
Prescription sales were up 7.8%, driven by organic growth, specialty medications, and professional services.
Online Sales Growth
Online sales grew by 26%, driven by click-and-collect services and third-party marketplaces.
Share Repurchase Program
Repurchased 2.849 million shares for $264 million, at an average price of $92.65 per share.
Lowlights
Increased Operating Expenses
Operating expenses were $521.3 million, representing 10.6% of sales, with increased energy costs in Ontario and higher online partnership fees.
Uncertain Economic Environment
Challenges include inflationary pressures on commodities, a weaker Canadian dollar, and potential impacts from newly introduced tariffs and counter-tariffs.
Low Transaction Count Growth
Transaction count was essentially flat, though the average basket size increased.
Company Guidance
During the Metro Inc. 2025 Second Quarter Results Call, Metro reported total sales of $4.9 billion, a 5.5% increase from the previous year. Food same-store sales rose by 5.2%, but when adjusted for a calendar shift, they increased by 3.9%. Pharmacy same-store sales grew by 7%, building on a 5.9% increase from the prior year. The gross margin was reported at 20% of sales, up slightly from 19.9% the previous year. Operating expenses were $521.3 million, representing 10.6% of sales. EBITDA for the quarter was $461 million, a 5% improvement year-over-year. The effective tax rate was 24.5%, reduced from 26.5% due to a $6 million tax holiday. Adjusted net earnings increased by 9.8% to $226.6 million, with adjusted net earnings per share up 12.1% to $1.02. The company also repurchased 2.849 million shares for $264 million. Looking forward, Metro aims to maintain a medium- to long-term EPS growth target of 8% to 10%.Metro Inc. Corporate Events
Business Operations and StrategyFinancial Disclosures
Metro Inc. Reports Strong Q2 2025 Financial Results
Positive
Apr 16, 2025
Metro Inc. reported strong financial results for the second quarter of Fiscal 2025, with a 5.5% increase in sales to $4,909.9 million and a 17.6% rise in net earnings to $220.0 million. The company saw significant growth in both food and pharmacy same-store sales, driven by strategic investments in retail networks and supply chain enhancements, despite economic uncertainties.
Spark’s Take on TSE:MRU Stock
According to Spark, TipRanks’ AI Analyst, TSE:MRU is a Outperform.
Metro Inc. scores well overall, driven by strong financial performance and a positive earnings outlook, particularly in the food and pharmacy sectors. The technical indicators suggest a positive trend, although caution is advised due to the high P/E ratio indicating potential overvaluation. The increase in dividends further supports the stock’s appeal. The main risks include inflationary pressures and operational cost increases.
To see Spark’s full report on TSE:MRU stock, click here.
Business Operations and StrategyFinancial Disclosures
Metro Inc. Reports Strong Q2 2025 Results with Sales and Earnings Growth
Positive
Apr 16, 2025
Metro Inc. reported a strong performance in the second quarter of Fiscal 2025, with sales increasing by 5.5% to $4,909.9 million. The company experienced significant growth in both food and pharmacy sales, with net earnings rising by 17.6% to $220.0 million. The results were positively influenced by strategic shifts in the shopping calendar and robust online sales, despite economic uncertainties. Metro’s continued investments in retail networks and supply chain are expected to sustain its growth trajectory.
Spark’s Take on TSE:MRU Stock
According to Spark, TipRanks’ AI Analyst, TSE:MRU is a Outperform.
Metro Inc. scores well overall, driven by strong financial performance and a positive earnings outlook, particularly in the food and pharmacy sectors. The technical indicators suggest a positive trend, although caution is advised due to the high P/E ratio indicating potential overvaluation. The increase in dividends further supports the stock’s appeal. The main risks include inflationary pressures and operational cost increases.
To see Spark’s full report on TSE:MRU stock, click here.
Financial Disclosures
METRO Inc. to Announce Q2 2025 Financial Results
Neutral
Mar 25, 2025
METRO Inc. announced that it will release its second quarter fiscal 2025 results on April 16, 2025, followed by a conference call for investors and financial analysts. This announcement is significant for stakeholders as it provides insights into the company’s financial performance and strategic direction, potentially impacting its market positioning and investor confidence.
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.
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.