Metro Inc. (MRU) AI Stock Analysis

Compare

394 Followers

Top Page

Metro Inc.

(TSX:MRU)

Rating:78Outperform

Price Target:

C$119.00

▲(13.55%Upside)

Metro Inc. is well-positioned in the grocery industry, supported by strong financial performance and a positive earnings call. While the stock's valuation appears reasonable, technical indicators suggest a neutral market sentiment. Economic uncertainties and operational cost challenges are factors to watch.

Positive Factors

Earnings

The company's earnings outlook appears favourable as it exited a significant DC project.

Growth

The company offers investors resiliency and growth.

Stock Recommendation

The stock is upgraded to Outperform due to favourable factors.

Negative Factors

Trade and Tariff Concerns

There is concern about the possibility of trade/tariff headwinds with the U.S., which could negatively impact Canada's economic growth.

Metro Inc. (MRU) vs. iShares MSCI Canada ETF (EWC)

Market Cap

C$22.69B

Dividend Yield1.42%

Average Volume (3M)388.66K

Price to Earnings (P/E)23.3

Beta (1Y)0.40

Revenue Growth2.31%

EPS Growth4.45%

CountryCA

Employees97,870

SectorConsumer Defensive

Sector Strength55

IndustryGrocery Stores

Share Statistics

EPS (TTM)1.02

Shares Outstanding218,072,050

10 Day Avg. Volume406,787

30 Day Avg. Volume388,656

Financial Highlights & Ratios

PEG Ratio6.23

Price to Book (P/B)3.24

Price to Sales (P/S)0.00

P/FCF Ratio22.32

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

C$112.00

Price Target Upside6.87% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering1

Metro Inc. Business Overview & Revenue Model

Company DescriptionMetro Inc. (MRU) is a leading Canadian food retailer and distributor operating in the grocery and pharmacy sectors. The company offers a wide range of products, including fresh and frozen foods, general merchandise, and pharmaceutical products through its supermarket and drugstore chains. Some of its well-known banners include Metro, Super C, Food Basics, and Jean Coutu, catering to diverse customer needs across Quebec and Ontario.

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. Earnings Call Summary

Earnings Call Date:Apr 16, 2025

(Q2-2025)

% Change Since: 4.25%|

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.

Q2-2025 Updates

Positive Updates

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.

Negative Updates

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. 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

Very Positive

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.

Balance Sheet

Positive

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.

Cash Flow

Positive

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.

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
EBITDA	2.02B	1.99B	2.00B	1.79B	1.74B	1.69B
Net Income	993.00M	928.80M	1.01B	846.10M	823.00M	795.20M
Balance Sheet
Total Assets	14.25B	14.14B	13.87B	13.40B	13.59B	13.42B
Cash, Cash Equivalents and Short-Term Investments	38.60M	29.40M	29.50M	13.40M	445.80M	441.50M
Total Debt	4.48B	4.31B	4.32B	4.12B	4.56B	4.70B
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

Technical Analysis Sentiment

Neutral

Last Price104.80

Price Trends

50DMA

105.07

Negative

100DMA

101.56

Positive

200DMA

94.86

Positive

Market Momentum

MACD

0.03

Positive

RSI

48.89

Neutral

STOCH

38.99

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:MRU, the sentiment is Neutral. The current price of 104.8 is below the 20-day moving average (MA) of 105.19, below the 50-day MA of 105.07, and above the 200-day MA of 94.86, indicating a neutral trend. The MACD of 0.03 indicates Positive momentum. The RSI at 48.89 is Neutral, neither overbought nor oversold. The STOCH value of 38.99 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for TSE:MRU.

Metro Inc. Peers Comparison

Overall Rating

UnderperformOutperform

Sector (65)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
EMP.A	80 Outperform	C$12.88B	18.88	13.02%	1.44%	1.77%	0.77%
MRU	78 Outperform	C$22.69B	23.29	14.26%	1.42%	2.31%	4.45%
L	78 Outperform	$65.74B	30.37	20.10%	1.02%	2.42%	7.04%
WN	76 Outperform	C$33.92B	29.75	19.58%	1.36%	2.36%	-6.97%
SAP	70 Outperform	C$11.38B	42.30	-2.51%	2.76%	9.91%	-165.83%
Sector *	65 Neutral	$26.77B	15.22	-4.18%	3.21%	1.01%	1.53%
NWC	65 Neutral	C$2.30B	16.66	18.85%	3.33%	4.19%	2.56%

* Consumer Defensive Sector Average

Performance Comparison

TSE:MRU

Metro Inc.

104.80

25.65

32.41%

TSE:L

Loblaw Companies

222.00

57.62

35.06%

TSE:WN

George Weston

266.85

63.42

31.18%

TSE:EMP.A

Empire Co Cl A NV

56.29

20.89

59.01%

TSE:NWC

North West

47.54

5.08

11.96%

TSE:SAP

Saputo Inc.

27.56

-3.03

-9.91%

Metro Inc. Corporate Events

Financial Disclosures

METRO Inc. to Announce Q3 Fiscal 2025 Results

Neutral

Jul 14, 2025

METRO Inc. has announced that it will release its third quarter fiscal 2025 results on August 13, 2025, followed by a conference call led by President & CEO Eric R. La Flèche and Executive Vice President & CFO Nicolas Amyot. This announcement is significant for investors and financial analysts as it provides insights into the company’s financial performance and strategic positioning. The conference call will allow analysts and institutional investors to engage directly with the company’s leadership, while the general public can listen in, reflecting METRO Inc.’s commitment to transparency and stakeholder engagement.

The most recent analyst rating on (TSE:MRU) stock is a Hold with a C$86.00 price target. To see the full list of analyst forecasts on Metro Inc. stock, see the TSE:MRU Stock Forecast page.

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: Jul 16, 2025