Metro Analysis

metro-inc

Hi everyone today’s post is a review of Metro Canada’s third largest supermarket operator in Canada. Metro’s ticker is (MRU on the TSX). Metro only operates in two Canadian provinces Quebec and Ontario.

About Metro

The Company operates under various grocery banners in the supermarket and discount segments. The Company operates or supplies a network of over 940 food stores under various banners, including Metro, Metro Plus, Super C, Food Basics, Adonis and Premiere Moisson, as well as approximately 260 drugstores under the Brunet, Metro Pharmacy and Drug Basics banners. The Adonis banner, which has over 10 stores, is specialized in perishables, and Mediterranean and Middle-Eastern products. It also operates Premiere Moisson, a company specialized in bakery, pastry, charcutery and other food offerings prepared on an artisanal basis. Premiere Moisson sells its products to its stores, to restaurant and distribution chains, as well as directly to consumers. It also acts as franchisor and distributor for over 180 franchised Brunet Plus, Brunet, Brunet Clinique and Clini Plus drugstores, owned by independent pharmacists.

(Source: Google Finance)

Also Metro currently owns 32.2 million shares (7.5%) of convenience store giant Alimentation Couche-Tard.

Metro’s Retail Network

Quebec Ontario Total
Supermarkets 204 Metro, Metro Plus 134 Metro 338
Discount Stores 93 Super C 125 Food Basics 218
Neighbourhood Stores
Marche Richelieu 59
350
Marche Ami 187
Marche Extra 104
Partners
Adonis 9 2 11
Premiere Moisson 24 1 25
Total 680 262 942
Drugstores 184 Brunet, Brunet Plus, Brunet Clinique, Clini Plus 74 Pharmacy Drug Basics 258

2016 Highlights

  • Sales reached $12,787.9 billion up 4.6% and same store sales were up 3.7% a key industry metric.
  • Net earnings increased 12.9% to $586.2 million.
  • Invested $350 million into it’s retail network.
  • Increased the dividend for the 22nd consecutive year a 19.3% increase over 2015.

Investing Back Into The Business

In 2016 Metro spent $350 million. It opened six new stores and carried out major renovations in 43 others. In Quebec major renovations were carried out in 11 Metro stores. Three new Super C stores were opened. Two Adonis stores were opened. In the pharmacy division three stores were added. 12 others were expanded, remodeled or relocated throughout Quebec.

In Ontario 1 new Metro, and 1 new Food Basics were opened. Also 12 Metro and 13 Food Basics were remodeled. One new pharmacy was opened and six others remodeled.

Metro is continuing to remodel and expand stores, and are adding a discount segment to allow for a more complete and diversified offer of products in an attempt to attract new customers.

Outlook for 2017

Metro is planning on once again investing $350 million this will be used mainly to open new stores, expansions and remodels. Also they are planning to add online grocery shopping to their physical store network. They are currently testing this in three stores in Quebec.

Sales

After a small blip in 2013 sales continue to climb.

Net Earnings

Metro continues to earn solid profits year over year.

Dividend & Share Buybacks

Metro pays a quarterly dividend. 2016 marked the 22nd consecutive  year that Metro has raised it’s dividend paying $0.5367 per share. In January the board of directors announced another increase for 2017 that would boost the dividend to an annual payout of $0.65. Metro’s current policy is to have a payout of 20 to 30% of net income.

  • Between Sept 10, 2015 and Sept 9, 2016 the Metro repurchased 9,842,328 common shares for a total cost of $376 million.
  • The Board of Directors has authorized the repurchase of up to 12,000,000 common shares between Sept 12, 2016 and Sept 11, 2017.

metro-port-hope

I thought I would share the above picture with you this Metro is in my hometown of Port Hope, Ontario. Several years ago a truck caught fire at the factory behind the store. There were no injuries and the fire did not spread to the store.

Conclusion 

I currently don’t own any shares of Metro but I have been thinking about starting a position. I believe Metro is in good financial shape and with a low payout ratio I think we can expect to see more dividend increases in the years to come.

Is Metro on your radar? Do you own shares?

Thanks for reading I hope you enjoyed the post.

Matthew

Advertisements

One thought on “Metro Analysis

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s