Metro Inc

MRU: XTSE (CAN)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	CAD 94.00	Qpbcl	Ltvncjlw

Metro Earnings: New Distribution Capacity Drives up 2024 Cost but Aids Long-Term Efficiency Gains

Dan Su

Jan 31, 2024

We plan to maintain our CAD 69 fair value estimate for no-moat Metro after absorbing the grocer’s first-quarter results, with sales up 6.5% and adjusted EPS up 2%, in line with our estimates. We maintain our 2024 estimates for 3.4% sales growth on moderating food price inflation and a 1% decline in adjusted EPS due to costs associated with the newly opened distribution center in Quebec. Our 10-year forecasts for low-single-digit top-line growth and operating margins averaging 6.5% remain in place. Shares strike us as fairly valued.

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