Morningstar

Metro Inc MRU

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Stock XTSE Rating as of
CAD 84.28 −1.30 (1.52%)
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As of Delayed Price Closed

Company Report

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No-Moat Grocer Metro Has Catching Up to Do for Its Private Label, Loyalty Program

Dan Su

As the smallest of the three pure-play food retailers in Canada, Metro has done a commendable job fending off competition in its core Ontario and Quebec markets with prudent merchandising strategies and strong execution. However, similar to larger rival Loblaw, we think ferocious price competition in the commoditized grocery market has prevented Metro from amassing any intangible assets or cost advantage to warrant an economic moat rating.

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Price vs Fair Value

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MRU is trading at a 737% premium.
Price
CAD 84.28
Fair Value
CAD 25.00
Uncertainty
Low
1-Star Price
CAD 72.30
5-Star Price
CAD 34.00
Economic Moat
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Capital Allocation
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Bulls Say, Bears Say

Bulls

Metro is well positioned to capture grocery shopping needs with various store formats, including full-price supermarkets, discounters, ethnic food stores, and bakeries and delis.

Bears

Given its smaller scale compared with grocery store rivals Loblaw and Sobeys, Metro has less bargaining power in procuring produce and packaged food products.

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Trading Information

Previous Close Price
CAD 85.58
Day Range
CAD 84.21–85.95
52-Week Range
CAD 65.43–87.22
Bid/Ask
CAD 84.16 / CAD 85.00
Market Cap
CAD 18.76 Bil
Volume/Avg
245,761 / 398,181

Key Statistics

Price/Earnings (Normalized)
19.54
Price/Sales
0.90
Dividend Yield (Trailing)
1.55%
Dividend Yield (Forward)
1.59%
Total Yield
4.37%

Company Profile

Metro is the third-largest grocery retailer in Canada (behind Loblaw and Sobeys) and also owns the top pharmacy chain in Quebec, Jean Coutu, following the 2018 acquisition. Its grocery banners include supermarket chain Metro, discounters Super C and Food Basics, and ethnic food grocer Adonis, while its pharmacies primarily operate under the Jean Coutu and Brunet trademarks. Metro operates both as a food retailer and a franchisor, licensing its trademarks and supplying merchandise to registered pharmacists. The firm also acts as a wholesaler and distributor to serve smaller, neighborhood grocery stores. Unlike peers Loblaw and Sobeys that operate chain stores across Canada, Metro’s operations are concentrated in Quebec and Ontario, with no presence in western Canada.
Sector
Consumer Defensive
Industry
Grocery Stores
Stock Style Box
Mid Core
Total Number of Employees
97,000
Website
https://www.metro.ca

Competitors

Valuation

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Metric
MRU
L
WMT
Price/Earnings (Normalized)
 19.5426.5933.81
Price/Book Value
 2.784.877.65
Price/Sales
 0.900.910.98
Price/Cash Flow
 12.3511.0618.56
Price/Earnings
MRU
L
WMT

Financial Strength

Metric
MRU
L
WMT
Quick Ratio
 0.400.700.18
Current Ratio
 1.101.360.80
Interest Coverage
 8.174.388.64
Quick Ratio
MRU
L
WMT

Profitability

Metric
MRU
L
WMT
Return on Assets (Normalized)
 6.87%5.71%6.41%
Return on Equity (Normalized)
 14.02%19.78%19.99%
Return on Invested Capital (Normalized)
 9.46%9.50%11.82%
Return on Assets
MRU
L
WMT

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