Loblaw Companies (TSE:L) Announces Quarterly Earnings Results

Loblaw Companies (TSE:L) announced its earnings results on Wednesday. The company reported C$0.52 earnings per share (EPS) for the quarter, FiscalAI reports. The firm had revenue of C$14.48 billion during the quarter. Loblaw Companies had a net margin of 4.29% and a return on equity of 24.88%.

Here are the key takeaways from Loblaw Companies’ conference call:

• Strong Q1 results — normalized revenue rose ~4.5%, total adjusted EBITDA was CAD 1.7B (+6%) with a 20 bp margin improvement, and adjusted diluted EPS grew ~10.6% (GAAP diluted EPS CAD 0.50, +19%).
• PC Financial sale to EQ Bank expected to close in Q3, unlocking ~CAD 600 million that Loblaw plans to use to increase buybacks (already repurchased CAD 648M in Q1) and purchase EQB shares, while also raising the dividend by 10%.
• Store expansion and format efficiency — hard-discount banners are driving double-digit comps and Loblaw plans ~30 discount openings this year; construction cost improvements (management cites ~30% reduction) enable faster, lower?cost rollouts into underserved markets.
• GLP-1 uncertainty — GLP-1 prescription sales accelerated (~40% YTD) boosting pharmacy performance today, but pending generic approvals (expected around August) create uncertainty around future same?store sales mix and margins.
• Automation and U.S. expansion are transitional — East Gwillimbury DC ramp and T&T U.S. investments are a near?term drag (management cites ~1% EPS headwind this year) but are expected to turn positive in H2 and no longer drag next year.

Loblaw Companies Stock Performance

Loblaw Companies stock opened at C$60.10 on Friday. The firm has a market cap of C$70.43 billion, a price-to-earnings ratio of 27.07, a price-to-earnings-growth ratio of 3.23 and a beta of 0.31. Loblaw Companies has a 1 year low of C$52.92 and a 1 year high of C$69.59. The firm’s 50 day moving average price is C$62.78 and its two-hundred day moving average price is C$62.19. The company has a debt-to-equity ratio of 153.41, a quick ratio of 0.68 and a current ratio of 1.09.

Loblaw Companies Dividend Announcement

The firm also recently declared a quarterly dividend, which was paid on Wednesday, April 1st. Shareholders of record on Wednesday, April 1st were given a $0.1411 dividend. The ex-dividend date was Friday, March 13th. This represents a $0.56 annualized dividend and a yield of 0.9%. Loblaw Companies’s payout ratio is 24.84%.

Wall Street Analysts Forecast Growth

L has been the subject of a number of research analyst reports. Desjardins upped their price target on shares of Loblaw Companies from C$67.00 to C$70.00 and gave the stock a “buy” rating in a research note on Thursday, February 26th. National Bank Financial raised their price objective on shares of Loblaw Companies from C$62.00 to C$66.00 and gave the company an “outperform” rating in a research note on Wednesday, January 28th. Royal Bank Of Canada boosted their target price on Loblaw Companies from C$68.00 to C$72.00 and gave the stock an “outperform” rating in a report on Friday, January 23rd. Scotia cut their target price on Loblaw Companies from C$70.00 to C$64.00 and set a “sector perform” rating for the company in a research report on Thursday. Finally, TD Securities increased their price target on Loblaw Companies from C$65.00 to C$75.00 and gave the company a “buy” rating in a research note on Monday, February 23rd. Four research analysts have rated the stock with a Buy rating and three have given a Hold rating to the company’s stock. According to data from MarketBeat, the stock presently has a consensus rating of “Moderate Buy” and a consensus target price of C$69.25.

Loblaw Companies Company Profile

Loblaw is one of Canada’s largest grocery, pharmacy, and general merchandise retailers, operating the most expansive store footprint in Ontario and maintaining sizable presences in provinces like Quebec and British Columbia. Key grocery banners include Loblaw, No Frills, and Maxi, while its pharmaceutical operations are the product of its 2014 acquisition of Shoppers Drug Mart. The firm carries a robust private-label assortment, with top sellers like President’s Choice and No Name. In addition to its retail operations, Loblaw oversees a financial-services business, which provides credit card services and guaranteed investment certificates, and also operates its PC Optimum loyalty program.