Is it a good company at a reasonable price? The stock price of this stock has risen sharply since around January 2021. I would worry that the growth in Revenue and Cash Flow is a lot lower than other growth, especially the stock price growth. Eventually, all growth depends on Revenue growth. I also do not like buying dividend stock when the dividend yield is below 1.00%. My testing is showing that on a lot of levels, the stock price is expensive as all tests point to this.
I do not own this stock of Loblaw Companies Ltd (TSX-L, OTC-LBLCF), but I did in the past. I owned it from 1996 to 2007. It was originally a great stock. I sold it in 2007 because it was having problems with its tech upgrade to its supply system and it did not seem that it would be fixed anytime soon. The stock started to do well again in 2014, but I had bought Metro and it has done well for me and it is a pure grocery stock. On the other hand, if I had bought more stock in 2007, I would have done very well with it to date. However, you never know how thing will work out.
When I was updating my spreadsheet, I noticed because of the problems this company had with its tech upgrade, shareholders who had this stock for 25 still have not reach a yearly return of at least 8%. From my spreadsheet, it looks like the stock hit a high in 2005 that was not duplicated until 2017, some 12 years later. The tech upgrade was their supply management system. I notice that if I cannot find a particular product in Metro, it will be there the next day. Loblaws stores might have it the next day or in two weeks’ time or somewhere in between.
What I have also noticed is that the stock price is climbing much faster than other values over the past 5 years. You can see that in the following chart in the 5 year figures where stock price is up 32% and the rest of the values show increases between 3.83% and 19.21%. What also stands out is the lack of revenue growth. In the chart below, I am showing 5 and 10 year total growth and per year growth in columns 3 and 4. Column 5 shows growth over 12 months to the first quarter in 2026 and expected growth over this year.
| Yr | Item | Tot. Gwth | Per Year | Gwth | Coverage |
|---|---|---|---|---|---|
| 5 | Revenue Growth | 21.23% | 3.92% | 0.91% | <-12 mths |
| 5 | AEPS Growth | 132.54% | 18.39% | 2.06% | <-12 mths |
| 5 | Net Income Growth | 140.70% | 19.21% | 3.64% | <-12 mths |
| 5 | Cash Flow Growth | 20.67% | 3.83% | 5.67% | <-12 mths |
| 5 | Dividend Growth | 72.34% | 11.50% | 10.00% | <-12 mths |
| 5 | Stock Price Growth | 295.16% | 31.63% | 5.54% | <-12 mths |
| 10 | Revenue Growth | 40.77% | 3.48% | 2.77% | <-this year |
| 10 | AEPS Growth | 180.92% | 10.88% | 6.17% | <-this year |
| 10 | Net Income Growth | 321.99% | 15.49% | -0.19% | <-this year |
| 10 | Cash Flow Growth | 103.44% | 7.36% | 5.67% | <-this year |
| 10 | Dividend Growth | 121.70% | 8.29% | 11.83% | <-this year |
| 10 | Stock Price Growth | 279.86% | 14.28% | 8.62% | <-this year |
If you had invested in this company in December 2015, for $1,012.77 you would have bought 62 shares at $16.34 per share. In December 2025, after 10 years you would have received $227.68 in dividends. The stock would be worth $3,847.10. Your total return would have been $4,074.78. This would be a total return of 15.49% per year with 14.28% from capital gain and 1.21% from dividends. This calculation takes into consideration stock splits, which means that the original cost would be lowered by these splits. (They split the stock in 2025.)
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $16.34 | $1,012.77 | 62 | 10 | $227.68 | $3,847.10 | $4,074.78 |
The current dividend yield is low with dividend growth moderate. The current dividend yield is low (below 2%) at 0.95%. The 5, 10 and historical median dividend yields are also low at 1.45%, 1.49% and 1.45%. The dividend growth is moderate (8% to 14% ranges per year) at 11.5% per year over the past 5 years. The last dividend increase was 10% and it was in 2026.
The Dividend Payout Ratios (DPR) are good. The DPR for 2025 for Earnings per Share (EPS) is good at 25% with 5 year coverage at 29%. The DPR for 2025 for Adjusted Earnings per Share (AEPS) is good at 23% with 5 year coverage at 23%. The DPR for 2025 for Cash Flow per Share (CFPS) is good at 9% with 5 year coverage at 9%. The DPR for 2025 for Free Cash Flow (FCF) is good at 22% with 5 year coverage at 18%. FCF for 2025 varies from $2,049M, to $4,097M. I am using $3,580M.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 24.84% | 28.77% |
| AEPS | 22.69% | 23.32% |
| CFPS | 8.77% | 8.67% |
| FCF | 22.68% | 17.97% |
Debt Ratios show that the company has too much debt. The Long Term Debt/Market Cap Ratio for 2025 is good at 0.08 and currently at 0.08. The Liquidity Ratio for 2025 is low at 1.08 and 1.09 currently. If you added in Cash Flow after dividends, the ratios are still low at 1.48 and currently fine at 1.52. The Debt Ratio for 2025 is low at 1.37 and 1.36 currently. The Leverage and Debt/Equity Ratios for 2025 are too high at 3.71 and 2.71 and currently at 3.77 and 2.77.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.08 | 0.08 |
| Intang/GW | 0.13 | 0.12 |
| Liquidity | 1.08 | 1.09 |
| Liq. + CF | 1.48 | 1.52 |
| Debt Ratio | 1.37 | 1.36 |
| Leverage | 3.71 | 3.77 |
| D/E Ratio | 2.71 | 2.77 |
The Total Return per Year is shown below for years of 5 to 37 to the end of 2025. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2020 | 5 | 11.50% | 33.30% | 31.63% | 1.67% |
| 2015 | 10 | 8.29% | 15.49% | 14.28% | 1.21% |
| 2010 | 15 | 6.65% | 14.24% | 12.87% | 1.36% |
| 2005 | 20 | 4.95% | 8.70% | 7.69% | 1.01% |
| 2000 | 25 | 7.07% | 7.50% | 6.58% | 0.93% |
| 1995 | 30 | 10.51% | 12.97% | 11.19% | 1.77% |
| 1990 | 35 | 10.36% | 12.81% | 11.15% | 1.65% |
| 1988 | 37 | 9.92% | 15.17% | 12.87% | 2.30% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 16.96, 18.96 and 21.83. The corresponding 10 year ratios are 18.77, 22.52 and 25.39. The corresponding historical ratios are 17.05, 19.42 and 21.84. The current ratio is 28.85 based on a stock price of $65.49 and EPS estimate for 2026 of $2.27. The current ratio is above the high ratio of the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. The ratios are pretty consistent, so this is a good test.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Earnings per Share Ratios are 14.27, 15.98 and 18.68. The corresponding 10 year ratios are 14.50, 16.10 and 18.36. The corresponding historical ratios are 13.64, 15.99 and 18.16. The current ratio is 25.38 based on a stock price of $65.49 and AEPS estimate for 2026 of $2.58. The current ratio is above the high ratio of the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive. The ratios are pretty consistent, so this is a good test.
I get a Graham Price of $23.21. The 10-year low, median, and high median Price/Graham Price Ratios are 1.16, 1.27 and 1.51. The current ratio is 2.82 based on a stock price of $65.49. The current ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.
I get a 10-year median Price/Book Value per Share Ratio of 2.33. The current ratio is 7.05 based on a Book Value of $10,909M, Book Value per Share of $9.28 and stock price of $65.49. The current ratio is 203% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I also have Book Value per Share estimate of $9.57 for 2026. This value, with a stock price of $65.49 and book Value of $11,249M gives a ratio of 9.84. This ratio is 194% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 10-year median Price/Cash Flow per Share Ratio of 7.84. The current ratio is 11.63 based on Cash Flow for the last 12 months of $6,619M, Cash Flow per Share of $5.63 and a stock price of $65.49. The current ratio is 48% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get an historical median dividend yield of 1.45%. The current dividend yield is 0.95% based on a dividend of $0.620732 and a stock price of $65.49. The current dividend yield is 35% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median dividend yield of 1.49%. The current dividend yield is 0.95% based on a dividend of $0.620732. The current dividend yield is 36% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10-year median Price/Sales (Revenue) Ratio is 0.60. The current P/S Ratio is 1.17 based on Revenue estimate for 2026 of $65,670M, Revenue per Share of $55.88 and a stock price of $65.49. The current ratio is 97% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
Results of stock price testing is that the stock price is probably relatively expensive. The Dividend yield tests say this and it is confirmed by the P/S Ratio test. In fact, all my tests are saying that the stock price is relatively expensive.
When I look at analysts’ recommendations, I find Strong Buy (5), Buy (3), Hold (1), and Sell (1). The consensus would be a Buy. The 12 month stock price consensus is $67.40 with a high of $75.00 and low of $43.00. The consensus stock price of $67.40 implies a total return of 3.86% with 2.92% from capital gains and 0.95% from dividends based on a current stock price of $65.49.
There are varies views on this company at Stock Chase. Some like it and call it a defensive stock. Other think it is expensive and other that its current growth is unsustainable. Amy Legate-Wolfe on Motley Fool thinks this is one of 5 top stocks to buy in August. Tony Dong on Motley Fool thinks this is a good stock to have as it will hold up in a Technical Recession. The company put out a press release via Globe Newswire about their fourth quarter of 2025 results. The company put out a press release via Globe Newswire about their first quarter of 2026.
Simply Wall Street on Yahoo Finance reviews this stock. They say it could be slightly below its fair value and at its fair value. They have one warning of has a high level of debt
Loblaw is Canada's largest retailer, operating approximately 2,500 food retail and pharmacy stores across the country. Beyond retail, Loblaw runs the PC Optimum loyalty program, but announced plans to sell its financial services arm including credit cards and insurance brokerage to EQB in December 2025. George Weston is Loblaw's controlling shareholder with a 53% stake. Its web site is here Loblaw Companies Ltd .
The last stock I wrote about was about was Savaria Corporation (TSX-SIS, OTC-SISXF) ... learn more. The next stock I will write about will be Stingray Digital Group Inc (TSX-RAY.A, OTC-STGYF) ... learn more on Wednesday, July 29, 2026 around 5 pm. Tomorrow on my other blog I will write about Pipelines but No Private Capital.... learn more on Tuesday, July 28, 2026 around 5 pm.
This blog is meant for educational purposes only and is not to provide investment advice. I am not a licensed professional investment advisor. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.
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