Loblaws, How Is It Doing 2

As I said yesterday, this is a stock (TSX-L) that was on the Dividend Achievers and the Dividend Aristocrats lists until recently and also on Mike Higgs’ list at http://www.dividendgrowth.org/Report.htm. Mike still has this stock on his list, but after 3 years of no dividend increases, it was taken from the Dividend Achiever’s and the Canadian Dividend Aristocrats lists. I used to own this stock, but sold it in 2007 because I felt my money was better invested elsewhere.

The positive on this stock are that there is insider buying going on, the current P/E of 16 is lower than the 5 year average of 23, the dividend yield of 2.9% is higher than the 5 year average of 1.5%, the leverage is still not bad at 2.45 and the Asset/Liability Ratio is still good at 1.69.

The negatives on this stock is that the Cash Flow from Operations was negative for June 2008 quarter, although they did have positive Earnings per Share; a number of analysts have lowered their EPS for the year ending in 2008; the Return on Equity (ROE) for the first half of the year is only 7.2% which is even lower than the 5 year average of 9.9%. This 9.9% is the lowest 5 year average ROE for this stock. Also, the Accrual Ratio has increased to 8%.

This stock was doing as well as the Consumer Staple Index and better than the TSX until the sharp stock decline starting from April 2005. Most analysts have a Hold rating on this stock. I think that there are Hold ratings on this stock because it still has a way to go to recovery. It may not yet be time to start re-buying this stock.

Loblaw, a subsidiary of George Weston Limited, is Canada’s largest food distributor and a leading provider of general merchandise, drugstore and financial products and services. Corporate owned store banners include Atlantic Superstore, Dominion(1) (in Newfoundland and Labrador only), Extra Foods, Loblaw, Maxi, Maxi & Cie, Provigo, the Real Canadian Superstore and Zehrs and wholesale outlets operating as Cash & Carry, Presto and The Real Canadian Wholesale Club. The Company’s franchised and associated stores operate under the trade names Atlantic SaveEasy, Fortinos, no frills, SuperValu, Valu-mart and Your Independent Grocer. Its web site is www.loblaw.com See my spreadsheet at www.spbrunner.com/stocks/lob.htm. I have re-uploaded by spreadsheet for the June 2008 quarterly report.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. See my website at www.spbrunner.com/stocks.html for a list of the stocks for which I have put up spreadsheets on my web site.