Loblaws, How Is It Doing

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 because I felt my money was better invested elsewhere. I purchased the stock in 1996 and sold in December 2007. I made an average rate of return, including dividends, of some 10% over this period of time.

The following figures are to the December 2007 annual statement. The 10 year annual increase in revenues is not bad at 10%, but the 5 year annual increase at 5% is not very good at all. The Earnings per Share (EPS) was 4% annually over 10 years and -14.6% annually over 5 years. The annual dividend increase for 10 years is good at 18%, but not very good over 5 years at 11.8% annually. The 5 year annual increase is, at least, better than inflation. The annual increase in closing price over 10 years was poor at 4.5% and awful over 5 years at -7% annually. The “Cash Flow from Operations” is not good over the last 5 years at 4.7% annually, but the 10 year annual rate of 10% is not bad .

The Current Asset/Current Liability and Asset/Liability ratios are solid at 1.09 and 1.68. The Return on Equity has been dropping steadily and the December 2007 5 year average of 9.9% is the lowest I have seen for this company. The accrual ratio for December 2007 is at least negative at -1.8%. It would be nice to see it lower, but it is negative, which is good. I will look at the stock again tomorrow to see if it is a good stock once again.

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.

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.