Wednesday, December 3, 2008

Metro Inc 2

I reviewed this stock yesterday because its annual statement for 2008 has been published. I want to see what others say about this stock and how well it has done since the Annual Statement for September 2008. Metro Inc (TSX-MRU.A) is on Mike Higgs’ list at, on the Dividend Achievers list at, and on the Dividend Aristocrats list at (see indices). I bought this stock in 2001. Since then I have made an average annual return of 13.3% on this stock. This return includes dividends and I am using November’s month end price of $34.50 in this calculation.

The spreadsheet I did yesterday showed that Metro has done well lately. However, please note that the spreadsheets that I do as a result of annual statements just show what a stock has done in the past. A past record might point to a similar future, but there are no guarantees.

I notice that the Globe gives this stock a 5 Star Rating. This rating shows how a stock performance stacks up against its peer group. 5 Stars is the highest rating possible. This stock was at a low at the end of February 2008. This was because it was not expected that the EPS would grow for 2008. However, the EPS was up by 8.8% at the September 2008 year end.

The other problem was the lack of Revenue growth. Over the last two years, Revenue has not grown much. This can be very important in the long term, because if you cannot grow Revenue, your EPS will stop growing. What happened in September 2008 is the Operations Profit Margin (Cash Flow/Revenue) was 4.2%. This is slightly better than the 5 year average of 4.1% and better than the 10 year average of 3.9%. The basic thing is either you much grow Revenue or become more efficient to grow EPS. In the long run though, you have to grow Revenue. This would be the thing to keep an eye on concerning this stock.

As far as stock price goes, this stock has done better than the TSX or the Consumer Staples Sub-Index for all periods. There are Ratings on this stock from Strong Buy to Underperform, with the Hold Rating being the average. Note that not everyone expects the EPS to increase next year and some expect it will go down from that earned in 2008 and not recovered until 2010.

Metro is a leader in the food and pharmaceutical sectors. It operates a network of close to 600 food stores under the banners Metro, Metro Plus, Super C, A&P, Dominion, Loeb and Food Basics. It has 250 pharmacies under the banners Brunet, Clini Plus, The Pharmacy and Drug Basics. Metro's operations are concentrated in Quebec and Ontario. Its web site is See my spreadsheet at I have reloaded my spreadsheet today.

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 for a list of the stocks for which I have put up spreadsheets on my web site.

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