Thursday, October 29, 2009

Loblaw Companies Ltd

I am reviewing this stock (TSX-L) today as I have updated my spreadsheet with the December 2008 financials and the 2nd quarterly financials. I do not own this stock. I used to own this stock, but sold it in 2007, because it was in trouble and I thought I could employ my money better elsewhere. They had stopped increasing their dividend in 2006. I held this stock from 1996 to 2007 and made a total return per year of just over 10%. I am still tracking this company as I feel that they might once again be a good investment when they can start to increase their dividends.

The growth figures for most items are not bad for the 10 year period, but usually awful for the last 5 years. For example, the growth in revenues for the last 5 years is just over 4% per year. The 10 year figure is better at just over 9% per year. Cash Flow from Operations was almost -1% per year for the last 5 years and just over 5% per year for the last 10 years. If you have invested in this stock for the last 5 years, you would not have made any money. The stock hit a peak in 2005 and has been treading downward ever since. It started to rise in March of this year, but has been falling since May 2009. Most Consumer Staple stocks have not done well this year.

The one good thing to say about this stock is that the Liquidity Ratio as been raising steadily and it is, as of the 2nd quarter, at 1.31. The Asset/Liability Ratio has always been better than the Liquidity Ratio and is at 1.75. Anything above 1.50 is good. The other good thing to say about this stock is the Accrual Ratio is negative and has been negative for the last few years. It currently stands at just below 0%. The last thing to talk about is the Return on Equity. This has also been raising since it hit a low of -4% in 2006 and for the end of 2008 it was at 9.3% and for the 2nd quarter of 2009 is it even better at 10%.

I think that Loblaw is in a tough market and most analysts expect it to do better in the future. As I had said before, I will again consider this stock when it can start to raise it dividends yearly. I will review what the analysts are saying on this stock tomorrow.

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. W. Galen Weston and George Weston Ltd own 63% of this company. Its web site is See my spreadsheet at

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.

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