Metro Inc

I am reviewing Metro Inc (TSX-MRU.A) today, as I just received the annual report for September 2009 year end. The stock I currently hold I bought in August 2004 and I have made almost 18% total returns per year on this stock. I had bought this stock also in December 2001 and this I sold in April 2009. On this other set, I earned just over 12% per year.

I sold some in April, as it was widely felt that this stock would not be doing well going forward. Also, I had almost 10% of my portfolio in this stock. When I looked at the stock then, I got an earnings estimate of $2.57 for 2009. The earnings came in $3.19, so the estimates were a bit off. What happened with this stock is that it did not take a dive in March 2009, but it also did not rise as much as the TSX has for the full year of 2009.

When you look at the growth figure for Revenue, Earnings, Dividends, Stock Price, Book Value and Cash Flow, you will find that all these figures are very good. The worst is the Cash Flow growth and here for the last 5 and 10 years the growth has been 8.4% and 9.6% per year respectively. The best growth figures have been for the Book Value and here the growth over the last 5 and 10 years has been just over 18% per year.

Looking at the Liquidity Ratios, I find that most are just over 0.90, but the ones for 2009 were better at 1.11. The Asset/Liability Ratios are much, much better and are generally over 1.80. The ratio for 2009 was 1.94. I like to see both these ratios at 1.50 or better. You need a ratio of at least 1.00 for assets to cover the liabilities.

The Return on Equity is generally good for this stock, with the 5 year average at 14.4% and the 2009 ROE at 15.7%. Both these figures are good. I guess the last ratio to mention is the Accrual Ratio and this is rather neutral at 2%.

I am currently happy with the shares I own in this company and I will retain them. This is a Consumer Staple type stock and therefore you need to keep an eye on it. The other thing with Consumer Staple stock is that the portion of the total return from dividends tends to be low and this stock’s dividends increases the return by under 2% per year. This stock’s return was much flatter than for the TSX. The TSX went up some 30% in 2009. This stock, including the dividends, when up some 7.5%.

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 www.metro.ca. See my spreadsheet at www.spbrunner.com/stocks/mru.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. Also, look at other investing notes on my website at www.spbrunner.com/investing.html.