Thursday, January 12, 2012

Metro Inc 2

I own this stock (TSX-MRU.A). I bought this stock in 2004. I have made a total return of 18.23% per year. The portion of this return attributable to dividends would be only 1.35%. This is quite typical of grocery stocks. Dividend yields are usually always low, but dividend increases are good.

Over the past year there has been insider trading, but mostly insider selling to the tune of $16.3M and minimal inside buying. It would appear that insiders are selling off stock options. All insiders, except for directors, have more stock options than shares. Metro is also buying back shares.

There are 139 institutions that own some 36% of this company. Over the past 3 months they have reduced their exposure to this company marginally (by less than 1%).

The 5 year median high and low Price/Earnings Ratios are 9.08 and 13.18 respectively. The current price of $52.41 has a P/E of 12.27. This shows a relatively high stock price. I get a Graham Price of $49.40. The current stock price is some 6.1% higher. The median difference between the Graham Price and the stock price is the stock price being 6.98% higher. This difference points to a relatively reasonable stock price.

I get a 10 year median Price/Book Value Ratio of 2.16 and a current P/B Ratio of 2.06, some 3% lower. This lower P/B Ratio points to a reasonable stock price. The 5 year median Dividend Yield is 1.6%. The current dividend yield is only 1.47%, a value 8% lower. This difference points to a relatively high stock price. The 10 year median dividend yield on high stock prices is 1.33%. This says that the stock price has been relatively higher.

My stock price tests are mixed, but I believe that they point to a relatively high price, although the stock has, in the past been relatively higher.

So, what do the analysts say? I find recommendations of Strong Buy, Buy, Hold, Underperform and Sell. The consensus recommendation would be a Buy. There are more recommendations on the buy side, than the underperform/sell side. One Buy comes with a 12 month stock price of $56. One analyst said that the company is cost-focused.

Another analyst said that this company is well-run, but he felt that the whole industry is suffering from margin compression, which he does not like. This is similar to my worry about lack of increase in revenues discussed in my posting of yesterday.

See a recent reports from G&M, with one dated November 16, 2011 and another one dated the same day.

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 here Metro. See my spreadsheet at 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 for stocks followed and investment notes. Follow me on twitter.

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