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.
This stock is on the dividend lists that I follow of Dividend Achievers (see resources) and Dividend Aristocrats (see indices). It is considered to be a dividend paying growth stock. These stocks are characterized by low dividend yields, high dividend growth and good capital gains.
I have had this stock for 8 years and the yield on my original investment is 4.36%. The dividend growth over the last 5 and 10 years has been at 11.8% and 15.4% per year, respectively. The last dividend increase for the 2011 financial year was for 13.2%. The 5 year median dividend yield is 1.6%.
The dividend yield has always been quite low on this stock and with this comes very low Dividend Payout Ratios. The DPRs for Earnings is 19.4 and for cash flow is 13%. The 5 year median DPR for earnings is 19% and for Cash Flow is 12%.
Mostly growth is good. The exception is growth in Revenue. Revenue growth over the past 5 and 10 years is up by 1% and 8.9% per year, respectively. Revenue growth per share is up 3.5% and 8.8% per year, respectively. The reason for the difference in revenue and revenue per share over the past 5 years is that the company has been buying back stock, so there are fewer shares now than 5 years ago.
Future revenue growth over the next two years is not expected to be very high either. This could be a problem as it is revenue growth that ultimately fuels a company’s growth. Without growth in earnings and cash flow, you cannot grow dividends.
For total return over the past 5 and 10 years, growth has been at 7.4% and 19.3% respectively. The portion of the return attributable to dividends is 1.5% and 2.2%, respectively. Earnings, Cash Flow and Book Value growth are all good. For example, EPS growth over the past 5 and 10 years is at 11.3% and 12% per year, respectively.
Liquidity Ratios are fine. The current one is 1.16 which is low but ok. It is better than the 5 year median one of 1.09. The Asset/Liabilities ratio has always been very good. The current one is at 2.07 and this ratio has a 5 year median value of 1.94. The Leverage and Debt/Equity Ratios are fine at 1.93 and 0.93. They are better than the 5 year median values of 2.06 and 1.06, respectively. (See my site for further information on Debt Ratios.)
The Return on Equity Ratios has generally been good and the one for the end of the financial year ending in September is 15%. The 5 year median ROE is 15%. The ROE based on the Comprehensive Income is also good at 15%. The good range for the ROE is the 10% to 15% range. A lot of companies are now reporting the Comprehensive Income. For more information on this, see Wikipedia.
I have been pleased with the performance of this stock. It is classified as a consumer staple stock. I started to invest in such stock once I had invested in enough utilities and financial stocks. However, I am keeping an eye on the revenues.
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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