Metro Inc.

On my other blog I am today writing about Dividend Stocks that may be cheap. I am showing this information for the next third of the stocks that I follow...continue...

I own this stock of Metro Inc. (TSX-MRU, OTC-MTRAF). I am starting off the year with a dividend growth consumer stock. I was following this stock because it was on Mike Higgs' Canadian Dividend Growth stock list and on the other dividend lists that I was following.

I bought this stock first at the end of 2001 because it is a good time to purchase as market is relatively low and Metro was on my hit list. I brought some more of this stock in 2004 as I was looking for something I already own, that has increasing dividends and reasonable P/E for a stock at this time. By 2009, Metro stock was over 10% of my portfolio because it had grown so strong, so I sold some to reduce the percentage of it in my portfolio.

The dividend yield is moderate at 1.54% and the dividend increases are good with the 5 and 10 year growth at 14.2% and 13.8% per year. The most recent increase was in 2013 was for 16.3%. The current stock that I own I bought in 2004 and after 10 years I am earning a dividend yield of 5.66%. I have dividend information going back to 1995 and they have increased dividends each year since then.

The Dividend Payout Ratios are good, with the DPR for EPS at a 5 year median of 16.95% and the DPR for CFPS at a 5 year median of 12.91%. Analysts expect the DPR for EPS to be around 19.2% in 2014 and CFPS to be around 16.2% in 2014.

The 5 and 10 year total return to date is good with the 5 and 10 year total return at 13.46% and 13% per year. The 5 and 10 year portion of this return attributable to dividends is 1.56% and 1.52% per year and the 5 and 10 year portion attributable to capital gains is 11.89% and 11.48% per year. What I have made on my stock purchased in 2004 is 16.86% per year with 14.84% from capital gains and 2.02% from dividends.

The outstanding shares have decreased over the past 5 and 10 years at 3.68% and less than 1% per year. Shares have increased due to Share Issues and Stock Options and decreased due to Buy Backs. The growth in earnings has been very good. The growth in cash flow has been good and the growth in revenue, not so much.

Revenue has grown at 1.2% and 7.1% per year over the past 5 and 10 years. Using 5 year running averages, the growth improves to 5% and 8.9% per year over these periods. Revenue per Share has grown at 5.1% and 7.8% per year over the past 5 and 10 years. However, if you use the 5 year running averages, Revenue per Share has grown at 7.1% and 8.8% per year over the past 5 and 10 years.

The Earnings per Share has gone up some 24% and 16% per year over the past 5 and 10 years. Using 5 year running averages, EPS grown is at 16% and 14% per year over the past 5 and 10 years. The Cash Flow per Share has gone up by 12% and 11% per year over the past 5 and 10 years.

The Return on Equity has been over 10% since 1995. The ROE for the financial year ending in September 2013 was 25.7%. The 5 year median ROE is 16%. The ROE on comprehensive income is slightly better than that on net income and was 27.7% for the financial year ending in September 2013.

The Liquidity Ratio has always been low and for the financial year ending in September 2013 was just 0.99. If you add in cash flow after dividends it rises to 1.38. Not a great figure either as I would rather have it at 1.50. The Debt Ratio has always been quite good and is at 2.25. The current Leverage and Debt/Equity Ratios are also current good at 1.80 and 0.80.

This is a retail stock and you must keep an eye on retail stocks. I must admit, I held Loblaws from 1996 until 2007. It was a great stock at first, but I sold in 2007 because I had lost hope of the company making a financial recovery and increasing its dividends in the future again. The first increase did not arrive until 2012 and was only for 4.8%.

I have done quite well with this stock. I have made a good return and enjoyed increasing dividends. However as I have said this is a retail stock and you must keep an eye on retail stocks. They can get into trouble. Just because people must buy food, it does not mean they will buy it from this store. See my spreadsheet at mru.htm.

This is the first of two parts. Second part will be posted on Friday, January 3, 2014 and will be available here.

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.

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 or StockTwits.