Metro Inc. 2

On my other blog I am today writing about possible cheap dividend stocks for January 2015 continue...

I own this stock of Metro Inc. (TSX-MRU, OTC-MTRAF). I first 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. Metro's P/E is relatively low for this stock. I brought more in 2004. 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.

When I look at insider trading for this past year there is some $20.4M of net insider trading and this is equal to 0.33% of the outstanding market cap. There is a very minor amount of insider buying. The amount of insider trading is very small.

There is some insider ownership with the CEO owning shares worth around $5.8M and the Chairman owning shares worth around $12.2M. However this all adds up to less than 1% of outstanding shares. Outstanding shares were increased by around 189,000 shares for stock options. These shares have a book value of $8.6M and this amount of shares was worth some $14M at the end of the fiscal year of September 2014. This number of share is only 0.22% of outstanding shares and therefore a relatively very small amount.

The best I can find for a mission statement from Metro is that Metro Inc. say that they employs in Quebec and Ontario over 65,000 people, whose mission is to satisfy their customers every day and earn their long-term loyalty.

The 5 year low, median and high median Price/Earnings per Share Ratios are 9.37, 10.99 and 12.85. This historical high P/E Ratio is 15.94. The current P/E Ratio is 16.31 based on a stock price of $92.50 and 2015 EPS estimate of $5.67. This stock price testing suggests that the stock price is relatively expensive.

I get a Graham Price of $63.38. The 10 year low, median and high P/GP Ratios are 0.82, 0.98 and 1.09. The current P/GP Ratio is 1.46 with a stock price of $92.50. This stock price testing suggests that the stock price is relatively expensive.

The 10 year Price/Book Value per Share Ratio is 2.02. The current P/B Ratio is 2.94 based on a BVPS of $31.49 and a stock price of $92.50. The current P/B Ratio is some 46% higher than the 10 year ratio and this suggests that the stock price is relatively expensive.

The only test that suggests that the stock may not be that expensive is the historical average and historical median dividend yields which are 1.43% and 1.44% and therefor only around 10% higher than the current dividend yields of 1.30%. The dividend yield is based on a stock price of $92.50 and dividends of $1.20 per year. Generally a stock is considered expensive if the historical dividend yields are 20% or more higher than the current dividend yield.

The 5 year median dividend yield is 1.58% and this dividend yield is just over 18% higher than the current dividend yield of 1.30%. Compared to the last 5 years, this stock price is getting expensive.

When I look at analysts' recommendations, I find Strong Buy, Buy, Hold and Underperform recommendations. Most of the recommendations are in the Hold category and this is the consensus recommendation. The 12 month stock target price is $87.50, which is some 5.4% lower than where it is now.

This Globe and Mail article talks about how Metro has benefited from ownership in Alimentation Couche-Tard Inc. This Financial Post article talks about the good 4th quarter that Metro has had. The Motley Fool put out a report on Metro after their 4th quarterly results were published. Energy Advantage in this article talks about Metro managing their energy requirements.

Sound bite for Twitter and StockTwits is: Expensive on a number of levels. See my spreadsheet at mru.htm.

This is the second of two parts. The first part was posted on Friday, January 02, 2015 and is available here. The first part talks about the stock and the second part talks about the stock price.

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. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

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