I do not own this stock of Loblaw Companies Ltd. (TSX-L, OTC-LBLCF), but I used to. I owned it from 1996 to 2007. It was originally a great stock. I sold it in 2007 because it was having problems with its tech upgrade to its supply system and it did not seem that it would be fixed anytime soon. It is still not working well. However, I must admit I still like shopping at Loblaws.
When I was updating my spreadsheet, I noticed that shares have gone up by 7.3% and 3.8% per year over the past 5 and 10 years. The increase was due to a 46% increase in 2014 for the purchase of Shopper’s Dung Mart. Because of the share increases, you really need to look at the per share values and they have not gone up much over the past 5 years, or even the past 10 years. An important one is Revenue per Share and this has only increased by 1.5% and 1.2% per year over the past 5 and 10 years.
Dividend yields have always been low to moderate. The current dividend yield is 1.74%. The 5, 10 and historical median dividend yields are 1.52%, 2.12% and 1.25%. Dividend growth used to be good but really slowed down after 2007. See chart below. Dividend growth was once again higher for the last increase at 9.3% for 2018.
They currently have no problem in covering their dividends. The Dividend Payout Ratio for 2017 was 28.5% with 5 year coverage at 50%. The DPR for CFPS is also good with the one for 2017 at 10% and 5 year coverage at 13.5%.
Debt/Market Cap Ratio is good at 0.36 in 2017. The Liquidity Ratio is a bit low and has always been. The ratio for 2017 is 1.30 with 5 year median at 1.43. If you add in cash flow after dividends it is 1.62 with a 5 year median at 1.65. The Debt Ratio is fine at 1.59 for 2017 and 5 year median at 1.61. The Leverage and Debt/Equity Ratios are normal for a consumer stock at 2.69 and 1.69 respectively and 5 year medians at 2.64 and 1.64 respectively.
The Total Return per year is show below for years of 5 to 26. Under the Capital Gain column is the portion of the Total Return attributable to capital gains. Under the Dividend column is the portion of the Total Return attributable to dividends. See charts below.
The total return from the past 15 and 20 years is quite low. Recently it has picked up again and growth for the past 5 years is good as is the growth for the past 25 years.
| Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|
| 5 | 4.71% | 12.20% | 10.22% | 1.98% |
| 10 | 2.45% | 9.21% | 7.21% | 2.00% |
| 15 | 5.49% | 3.78% | 1.57% | 2.21% |
| 20 | 9.97% | 2.93% | 1.69% | 1.24% |
| 25 | 10.93% | 12.32% | 9.86% | 2.46% |
| 27 | 10.63% | 11.55% | 9.33% | 2.22% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 26.28, 28.80 and 31.32. The corresponding 10 year ratios are 15.87, 17.76 and 19.62. The corresponding historical ratios are 17.03, 19.41 and 20.80. The recent increase in this ratio has been on the price side. The current P/E Ratio is 20.45 based on a stock price of $67.68 and EPS of $3.31. This stock price testing suggests that the stock price is relatively expensive.
I get a Graham Price of $49.33. The 10 year low, median, and high median Price/Graham Price Ratios are 1.05, 1.18 and 1.33. The current P/GP Ratio is 1.37 based on a stock price of $67.68. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median Price/Book Value per Share Ratio of 1.74. The current P/B Ratio is 2.07 based on Book Value of $12,237M, Book Value per Share of $32.67 and a stock price of $67.68. The current ratio is some 19% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable but above the median. If it was 20% above the 10 year median, the stock price would be considered expensive.
I get an historical median dividend yield of 1.25%. The current dividend yield is 1.74% based on dividends of $1.18 and stock price of $67.68. The current dividend yield is some 39% above the historical median. This stock price testing suggests that the stock price is relatively expensive.
The 10 year median Price/Sales (Revenue) Ratio is 0.37. The current P/S Ratio is 0.54 based on 2018 Revenue estimate of $47, 076M, Revenue per Share of $125.68 and a stock price of $67.68. The current ratio is some 44% above the 10 year median. This stock price testing suggests that the stock price is relatively expensive.
When I look at analysts’ recommendations I find Buy (8) and Hold (3). The consensus recommendation would be a Buy. The 12 month stock price is $78.80. This implies a total return of 18.17% with 16.43% from capital gains and 1.74% from Dividends based on a current stock price of $67.68.
David Jagielski on Motley Fool thinks Loblaws has a revenue growth challenge. A Canadian Press Report on Financial Post talks about this company’s second quarter with earnings and revenue down.. There is a Canadian Press report on the Financial Post about a disagree with of Loblaws with the CRA. See what analysts are saying about this company on Stock Chase. Some like this stock and some do not.
Loblaw Companies Ltd is a retailer of food products that also provides drugstore, general merchandise and financial products and services. The company operates corporate-owned stores as well as franchised stores. Its web site is here Loblaw Companies Ltd.
The last stock I wrote about was about Ballard Power Systems Inc. (TSX-BLDP, NASDAQ-BLDP) ... learn more. The next stock I will write about will be Choice Properties REIT (TSX- CHP.UN, OTC- PPRQF) ... learn more on Wednesday, August 8, 2018 around 5 pm. Today on my other blog I will write about Dividend Stocks August 2018.... learn more on Tuesday, August 7, 2018 around 5 pm.
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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