I do not own this stock of Loblaw Companies Ltd (TSX-L, OTC-LBLCF). 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.
When I was updating my spreadsheet, I noticed shareholders who bought this stock 15 to 20 years ago have made little in the way of return. The Total Return for the past 15 and 20 years is 3.79% and 3.03% per year. This is because the stock was steadily rising and hit a high of $72.02 in 2004. This is a high that has only been breached again in 2015 and the current stock price is still below this high.
It was at this time that they built a new supply management system that they had lots of trouble with. Earnings fell, the dividends were held steady for 6 years and, of course, the stock price fell. Another thing is that Book Value is down by 0.26% over the past 5 years. This means that net assets have not been growing. This is just not a good sign.
The dividend yields are low with dividend growth low. The current dividend yield is low (under 2%) at 1.82%. The 5, 10 and historical dividend yields are also low at 1.52%, 1.96% and 1.30%. The Dividend growth is currently low (under 8%) at 4.93% per year for the past 5 years. The last dividend increase was in 2019 and it was for 6.8%.
The Dividend Payout Ratios (DPR) are good. The DPR for EPS for 2019 is 43% with 5 year coverage at 44%. The DPR for CFPS for 2019 is 9% with 5 year coverage at 11%. The DPR for Free Cash Flow for 2019 is 17% with 5 year coverage at 21%. Dividend Coverage Ratio is 6.02 with 5 year ratio at 4.84.
Debt Ratios could be improved. The Long Term Debt/Market Cap Ratio for 2019 is good at 0.25. The Liquidity Ratio is low at 1.23, but if you add in cash flow after dividends it is good at 1.61. The Debt Ratio is too low at 1.45. I prefer it to be 1.50 or higher. The Leverage and Debt/Equity Ratios are too high at 3.21 and 2.21. I prefer these to be under 3.00 and under 2.00.
The Total Return per year is shown below for years of 5 to 31 to the end of 2019. 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 chart below.
| From | Years | Div. Gth | Tot Ret | Cap Gain | Div. |
|---|---|---|---|---|---|
| 2014 | 5 | 4.93% | 3.22% | 1.51% | 1.71% |
| 2009 | 10 | 3.97% | 9.21% | 7.06% | 2.15% |
| 2004 | 15 | 3.32% | 3.79% | -0.48% | 4.27% |
| 1999 | 20 | 8.56% | 3.03% | 1.60% | 1.43% |
| 1994 | 25 | 11.06% | 11.66% | 8.89% | 2.76% |
| 1989 | 30 | 10.23% | 12.81% | 9.96% | 2.84% |
| 1988 | 31 | 9.89% | 13.94% | 10.77% | 3.16% |
The 5 year low, median, and high median Price/Earnings per Share Ratios are 25.56, 28.60 and 31.32. The corresponding 10 year ratios are 19.47, 21.95 and 24.47. The corresponding historical ratios are 17.05, 19.42 and 21.60. The current P/E Ratio is 20.21 based on a stock price of $69.13 and 2020 EPS estimate of $3.42. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $48.46. The 10 year low, median, and high median Price/Graham Price Ratios are 1.31, 1.44 and 1.57. The current P/GP Ratio is 1.43 based on a stock price of $69.13. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10 year median Price/Book Value per Share Ratio of 1.81. The current P/B Ratio is 2.27 based on a Book Value of $10,988M, Book Value per Share of $30.52 and a stock price of $69.13. The current P/B Ratio is 25% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median Price/Cash Flow per Share Ratio of 8.47. The current P/CF Ratio is 5.86 based on Cash Flow per Share estimate for 2020 of $11.80, a Cash Flow of $4,249M and a stock price of $69.13. the current cash flow is 31% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 1.30%. The current dividend yield is 1.82% based on dividends of $1.26 and a stock price of $69.13. The current dividend yield is 40% above the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get a 10 year median dividend yield of 1.96%. The current dividend yield is 1.82% based on dividends of $1.26 and a stock price of $69.13. The current dividend yield is 7% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively cheap. This stock price testing suggests that the stock price is relatively reasonable but above the median.
The 10 year median Price/Sales (Revenue) Ratio is 0.48. The current P/S Ratio is 0.48 based on Revenue estimate for 2020 o $52,143M, Revenue per Share of $144.82 and a stock price of $69.13. The current ratio is at 0% variation from the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and at the median.
Results of stock price testing is that the stock price is reasonable and at the median. One of the dividend yield tests show the stock price below and one show the stock price above the median. The P/S Ratio test shows the stock price at the median. The other tests vary in the results but none are out of line.
Is it a good company at a reasonable price? This is a good defensive stock. They have a long history of paying dividends. They are currently a dividend growth stock. It is a good company and the current price is reasonable. I must admit I shop at Loblaws, but I own Metro.
When I look at analysts’ recommendations, I find Strong Buy (3), Buy (2) and Hold (6). The consensus would be a Buy. The 12 month stock price consensus is $80.82. This implies a total return of $18.73% with 1.82% from dividends and 16.91% from capital gains.
Analysts opinion of this stock varies on Stock Chase from Top Pick to Don’t Buy.. Stephanie Bedard-Chateauneuf on Motley Fool says this is a good stock for a recession. A writer on Simply Wall Street says that this company is a consistent dividend payer. A writer on Simply Wall Street talks about insider buying at this company. The blogger Dividend Earner says Loblaw’s is a consumer defensive stock and should hold good during times of uncertainty.
Loblaw is one of Canada's largest grocery, pharmacy, and general merchandise retailers. It operates the most expansive store footprint in Ontario and maintains sizable presences in provinces like Quebec and British Columbia. Its web site is here Loblaw Companies Ltd.
The last stock I wrote about was about was Ballard Power Systems Inc (TSX-BLDP, NASDAQ-BLDP) ... learn more. The next stock I will write about will be Stingray Digital Group Inc (TSX-RAY.A, OTC-NONE) ... learn more on Wednesday, August 05, 2020 around 5 pm. Today on my other blog I will write about Dividend Stocks August 2020.... learn more on Tuesday, August 4, 2020 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.
See my website for stocks followed and investment notes. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter or StockTwits. I am on Instagram. Or you can just Google #walktoronto spbrunner8166 to see my pictures.
No comments:
Post a Comment