Is it a good company at a reasonable price? This is considered a defensive stock, because always have to buy food no matter the economic situation. If you look at total return over time, this stock has done generally well for its shareholders. I did well because when I bought it was relatively cheap. However, it is not always possible to buy stocks cheap, and buying them at a reasonable price is good. This company’s stock price is currently at the reasonable level.
I own this stock of Metro Inc (TSX-MRU, OTC-MTRAF). I was following this stock before I bought it because it was on Mike Higgs' Canadian Dividend Growth stock list and on the other dividend lists that I was following.
When I was updating my spreadsheet, I noticed I have done well with this stock over the years. I have had this stock for just over 19 years and I have been making around 15.62% total return a year with 2.14% from dividends and 13.48% from capital gains. The TD bank report says that this company will be having some head winds in the future because of capital projects that are necessary. I tend to be in stocks for the long term and so I have no intension of selling.
If you had invested in this company in December 2013, for $1,016.77 you would have bought 47 shares at $21.63 per share. In December 2023, after 10 years you would have received $356.62 in dividends. The stock would be worth $3,223.60. Your total return would have been $3,580.35. This is a total return would be a total return of 14.20% per year with 12.23% from capital gain and 1.96% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $21.63 | $1,016.77 | 47 | 10 | $356.62 | $3,223.73 | $3,580.35 |
If you had invested in this company in December 1993, for $1,000.16 you would have bought 1064 shares at $0.94 per share. In December 2023, after 30 years you would have received $10,533.00 in dividends. The stock would be worth $72,979.76. Your total return would have been $83,512.76. This is a total return would be a total return of 17.50% per year with 15.37% from capital gain and 2.13% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $0.94 | $1,000.16 | 1,064 | 30 | $10,533.00 | $72,979.76 | $83,512.76 |
The current dividend yield is low with dividend growth moderate. The dividend yield is low (below 2%) at just 1.80%. The 5, 10 and historical dividend yields are also low at 1.60%, 1.60% and 1.47%. The dividend increases are moderate (8% to 14% ranges) at 11% per year over the past 5 years. The last dividend increase was for 10% and was made in 2023.
The Dividend Payout Ratios (DPR) are good. The DPR for 2022 for Earnings per Share (EPS) is good at 27% with 5 year coverage at 29%. The DPR for 2022 for Adjusted Earnings per Share (AEPS) is good at 28% with 5 year coverage at 28%. The DPR for 2022 for Cash Flow per Share (CFPS) is good at 14% with 5 year coverage at 14%. The DPR for 2022 for Free Cash Flow (FCF) is good at 21.11% with 5 year coverage at 29%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 27.18% | 28.57% |
| AEPS | 27.50% | 27.64% |
| CFPS | 13.55% | 13.71% |
| FCF | 31.11% | 29.31% |
Debt Ratios are fine. The Long Term Debt/Market Cap Ratio for 2022 is good at 0.16 and currently at 0.17. The Liquidity Ratio for 2022 is a bit low at 1.32 and 1.32 currently. If you added in Cash Flow after dividends, the ratios are fine at 1.78 and 1.78. The Debt Ratio for 2022 is fine at 1.6 and 1.67 currently. The Leverage and Debt/Equity Ratios for 2022 are fine at 2.03 and 1.03 and currently at 2.03 and 1.03.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.16 | 0.17 |
| Intang/GW | 0.37 | 0.39 |
| Liquidity | 1.23 | 1.23 |
| Liq. + CF | 1.78 | 1.78 |
| Debt Ratio | 1.97 | 1.97 |
| Leverage | 2.03 | 1.03 |
| D/E Ratio | 2.03 | 1.03 |
The Total Return per year is shown below for years of 5 to 33 to the end of 2023. 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. |
|---|---|---|---|---|---|
| 2018 | 5 | 10.98% | 9.46% | 7.70% | 1.76% |
| 2013 | 10 | 13.90% | 14.20% | 12.23% | 1.96% |
| 2008 | 15 | 14.11% | 13.93% | 12.12% | 1.81% |
| 2003 | 20 | 13.85% | 13.55% | 11.85% | 1.70% |
| 1998 | 25 | 15.23% | 14.85% | 13.06% | 1.80% |
| 1993 | 30 | 18.58% | 17.50% | 15.37% | 2.13% |
| 1990 | 33 | 21.26% | 18.41% | 2.85% |
The 5-year low, median, and high median Price/Earnings per Share Ratios are 15.86, 17.73 and 20.46. The corresponding 10 year ratios are 15.05, 17.16 and 19.15. The corresponding historical ratios are 11.97, 12.78 and 15.99. The current P/E Ratio is 15.07 based on a stock price of $68.59 and EPS estimate for 2024 of $4.55. The current ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I also have Adjusted Earnings per Share (AEPS) data. The 5-year low, median, and high median Price/Adjusted Earnings per Share Ratios are 15.38, 17.21 and 19.21. The corresponding 10 year ratios are 15.36, 1719 and 19.09. The current P/AEPS Ratio is 16.14 based on a stock price of $68.59 and AEPS estimate for 2024 of $4.25. The current ratio is between the low and median ratios of the 10 year median ratios. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a Graham Price of $53.30. The 10-year low, median, and high median Price/Graham Price Ratios are 1.18, 1.36 and 1.51. The current P/GP Ratio is 1.29 based on a stock price of $68.59. The current ratio is between the low and median ratios of the 10 year median ratios. 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 2.37. The current P/B Ratio is 2.31 based on a Book Value of $6,803M, Book Value per Share of $29.71 and a stock price of $68.59. The current ratio is 3% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get a 10-year median Price/Cash Flow per Share Ratio of 12.16. The current P/CF Ratio is 9.94 based on a Cash Flow estimate for 2024 of $1,580M, Cash Flow per Share $6.90, and a stock price of $68.59. The current ratio is 18% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
I get an historical median dividend yield of 1.47%. The current dividend yield is 1.76% based on dividends of $1.21 and a stock price of $68.59. The current yield is 20% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively cheap.
I get an historical median dividend yield of 1.60%. The current dividend yield is 1.76% based on dividends of $1.21 and a stock price of $68.59. The current yield is 10% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable and below the median.
The 10-year median Price/Sales (Revenue) Ratio is 0.78. The current P/S Ratio is 0.74 based on a stock price of $68.59, Revenue estimate for 2024 of $21,173 and revenue per share of $92.48. The current ratio is 5% below the 10 year median ratio. This stock price testing suggests that the stock price is relatively reasonable and below the median.
Results of stock price testing is that the stock price is probably reasonable. The 10 year median dividend yield test says this and it is confirmed by the P/S Ratio test. Most of the other testing is finding the stock price as reasonable and below the median.
When I look at analysts’ recommendations, I find Buy (1), Hold (8) and Underperform (1). The consensus would be a Hold. The 12 month stock price consensus is $76.10 with a high of $83.00 and low of $69.00. The consensus price of $76.10 implies a total return of 12.71% with 10.95% from capital gains and 1.76% from dividends.
This stock is given missed reviews on Stock Chase. The last recommendation is a Top Pick. Stock Chase gives this stock 3 stars out of 5. It is on all 3 dividend lists that I follow. Amy Legate-Wolfe on Motley Fool thinks this stock will recovery once more. Christopher Liew on Motley Fool thinks this is a defensive stock to buy. The company put out a press release on Newswire about their results for 2023 year end.
Simply Wall Street via Yahoo Finance reviews this stock. Simply Wall Street gives this tock 3 and one half stars out of 5. They do not list any risks.
Metro is the third-largest grocery retailer in Canada (behind Loblaw and Sobeys) and also owns a top pharmacy chain in Quebec. Its grocery banners include supermarket chain Metro, discounters Super C and Food Basics, and ethnic food grocer Adonis, while its pharmacies primarily operate under the Jean Coutu and Brunet trademarks. Unlike its peers Loblaw and Sobeys that operate chain stores across Canada, Metro's operations are concentrated in the provinces of Quebec and Ontario, with no presence in western Canada. Its web site is here Metro Inc.
The last stock I wrote about was about was Sleep Country Canada Holdings Inc (TSX-ZZZ, OTC-SCCAF) ... learn more. The next stock I will write about will be Bank of Montreal (TSX-BMO, NYSE-BMO) ... learn more on Wednesday, January 3, 2024 around 5 pm. Today on my other blog I will write about Dividend Stocks January 2024 .... learn more on Tuesday, January 2, 2024 around 5 pm.
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