Loblaw Companies Ltd

Sound bite for Twitter and StockTwits is: Dividend Growth Consumer. Results of stock price testing is that the stock price is probably relatively expensive. Debt Ratios show that they have a lot of debt. The Dividend Payout Ratios (DPR) are good. The current dividend yield is low with dividend growth moderate. See my spreadsheet on Loblaw Companies Ltd.

Is it a good company at a reasonable price? This stock has done well since their low point in 2008 (some 15 years ago). In the last 5 years, dividend increases have been good. I think this is a solid company and if I had it, I would continue to hold it. Currently the stock price seems to be on the expensive side, so I would seem it is not a good time to buy. However, there are analyst that think it is currently a good buy.

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. (Systems still not working well. Items out of stock can take a day or a week to be back in stock. Metro does it the next day. However, I like shopping for food in Loblaws compared to Metro.)

When I was updating my spreadsheet, I noticed I did make money from this stock. The stock did go down after 2007. From the high in 2006, it took until 2015 to reach again. However, if you invest for the long term like I do, and I think of long term of 20 years, companies are going to go through some tough times. That is to be expected. In the Total Return chart below, you will see that people who invested in this company 20 to 25 years ago, did poorly. One of the reasons to invest in installments instead of just one investment in the stock.

In the chart below, I am showing 5 and 10 year total growth and per year growth in columns 3 and 4. Column 5 shows growth expected over 12 months to the first quarter in 2024 and expected growth over the next year. This chart shows that growth has been mostly good. The stock price has increased a lot this year. I notice that currently stock price is increasing faster than over values.

Yr	Item	Tot. Gwth	Per Year	Gwth	Coverage
5	Revenue Growth	27.49%	4.98%	0.98%	<-12 mths
5	AEPS Growth	68.48%	11.00%	2.19%	<-12 mths
5	Net Income Growth	174.15%	22.35%	1.95%	<-12 mths
5	Cash Flow Growth	126.07%	17.72%	-1.04%	<-12 mths
5	Dividend Growth	50.91%	8.58%	13.88%	<-12 mths
5	Stock Price Growth	109.92%	15.99%	31.74%	<-12 mths
10	Revenue Growth	83.90%	6.28%	3.57%	<-this year
10	AEPS Growth	201.20%	11.66%	9.81%	<-this year
10	Net Income Growth	233.33%	12.79%	6.90%	<-this year
10	Cash Flow Growth	279.21%	14.26%	-3.34%	<-this year
10	Dividend Growth	85.43%	6.37%	14.06%	<-this year
10	Stock Price Growth	202.69%	11.71%	36.03%	<-this year

If you had invested in this company in December 2013, for $1,017.12 you would have bought 24 shares at $42.38 per share. In December 2023, after 10 years you would have received $299.23 in dividends. The stock would be worth $3,078.72. Your total return would have been $3,377.95. This would be a total return of 13.50% per year with 11.71% from capital gain and 1.78% from dividends.

Cost	Tot. Cost	Shares	Years	Dividends	Stock Val	Tot Ret
$42.38	$1,017.12	24	10	$299.23	$3,078.72	$3,377.95

The current dividend yield is low with dividend growth moderate. The dividend yield is low (below 2%) at 1.21%. The 5, 10 and historical dividend yields are also low at 1.69%, 1.61% and 1.46%. The dividends have increase moderately (8% to 14% per year) at 8.6% per year over the past 5 years. The last dividend increase was in 2024 and it was for 15%. It is on the Money Sense Dividend Stock list.

The Dividend Payout Ratios (DPR) are good. The DPR for 2023 for Earnings per Share (EPS) is good at 27% with 5 year coverage at 35%. The DPR for 2023 for Adjusted Earnings per Share (AEPS) is good at 22% with 5 year coverage at 26%. The DPR for 2023 for Cash Flow per Share (CFPS) is good at 8% with 5 year coverage at 9%. The DPR for 2023 for Free Cash Flow (FCF) is good at 19% with 5 year coverage at 16%.

Item	Cur	5 Years
EPS	26.73%	34.79%
AEPS	22.49%	26.28%
CFPS	8.36%	8.73%
FCF	18.99%	15.76%

Debt Ratios show that they have a lot of debt. The Long Term Debt/Market Cap Ratio for 2023 is good at 0.17 and currently at 0.13. The Liquidity Ratio for 2023 is too low at 1.25 and 1.28 currently. If you added in Cash Flow after dividends, the ratios are fine at 1.72 and currently at 1.76. The Debt Ratio for 2023 is low at 1.42 and 1.42 currently. I prefer this ratio to be at 1.50 or above. The Leverage and Debt/Equity Ratios for 2023 are too high at 3.35 and 2.35 and currently at 1.38 and 2.38. I prefer these to be below 3.00 and below 2.00.

Type	Year End	Ratio Curr
Lg Term R	0.17	0.13
Intang/GW	0.26	0.19
Liquidity	1.25	1.28
Liq. + CF	1.72	1.76
Debt Ratio	1.42	1.42
Leverage	3.35	3.38
D/E Ratio	2.35	2.38

The Total Return per year is shown below for years of 5 to 35 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	8.58%	17.74%	15.99%	1.76%
2013	10	6.37%	13.50%	11.71%	1.78%
2008	15	4.99%	10.79%	9.05%	1.74%
2003	20	5.48%	4.45%	3.33%	1.12%
1998	25	9.05%	6.32%	5.05%	1.27%
1993	30	10.82%	12.10%	9.86%	2.24%
1988	35	9.77%	14.32%	11.54%	2.79%

The 5-year low, median, and high median Price/Earnings per Share Ratios are 16.96, 18.96 and 21.83. The corresponding 10 year ratios are 20.18, 22.78 and 25.39. The corresponding historical ratios are 17.00, 19.31, and 21.59. The current P/E Ratio 21.50 based on a stock price of $168.99 and EPS estimate for 2024 of $7.86. 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 14.23, 15.98 and 18.39. The corresponding 10 year ratios are 14.258, 16.10 and 18.36. The current P/AEPS Ratio is 19.86 based on a stock price of $168.99 and AEPS of $8.51. This ratio is above the high ratio of the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.

I get a Graham Price of $82.10. The 10-year low, median, and high median Price/Graham Price Ratios are 1.15, 1.26 and 1.41. The current ratio is 2.06 based on a stock price of $168.99. The current ratio is above the high ratio of the 10 year median ratios. 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 2.19. The current P/B Ratio is 4.80 based on a Book Value of $10,932M, Book Value per Share of $35.20 and a stock price of $168.99. The current ratio is 119% 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 7.85. The current P/CF Ratio is 9.60 based on Cash Flow per Share estimate for 2024 of $17.60, Cash Flow of $5,465M and a stock price of $168.99. The current ratio is 22% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.

I get an historical median dividend yield of 1.46%. The current dividend yield is 1.21% based on dividends of $1.985 and a stock price of $168.99. The current dividend yield is 17% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively reasonable but above the median.

I get an historical median dividend yield of 1.61%. The current dividend yield is 1.21% based on dividends of $1.985 and a stock price of $168.99. The current dividend yield is 24% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.

The 10-year median Price/Sales (Revenue) Ratio is 0.55. The current P/S Ratio is 0.85 based on Revenue estimate for 2024 of $61,653M, Revenue per Share of $198.54 and a stock price of $168.99. The current ratio is 54% above the 10 year median ratios. This stock price testing suggests that the stock price is relatively expensive.

Results of stock price testing is that the stock price is probably relatively expensive. The 10 year median dividend test says that the stock price is relatively expensive. The P/S Ratio test concurs. Most of the rest of the testing says the same thing.

When I look at analysts’ recommendations, I find Strong Buy (5), Buy (2), Hold (2) and Underperform (1). The consensus would be a Buy. The 12 month stock price is $174.50 with a high of $189 and a low of $129.00. The consensus stock price of $174.50 implies a total return of 4.47% with 3.26% from capital gains and 1.21% from dividends based on a current price of $168.99.

For 2024 there are on Stock Chase two Holds and a Top Pick. Analysts all make positive remarks on this stock. Stock chase gives this stock 4 stars out of 5. Amy Legate-Wolfe on Motley Fool says the stock offers long term opportunities. Kay Ng on Motley Fool thinks this stock should be a core holding. The company put out a press release via Canadian Grocer on their fourth quarter results. The company put out a Press Release about their first quart of 2024.

Simply Wall Street via Yahoo Finance talks about this company’s dividends. Simply Wall Street has two warnings of earnings are forecast to decline by an average of 0.2% per year for the next 3 years; and has a high level of debt. Simply Wall Street gives this stock 2 and one half stars out of 5.

Loblaw is Canada's largest retailer, operating food retail and pharmacy stores across the country. Beyond retail, Loblaw runs the PC Optimum loyalty program and also offers credit cards and insurance brokerage, which are collectively referred to as financial services. George Weston is Loblaw's controlling shareholder with a 53% stake. 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, July 31, 2024 around 5 pm. Tomorrow on my other blog I will write about Self-Employment.... learn more on Tuesday, July 30, 2024 around 5 pm.

This blog is meant for educational purposes only and is not to provide investment advice. I am not a licensed professional investment advisor. 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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