Is it a good company at a reasonable price? This company seems to be doing very well at present. It does seem to be at all time high. I know that analysts have a buy rating on this stock, but generally speaking most analysts’ recommendations consensus is a Buy. The best way to buy any company for the long term, is to buy shares over a period of years and in different months. All my testing is pointing to the stock price as being on the expensive side.
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.
When I was updating my spreadsheet, I noticed that this stock started to do well again from 2014. However, I had replaced Loblaws with Metro and Metro has done well for me and it is a pure grocery stock. Loblaws is more than just groceries as it has real estate and Shoppers Drug Mart. This company had a very good year in 2024.
I noticed that if I had kept my stock to this date, I would have probably earned 11.38% per year with 9.30% from capital gains and 2.08% from dividends. That would be over a period of just 28 years. I had made two purchases, one in 1996 and one in 1998. So, in the end, I would not have done badly.
The company had problems and hit a low in 2008. That was 16 years ago and it has recovered. The stock hit a high in 2004 and it took the stock 11 years, until 2015 to get back to this high. People who bought this stock in 2004, just over 20 years ago have earned over past 20 years to 2024, 5.89% total return per year with 4.95% from capital gains and 0.94% from dividends. See chart below.
If you had invested in this company in December 2014, for $1,056.89 you would have bought 17 shares at $62.17 per share. In December 2024, after 10 years you would have received $229.13 in dividends. The stock would be worth $3,215.89. Your total return would have been $3,445.02. This would be a total return of 13.06% per year with 11.77% from capital gain and 1.29% from dividends.
| Cost | Tot. Cost | Shares | Years | Dividends | Stock Val | Tot Ret |
|---|---|---|---|---|---|---|
| $62.17 | $1,056.89 | 17 | 10 | $229.13 | $3,215.89 | $3,445.02 |
The current dividend yield is low with dividend growth moderate. The current dividend is low (below 2%) at 1.01%. The 5, 10 and historical median dividend yields are also low at 1.46%, 1.51% and 1.46%. The dividends growth is moderate (8% to 14% range per year) at 9.9% per year over the past 5 years. The last dividend increase was in 2025 and it was for 10%.
The dividends are low, so if you buy this stock what sort of dividends would you get in the future. This chart is an attempt to show this. If dividends continue to increase by 9.87% as they have in the past 5 years, what you would get in dividends in 5, 10 and 15 years is shown in the Dividends Paid (Div Pd) column. The next column shows what your yield on the current stock price of $223.68 would be. The last column shows the percentage of your stock’s price would be covered by dividends in 5, 10 and 15 years.
| Div Pd | Div Yield | Years | At IRR | Div Cov |
|---|---|---|---|---|
| $3.61 | 1.62% | 5 | 9.87% | 6.14% |
| $5.78 | 2.59% | 10 | 9.87% | 14.37% |
| $9.26 | 4.14% | 15 | 9.87% | 27.53% |
The Dividend Payout Ratios (DPR) are good. The DPR for 2024 for Earnings per Share (EPS) is good at 28% with 5 year coverage at 31%. The DPR for 2024 for Adjusted Earnings per Share (AEPS) is good at 23% with 5 year coverage at 25%. The DPR for 2024 for Cash Flow per Share (CFPS) is good at 9% with 5 year coverage at 9%. The DPR for 2024 for Free Cash Flow (FCF) is good at 18% with 5 year coverage at 17%.
| Item | Cur | 5 Years |
|---|---|---|
| EPS | 28.40% | 30.59% |
| AEPS | 23.22% | 24.91% |
| CFPS | 8.58% | 8.54% |
| FCF | 17.59% | 17.38% |
Some Debt Ratios are fine, but the company has too much debt. The Long Term Debt/Market Cap Ratio for 2024 is good at 0.13 and currently at 0.12. The Liquidity Ratio for 2024 is low at 1.24 and 1.34 currently. If you added in Cash Flow after dividends, the ratios are fine at 1.68 and currently at 1.75. The Debt Ratio for 2024 is low at 1.38 and 1.38 currently. The Leverage and Debt/Equity Ratios for 2024 are too high at 3.63 and 2.63 and currently at 3.61 and 2.61. It is best if the Leverage and D/E Ratios are below 3.00 and 2.00.
| Type | Year End | Ratio Curr |
|---|---|---|
| Lg Term R | 0.13 | 0.12 |
| Intang/GW | 0.17 | 0.14 |
| Liquidity | 1.24 | 1.34 |
| Liq. + CF | 1.68 | 1.75 |
| Debt Ratio | 1.38 | 1.38 |
| Leverage | 3.63 | 3.61 |
| D/E Ratio | 2.63 | 2.61 |
The Total Return per year is shown below for years of 5 to 36 to the end of 2024. 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. |
|---|---|---|---|---|---|
| 2019 | 5 | 9.87% | 24.65% | 23.07% | 1.57% |
| 2014 | 10 | 7.37% | 13.06% | 11.77% | 1.29% |
| 2009 | 15 | 5.90% | 13.75% | 12.15% | 1.60% |
| 2004 | 20 | 4.92% | 5.89% | 4.95% | 0.94% |
| 1999 | 25 | 8.82% | 8.15% | 6.95% | 1.19% |
| 1994 | 30 | 10.86% | 13.22% | 11.14% | 2.08% |
| 1989 | 35 | 10.18% | 13.92% | 11.75% | 2.18% |
| 1988 | 36 | 9.89% | 14.87% | 12.40% | 2.47% |
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 18.77, 22.52 and 25.39. The corresponding historical ratios are 17.03, 19.41 and 21.83. The current P/E Ratio is 30.81 based on a stock price of $223.68 and EPS estimate for 2025 of $7.26. 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 also have Adjusted Earnings per Share (AEPS) Data. The 5-year low, median, and high median Price/Earnings per Share Ratios are 14.23, 15.98 and 18.41. The corresponding 10 year ratios are 14.51, 16.10 and 18.36. The corresponding historical ratios are 13.71, 15.99 and 18.33. The current P/E Ratio is 23.52 based on a stock price of $223.68 and AEPS estimate for 2025 of $9.51. 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 $89.03. The 10-year low, median, and high median Price/Graham Price Ratios are 1.16, 1.27 and 1.44. The current P/GP Ratio is 2.51 based on a stock price of $223.68. 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 10-year median Price/Book Value per Share Ratio of 2.21. The current ratio is 6.04 based on a stock price of $223.68, Book Value of $11,0.31 and Book Value per Share of $37.04. The current ratio is 173% above the 10 year median ratio. This stock price testing suggests that the stock price is relatively expensive.
I also have a Book Value per Share estimate for 2025 of $38.18. This implies a ratio of 5.86 based on a stock price of $223.68 and Book Value of $11,370M. This ratio is 165% 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 7.84. The current P/CF Ratio is 13.08 based on Cash Flow per Share estimate for 2025 of $17.10, Cash Flow of $5,092M and a stock price of $223.68. The current ratio is 67% 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 1.01% based on a stock price of $223.68 and dividends of $2.572. The current yield is 31% below the historical median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
I get a 10 year median dividend yield of 1.51%. The current dividend yield is 1.01% based on a stock price of $223.68 and dividends of $2.572. The current yield is 34% below the 10 year median dividend yield. This stock price testing suggests that the stock price is relatively expensive.
The 10-year median Price/Sales (Revenue) Ratio is 0.59. The current P/S Ratio is 1.03 based on Revenue estimate for 2025 of $64,777M, Revenue per Share of $217.52 and a stock price of $223.68. The current ratio is 74% above the 10 year median ratio. 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 dividend yield test says this. It is confirmed by the P/S Ratio test. All the testing I have done is showing the stock price as relatively high. It is also very near it recent high.
When I look at analysts’ recommendations, I find Strong Buy (5), Buy (3), Hold (2), and Sell (1). The consensus would be a Buy. The 12 month stock price consensus is $235.09 with a high of $267.00 and low of $148.00. The consensus stock price of $235.09 implies a total return of 6.11% with 5.10% from capital gains and 1.01% from dividends based on a current stock price of $223.68.
Analysts on Stock Chase sees this company as a weak buy or a hold. They are mainly worried about tariffs affecting this company. That said, they seem to like this company. Jitendra Parashar on Motley Fool thinks this is a great stock to hold for decades. He does a great review of this stock. Sneha Nahata on Motley Fool thinks this is a solid stocks to buy and hold forever. The company put out a Press Release about their fourth quarter of 2024. The company put out a Press Release about their first quarter of 2025.
Simply Wall Street via Yahoo Finance reviews this stock. They have one warning of has a high level of debt.
Loblaw is Canada's largest retailer, operating approximately 2,500 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-STGYF) ... learn more on Monday, August 4, 2025 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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