December 10, 2018

Metro Incorporated (MRU/A)

Metro Incorporated (MRU/A) began sixty years ago as a Montreal grocery chain.  The company started when several independent grocery retailers got together and decided to form a co-op-esque type of agreement that would allow them to cut their purchase costs and compete with the larger retailers in their respective markets.  Through several decades of acquisitions and mergers, Metro is now the third largest company in the Canadian food industry (one of his biggest competitor being Loblaw (L)).  It is now the biggest grocer in both Quebec and Ontario and has over 35% market share between the two provinces with over 160 stores in Ontario alone.  They also employ over 65,000 people.  By constantly looking for advantageous additions to their growing food empire, Metro is expanding at a respectable rate.  They most recently shored up their market share in Quebec by purchasing an additional 15 stores in La Belle Province.  Metro (MRU/A) is known for its strong social activist commitments as well.  It’s most recent venture is known as the “Green Apply School Program” that will help schools by donating over a million dollars worth of fresh produce to primary and secondary schools in Quebec this academic year.

 

Logo-metroThe biggest news for Metro (MRU/A) in recent years was the company’s large purchase of the The Great Atlantic and Pacific Tea Company, including its subsidiary, A&P Luxembourg S.  The price tag was not cheap at $1.7 billion dollars, but Metro was able to pay over $1 billion of the sale in cash, and the rest of the payment consisted of treasury shares in Metro (MRU/A).  The Quebec-based company had been sitting on a pile of cash thanks to one of the largest profit margins within the industry.  Their second-quarter profits were up 3.7% to $83.3 million.  The only place that Metro hasn’t seen a bump in profits is its over-the-counter drug sales.  Stronger competition within the sector has been responsible for the lower prices. As for obstacles on the horizon, the development of Wal-Mart’s expansion into grocery items has some food retailers, including Metro (MRU/A), nervously eyeing their market share.  Eric La Flache, the President of Metro Inc. claimed that, “There has been some impact on us but so far it’s been modest.”

 

Metro is currently trading close to $46 a share, and that is right in the middle of its 52 week range.  At this price I am not too excited about the grocery giant.  The company is massive with a market capitalization of nearly $5 billion.  It has a respectable price-to-earnings ration of 12.4, and its yearly dividend of $0.77 gives Metro (MRU/A) a nice dividend ration of 1.7%.  There is definitely wrong with the stock, I just believe that it is a fairly regional play, and that there are much better opportunities in the Canadian foods sector in terms of both dividend-producers and growth opportunities.

 

Metro Incorporated (MRU/A) Dividend Stock Graph:

TSE MRU

Metro Incorporated (MRU/A) Dividend Metrics:

TickerNamePriceDividend YieldPayout RatioDEBT_TO_MKT_CAPDividend Growth 5 yearsDividend Growth 1 years
MRU/AMetro Inc47.151.6317.660.212906616.898253.64808

Speak Your Mind

*