Metro (TSX:MRU) - Share price, News & Analysis

Q: What is the Fair Price of MRU when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

MRU (CA$70.23) is trading below our estimate of [[fair value]] (CA$76.2)

MRU fundamental analysis
Snowflake Score
Valuation	1/6
Future Growth	1/6
Past Performance	3/6
Financial Health	5/6
Dividends	4/6

MRU Stock Overview

Metro Inc. operates as a retailer, franchisor, distributor, and manufacturer in the food and pharmaceutical sectors in Canada.

Rewards

Trading at 7.8% below our estimate of its fair value

Earnings are forecast to grow 4.19% per year

Risk Analysis

MRU passed our risk checks.

Metro Competitors

George Weston

TSX:WN

CA$21.7b

Empire

TSX:EMP.A

CA$10.0b

Loblaw Companies

TSX:L

CA$37.7b

Alimentation Couche-Tard

TSX:ATD

CA$57.0b

Price History & Performance

Summary of all time highs, changes and price drops for Metro
Historical stock prices
Current Share Price	CA$70.23
52 Week High	CA$73.54
52 Week Low	CA$59.14
Beta	-0.034
1 Month Change	-1.31%
3 Month Change	2.90%
1 Year Change	9.24%
3 Year Change	31.37%
5 Year Change	64.71%
Change since IPO	27,085.95%

Recent News & Updates

May 29

Metro (TSE:MRU) Seems To Use Debt Quite Sensibly

Legendary fund manager Li Lu (who Charlie Munger backed) once said, 'The biggest investment risk is not the volatility...

May 14

A Look At The Fair Value Of Metro Inc. (TSE:MRU)

In this article we are going to estimate the intrinsic value of Metro Inc. ( TSE:MRU ) by taking the forecast future...

Shareholder Returns

	MRU	CA Consumer Retailing	CA Market
7D	0.07%	-1.7%	0.3%
1Y	9.2%	12.6%	-2.0%

Return vs Industry: MRU underperformed the Canadian Consumer Retailing industry which returned 14.2% over the past year.

Return vs Market: MRU exceeded the Canadian Market which returned -1.2% over the past year.

Price Volatility

Is MRU's price volatile compared to industry and market?
MRU volatility
MRU Average Weekly Movement	2.6%
Consumer Retailing Industry Average Movement	4.1%
Market Average Movement	10.8%
10% most volatile stocks in CA Market	19.4%
10% least volatile stocks in CA Market	4.3%

Stable Share Price: MRU is less volatile than 75% of Canadian stocks over the past 3 months, typically moving +/- 3% a week.

Volatility Over Time: MRU's weekly volatility (3%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1947	90,000	Eric La Fleche	https://www.metro.ca

Metro Inc. operates as a retailer, franchisor, distributor, and manufacturer in the food and pharmaceutical sectors in Canada. It operates supermarkets and discount stores that provide fresh and grocery products, baked goods, prepared foods, meats, dairy products, fruits and vegetables, frozen foods, bakery products, and pastries, as well as Mediterranean and Middle Eastern products. As of September 25, 2021, the company operated a network of approximately 963 food stores under various banners, including Metro, Metro Plus, Super C, and Food Basics, Adonis, and Premiere Moisson as well as approximately 649 drugstores primarily under the Jean Coutu, Brunet, Metro Pharmacy, and Food Basics Pharmacy banners.

Metro Fundamentals Summary

How do Metro's earnings and revenue compare to its market cap?
MRU fundamental statistics
Market Cap	CA$16.78b
Earnings (TTM)	CA$849.30m
Revenue (TTM)	CA$18.40b

19.8x

P/E Ratio

0.9x

P/S Ratio

Is MRU overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
MRU income statement (TTM)
Revenue	CA$18.40b
Cost of Revenue	CA$16.22b
Gross Profit	CA$2.19b
Other Expenses	CA$1.34b
Earnings	CA$849.30m

Last Reported Earnings

Mar 12, 2022

Next Earnings Date

Aug 10, 2022

Earnings per share (EPS)	3.55
Gross Margin	11.88%
Net Profit Margin	4.61%
Debt/Equity Ratio	40.5%

How did MRU perform over the long term?

See historical performance and comparison

Dividends

1.6%

Current Dividend Yield

30%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

Is MRU undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

1/6

Valuation Score 1/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for MRU?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for MRU. This is calculated by dividing MRU's market cap by their current preferred multiple.
What is MRU's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	CA$16.78b

MRU key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	1.1x
Enterprise Value/EBITDA	12.3x
PEG Ratio	4.7x

Price to Earnings Ratio vs Peers

How does MRU's PE Ratio compare to its peers?

MRU PE Ratio vs Peers

The above table shows the PE ratio for MRU vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	15.5x
WN George Weston	13.1x	-3.1%	CA$21.7b
EMP.A Empire	13.4x	n/a	CA$10.0b
L Loblaw Companies	18.8x	-2.3%	CA$37.7b
ATD Alimentation Couche-Tard	16.5x	8.0%	CA$57.0b
MRU Metro	19.8x	4.2%	CA$16.8b

Price-To-Earnings vs Peers: MRU is expensive based on its Price-To-Earnings Ratio (19.8x) compared to the peer average (15.5x).

Price to Earnings Ratio vs Industry

How does MRU's PE Ratio compare vs other companies in the North American Consumer Retailing Industry?

Price-To-Earnings vs Industry: MRU is expensive based on its Price-To-Earnings Ratio (19.8x) compared to the Canadian Consumer Retailing industry average (13.3x)

Price to Earnings Ratio vs Fair Ratio

What is MRU's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

MRU PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	19.8x
Fair PE Ratio	16.9x

Price-To-Earnings vs Fair Ratio: MRU is expensive based on its Price-To-Earnings Ratio (19.8x) compared to the estimated Fair Price-To-Earnings Ratio (16.9x).

Share Price vs Fair Value

What is the Fair Price of MRU when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: MRU (CA$70.23) is trading below our estimate of fair value (CA$76.2)

Significantly Below Fair Value: MRU is trading below fair value, but not by a significant amount.

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is less than 20% higher than the current share price.

Discover undervalued companies

Future Growth

How is Metro forecast to perform in the next 1 to 3 years based on estimates from 10 analysts?

Future Growth Score

1/6

Future Growth Score 1/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

4.2%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: MRU's forecast earnings growth (4.2% per year) is above the savings rate (1.6%).

Earnings vs Market: MRU's earnings (4.2% per year) are forecast to grow slower than the Canadian market (7.6% per year).

High Growth Earnings: MRU's earnings are forecast to grow, but not significantly.

Revenue vs Market: MRU's revenue (2.5% per year) is forecast to grow slower than the Canadian market (6.3% per year).

High Growth Revenue: MRU's revenue (2.5% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: MRU's Return on Equity is forecast to be low in 3 years time (13.9%).

Discover growth companies

Past Performance

How has Metro performed over the past 5 years?

Past Performance Score

3/6

Past Performance Score 3/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

-7.1%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: MRU has high quality earnings.

Growing Profit Margin: MRU's current net profit margins (4.6%) are higher than last year (4.5%).

Past Earnings Growth Analysis

Earnings Trend: MRU's earnings have declined by 7.1% per year over the past 5 years.

Accelerating Growth: MRU's earnings growth over the past year (2.6%) exceeds its 5-year average (-7.1% per year).

Earnings vs Industry: MRU earnings growth over the past year (2.6%) underperformed the Consumer Retailing industry 6.3%.

Return on Equity

High ROE: MRU's Return on Equity (13.1%) is considered low.

Discover strong past performing companies

Financial Health

How is Metro's financial position?

Financial Health Score

5/6

Financial Health Score 5/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: MRU's short term assets (CA$2.3B) exceed its short term liabilities (CA$2.1B).

Long Term Liabilities: MRU's short term assets (CA$2.3B) do not cover its long term liabilities (CA$4.9B).

Debt to Equity History and Analysis

Debt Level: MRU's net debt to equity ratio (37.1%) is considered satisfactory.

Reducing Debt: MRU's debt to equity ratio has reduced from 54.2% to 40.5% over the past 5 years.

Debt Coverage: MRU's debt is well covered by operating cash flow (56.8%).

Interest Coverage: MRU's interest payments on its debt are well covered by EBIT (11.2x coverage).

Balance Sheet

Discover healthy companies

Dividend

What is Metro current dividend yield, its reliability and sustainability?

Dividend Score

4/6

Dividend Score 4/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage

1.57%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: MRU's dividend (1.57%) isn’t notable compared to the bottom 25% of dividend payers in the Canadian market (1.91%).

High Dividend: MRU's dividend (1.57%) is low compared to the top 25% of dividend payers in the Canadian market (5.36%).

Stability and Growth of Payments

Stable Dividend: MRU's dividends per share have been stable in the past 10 years.

Growing Dividend: MRU's dividend payments have increased over the past 10 years.

Earnings Payout to Shareholders

Earnings Coverage: With its reasonably low payout ratio (30%), MRU's dividend payments are well covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its reasonably low cash payout ratio (32.1%), MRU's dividend payments are well covered by cash flows.

Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

3.8yrs

Average management tenure

CEO

Eric La Fleche (60 yo)

14.33yrs

Tenure

CA$5,018,907

Compensation

Mr. Eric Richer La Fleche has been the Chief Executive Officer and President of Metro Inc. since April 1, 2008. Mr. La Fleche served as the Chief Operating Officer and Executive Vice President of Metro fro...

CEO Compensation Analysis

Compensation vs Market: Eric's total compensation ($USD3.90M) is below average for companies of similar size in the Canadian market ($USD7.95M).

Compensation vs Earnings: Eric's compensation has been consistent with company performance over the past year.

Leadership Team

Experienced Management: MRU's management team is considered experienced (3.8 years average tenure).

Board Members

Experienced Board: MRU's board of directors are considered experienced (6.6 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: MRU insiders have only sold shares in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/08/09 00:00
End of Day Share Price	2022/08/09 00:00
Earnings	2022/03/12
Annual Earnings	2021/09/25