George Weston (TSX:WN) - Share price, News & Analysis

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

WN (CA$153.58) is trading below our estimate of [[fair value]] (CA$333.01)

WN fundamental analysis
Snowflake Score
Valuation	2/6
Future Growth	2/6
Past Performance	5/6
Financial Health	3/6
Dividends	4/6

WN Stock Overview

George Weston Limited provides food and drug retailing, and financial services in Canada and internationally.

Rewards

Trading at 53.9% below our estimate of its fair value

Earnings are forecast to grow 2.28% per year

Earnings grew by 310.1% over the past year

Risk Analysis

Has a high level of debt

Significant insider selling over the past 3 months

George Weston Competitors

Metro

TSX:MRU

CA$16.8b

Loblaw Companies

TSX:L

CA$38.9b

Empire

TSX:EMP.A

CA$10.4b

Alimentation Couche-Tard

TSX:ATD

CA$52.3b

Price History & Performance

Summary of all time highs, changes and price drops for George Weston
Historical stock prices
Current Share Price	CA$153.58
52 Week High	CA$162.51
52 Week Low	CA$117.70
Beta	0.35
1 Month Change	-0.32%
3 Month Change	-3.34%
1 Year Change	29.71%
3 Year Change	53.40%
5 Year Change	33.26%
Change since IPO	965.30%

Recent News & Updates

Jul 04

George Weston (TSE:WN) Seems To Use Debt Quite Sensibly

Howard Marks put it nicely when he said that, rather than worrying about share price volatility, 'The possibility of...

May 27

George Weston's (TSE:WN) Shareholders Will Receive A Bigger Dividend Than Last Year

The board of George Weston Limited ( TSE:WN ) has announced that it will be increasing its dividend on the 1st of July...

May 25

George Weston Limited's (TSE:WN) Intrinsic Value Is Potentially 45% Above Its Share Price

Does the May share price for George Weston Limited ( TSE:WN ) reflect what it's really worth? Today, we will estimate...

Shareholder Returns

	WN	CA Consumer Retailing	CA Market
7D	4.1%	-1.4%	-1.2%
1Y	29.7%	21.0%	-4.5%

Return vs Industry: WN exceeded the Canadian Consumer Retailing industry which returned 21% over the past year.

Return vs Market: WN exceeded the Canadian Market which returned -4.5% over the past year.

Price Volatility

Is WN's price volatile compared to industry and market?
WN volatility
WN Average Weekly Movement	3.1%
Consumer Retailing Industry Average Movement	4.0%
Market Average Movement	10.1%
10% most volatile stocks in CA Market	17.5%
10% least volatile stocks in CA Market	4.4%

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

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

About the Company

Founded	Employees	CEO	Website
1882	215,298	Galen Weston	https://www.weston.ca

George Weston Limited provides food and drug retailing, and financial services in Canada and internationally. The company operates through two segments, Loblaw Companies Limited (Loblaw) and Choice Properties Real Estate Investment Trust (Choice Properties). The Loblaw segment provides grocery, pharmacy, health and beauty, apparel, general merchandise, and financial services.

George Weston Fundamentals Summary

How do George Weston's earnings and revenue compare to its market cap?
WN fundamental statistics
Market Cap	CA$22.44b
Earnings (TTM)	CA$1.13b
Revenue (TTM)	CA$54.14b

19.8x

P/E Ratio

0.4x

P/S Ratio

Is WN overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
WN income statement (TTM)
Revenue	CA$54.14b
Cost of Revenue	CA$36.59b
Gross Profit	CA$17.54b
Other Expenses	CA$16.41b
Earnings	CA$1.13b

Last Reported Earnings

Mar 26, 2022

Next Earnings Date

Jul 29, 2022

Earnings per share (EPS)	7.76
Gross Margin	32.41%
Net Profit Margin	2.09%
Debt/Equity Ratio	110.7%

How did WN perform over the long term?

See historical performance and comparison

Dividends

1.6%

Current Dividend Yield

31%

Payout Ratio

We’ve recently updated our valuation analysis.

Valuation

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

Valuation Score

2/6

Valuation Score 2/6

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

Key Valuation Metric

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

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for WN. This is calculated by dividing WN's market cap by their current preferred multiple.
What is WN's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	CA$22.44b

WN 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	0.8x
Enterprise Value/EBITDA	7.7x
PEG Ratio	8.7x

Price to Earnings Ratio vs Peers

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

WN PE Ratio vs Peers

The above table shows the PE ratio for WN vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	17.1x
MRU Metro	19.7x	4.2%	CA$16.8b
L Loblaw Companies	19.6x	-5.9%	CA$38.9b
EMP.A Empire	14x	n/a	CA$10.4b
ATD Alimentation Couche-Tard	14.9x	8.0%	CA$52.3b
WN George Weston	19.8x	2.3%	CA$22.4b

Forward PE

Price-To-Earnings vs Peers: WN is expensive based on its Price-To-Earnings Ratio (19.8x) compared to the peer average (17.1x).

Price to Earnings Ratio vs Industry

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

Price-To-Earnings vs Industry: WN is expensive based on its Price-To-Earnings Ratio (19.8x) compared to the Canadian Consumer Retailing industry average (14x)

Price to Earnings Ratio vs Fair Ratio

What is WN'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.

WN PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	19.8x
Fair PE Ratio	16.2x

Price-To-Earnings vs Fair Ratio: WN is expensive based on its Price-To-Earnings Ratio (19.8x) compared to the estimated Fair Price-To-Earnings Ratio (16.2x).

Share Price vs Fair Value

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

Below Fair Value: WN (CA$153.58) is trading below our estimate of fair value (CA$333.01)

Significantly Below Fair Value: WN is trading below fair value by more than 20%.

Price to Earnings Growth Ratio

PEG Ratio: WN is poor value based on its PEG Ratio (8.7x)

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Future Growth

How is George Weston forecast to perform in the next 1 to 3 years based on estimates from 7 analysts?

Future Growth Score

2/6

Future Growth Score 2/6

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

2.3%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: WN's forecast earnings growth (2.3% per year) is above the savings rate (1.6%).

Earnings vs Market: WN's earnings (2.3% per year) are forecast to grow slower than the Canadian market (7% per year).

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

Revenue vs Market: WN's revenue (2.5% per year) is forecast to grow slower than the Canadian market (6.5% per year).

High Growth Revenue: WN'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: WN's Return on Equity is forecast to be high in 3 years time (25%)

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Past Performance

How has George Weston performed over the past 5 years?

Past Performance Score

5/6

Past Performance Score 5/6

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

7.9%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: WN has high quality earnings.

Growing Profit Margin: WN's current net profit margins (2.1%) are higher than last year (0.5%).

Past Earnings Growth Analysis

Earnings Trend: WN's earnings have grown by 7.9% per year over the past 5 years.

Accelerating Growth: WN's earnings growth over the past year (310.1%) exceeds its 5-year average (7.9% per year).

Earnings vs Industry: WN earnings growth over the past year (310.1%) exceeded the Consumer Retailing industry 6.3%.

Return on Equity

High ROE: WN's Return on Equity (17%) is considered low.

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Financial Health

How is George Weston's financial position?

Financial Health Score

3/6

Financial Health Score 3/6

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

Financial Position Analysis

Short Term Liabilities: WN's short term assets (CA$14.9B) exceed its short term liabilities (CA$10.1B).

Long Term Liabilities: WN's short term assets (CA$14.9B) do not cover its long term liabilities (CA$23.9B).

Debt to Equity History and Analysis

Debt Level: WN's net debt to equity ratio (81.7%) is considered high.

Reducing Debt: WN's debt to equity ratio has increased from 85.7% to 110.7% over the past 5 years.

Debt Coverage: WN's debt is well covered by operating cash flow (34%).

Interest Coverage: WN's interest payments on its debt are well covered by EBIT (4.2x coverage).

Balance Sheet

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Dividend

What is George Weston 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

1.56%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: WN's dividend (1.56%) isn’t notable compared to the bottom 25% of dividend payers in the Canadian market (2%).

High Dividend: WN's dividend (1.56%) is low compared to the top 25% of dividend payers in the Canadian market (5.36%).

Stability and Growth of Payments

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

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

Earnings Payout to Shareholders

Earnings Coverage: With its reasonably low payout ratio (30.8%), WN's dividend payments are well covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its low cash payout ratio (9.9%), WN's dividend payments are thoroughly covered by cash flows.

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Management

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

5.5yrs

Average management tenure

CEO

Galen Weston (49 yo)