JHVEPhoto Please note all $ figures in $CAD, not $USD, unless otherwise stated. Introduction I reviewed Loblaw ( OTCPK:LBLCF )( TSX: L:CA ) back in February. Back then, I issued a ‘hold’ rating on the stock, noting that the company was a best-in-class Canadian grocer with strong growth in both gross margins and earnings per share.
While the company traded at a premium to peers, I felt that the company could likely continue expanding margins given growth in pharmacy (a higher margin business that deserves a premium multiple) and expense management related to logistics. Collectively, I felt that organic growth initiatives coupled with good capital allocation in both dividend increases and share buybacks made the company an attractive long-term hold. In this article, I’ll provide an update to my investment thesis and analyze the company’s latest quarter and developments to see if shares are worth buying today.
Business Overview To recap, Loblaw is the owner of several supermarket stores in Canada. As the largest player in the industry, the company owns the Loblaw, SuperStore, Shoppers, Maxi, and No Frills banners. Each one of them is slightly different to one another, with some being more value-oriented and others being more service and convenience-oriented.
For example, Loblaw and SuperStore tend to be massive grocery stores that sell a wide range of products including groceries, electronics, clothing, and household items. They cater to a broad customer base looking for.
