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1. Company Snapshot

1.a. Company Description

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.It also manufactures generic drugs; and provides online grocery shopping services.Metro Inc.


was founded in 1947 and is headquartered in Montréal, Canada.

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1.b. Last Insights on MRU

Metro Inc.'s recent performance was driven by strong Q1 2025 earnings, with a 2.9% sales increase and a 10.4% dividend hike. The company navigated inflation and currency challenges, indicating its resilience. Additionally, the appointment of Nicolas Amyot as Chief Financial Officer, effective April 18, 2025, suggests a smooth succession plan and reinforces investor confidence. The significant retail investor ownership (57%) also implies that key decisions are influenced by the retail investors' perspective. Furthermore, the company's recent dividend increase, to CA$0.37, is a positive signal to shareholders.

1.c. Company Highlights

2. Metro's Q1 Earnings: A Mixed Bag

Metro reported total sales of $5.3 billion, a 3.3% increase year-over-year, with food same-store sales growing by 1.6% and pharmacy same-store sales by 3.9%. The gross margin stood at 19.7% of sales, unchanged from the previous year. Adjusted EBITDA reached $504.2 million, up 4.7% year-over-year, and adjusted fully diluted net earnings per share were $1.16, a 5.5% increase. However, actual EPS came in at $1.05, below estimates of $1.11.

Publication Date: Feb -09

📋 Highlights
  • Total Sales Growth: Q1 sales reached $5.3 billion, up 3.3% YoY despite a pre-Christmas shift and Toronto freezer shutdown.
  • Pharmacy Sales Momentum: Same-store sales rose 3.9%, driven by 5.1% prescription growth and 1.3% front-store gains.
  • Adjusted EBITDA Expansion: Adjusted EBITDA hit $504.2 million, a 4.7% YoY increase, reaching 9.5% of sales (up 13 bps).
  • Capital Expenditures Decline: Capex dropped to $61.9 million in Q1, down from $89.3 million in the prior-year period.
  • Dividend Growth: Quarterly dividend raised 10.1% to $0.475/share, marking 32nd consecutive year of increases.

Operational Highlights

The company opened three new stores and expanded or renovated three others, resulting in a net increase of 88,600 square feet. Online sales grew by 25.8%, driven by third-party marketplaces and the ramp-up of click-and-collect services. Eric La Flèche noted that operations at the frozen DC in Toronto have fully resumed, and the company is working to mitigate inflationary pressures on commodity prices.

Margin Pressures and Cost Control

Gross margin was impacted by the disruptions at the frozen DC, with Eric La Flèche estimating a 30 basis point loss in same-store sales. Operating expenses grew by 5.5% year-over-year, but excluding the costs related to the temporary shutdown, they increased by 1.6%. Nicolas Amyot expects cost control to continue to improve, potentially by a notch more than the current rate.

Valuation and Outlook

With a P/E Ratio of 20.81 and an EV/EBITDA of 12.27, the market is pricing in a certain level of growth. Analysts estimate next year's revenue growth at 3.0%. The company's commitment to its financial framework objectives and a 10.1% increase in the quarterly dividend suggest a stable outlook. The Dividend Yield stands at 1.55%, and the Free Cash Flow Yield is 5.57%, indicating a relatively attractive return for investors.

Leverage and Buybacks

Nicolas Amyot mentioned that Metro is contemplating increasing leverage to facilitate more buybacks, but this will be done gradually and prudently. The company has repurchased 1 million shares for a total consideration of $98.7 million under its normal issuer bid program.

3. NewsRoom

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Metro Inc. Prices Aggregate C$350 Million Senior Unsecured Notes Offering

Feb -23

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Metro Inc. Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

Jan -30

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How The New Price Target Is Reframing The Metro (TSX:MRU) Investment Story

Jan -29

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Metro Restores Operations As Dividend Growth And Valuation Draw Focus

Jan -29

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New Grocery Code of Conduct won't have notable impact, insiders say

Jan -28

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Assessing Metro (TSX:MRU) Valuation After Recent Share Price Weakness

Jan -28

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METRO ANNOUNCES THE VOTING RESULTS ON THE ELECTION OF ITS DIRECTORS

Jan -28

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Metro Inc (MTRAF) Q1 2026 Earnings Call Highlights: Strong Sales Growth Amid Operational Challenges

Jan -28

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.65%)

6. Segments

Food and Pharmaceutical

Expected Growth: 4.65%

Metro Inc.'s Food segment growth of 4.65% is driven by increasing demand for private label products, expansion of e-commerce capabilities, and strategic store renovations. The Pharmaceutical segment benefits from an aging population, increased generic drug sales, and the company's diversified retail pharmacy network.

7. Detailed Products

Food Basics

Discount grocery stores offering a wide range of products at lower prices

Metro

Conventional grocery stores offering a wide range of products and services

Super C

Discount grocery stores offering a wide range of products at lower prices

Food Markets

Upscale grocery stores offering a wide range of gourmet and specialty products

Pharmacies

In-store pharmacies offering health and wellness products and services

Liquor Stores

Specialty stores offering a wide range of wine, beer, and spirits

8. Metro Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Metro Inc. faces moderate threat from substitutes due to the presence of alternative grocery stores and online shopping platforms.

Bargaining Power Of Customers

Metro Inc. has a large customer base, but customers have low switching costs, giving them significant bargaining power.

Bargaining Power Of Suppliers

Metro Inc. has a diverse supplier base, and suppliers have limited bargaining power due to the company's large scale of operations.

Threat Of New Entrants

The grocery retail industry has high barriers to entry, making it difficult for new entrants to compete with established players like Metro Inc.

Intensity Of Rivalry

The grocery retail industry is highly competitive, with many established players competing for market share, leading to a high intensity of rivalry.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 38.87%
Debt Cost 4.17%
Equity Weight 61.13%
Equity Cost 4.17%
WACC 4.17%
Leverage 63.58%

11. Quality Control: Metro Inc. passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Weston

A-Score: 6.8/10

Value: 6.8

Growth: 7.0

Quality: 4.2

Yield: 4.0

Momentum: 9.0

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
Village Super Market

A-Score: 6.6/10

Value: 7.9

Growth: 4.9

Quality: 4.7

Yield: 7.0

Momentum: 7.5

Volatility: 7.7

1-Year Total Return ->

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Stock-Card
Albertsons

A-Score: 6.3/10

Value: 7.6

Growth: 5.4

Quality: 3.7

Yield: 9.0

Momentum: 3.5

Volatility: 8.3

1-Year Total Return ->

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Stock-Card
Laureate Education

A-Score: 6.2/10

Value: 2.9

Growth: 5.6

Quality: 6.0

Yield: 5.0

Momentum: 10.0

Volatility: 7.7

1-Year Total Return ->

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Stock-Card
Metro

A-Score: 6.1/10

Value: 4.8

Growth: 6.3

Quality: 5.1

Yield: 3.0

Momentum: 7.5

Volatility: 10.0

1-Year Total Return ->

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Stock-Card
Sprouts Farmers Market

A-Score: 3.9/10

Value: 4.6

Growth: 8.1

Quality: 5.4

Yield: 0.0

Momentum: 0.5

Volatility: 5.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

91.16$

Current Price

91.16$

Potential

-0.00%

Expected Cash-Flows