Loblaw’s Profit Rises 26% in Q3

Loblaw Companies (L) announced higher revenues and profits for the quarter ended October 9.

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Canada’s largest grocer beat profit and revenue estimates, helped by strong demand online and in stores. (See Analysts’ Top Stocks on TipRanks)

Revenue & Earnings

Revenue for Q3 2021 came in at C$16.05 billion, an increase of 2.4% from the revenue of C$15.67 billion reported in Q3 2020. It beat analysts’ estimates of C$15.89 billion.

Food retail (Loblaw) same-store sales increased by 0.2%, while drug retail (Shoppers Drug Mart) same-store sales grew by 4.4%.

The food and pharmacy company earned a profit available to common shareholders of C$431 million (C$1.27 per diluted share), an increase of 26% from C$342 million (C$0.96 per diluted share) from Q3 2020.

On an adjusted basis, Loblaw earned C$1.59 per diluted share in the quarter, an increase of 24.2% from the adjusted profit of C$1.28 reported in the third quarter of 2020. It exceeds the average analysts’ estimate of C$1.48 per share.

Costs related to COVID-19 were approximately C$19 million, down from C$85 million a year earlier.

Management Commentary

Loblaw president and chairman Galen G. Weston said, “In the third quarter, our focus on core retail execution and an enthusiastic consumer response drove another quarter of strong financial results. As the country emerges from pandemic-related lockdown, our portfolio of supermarkets and drug stores positions us well to meet the evolving needs of Canadians.”

Wall Street’s Take

On November 15, TD Securities analyst Michael Van Aelst reiterated a Buy rating on the stock while raising its price target to C$110 (from C$98) This implies 12.5% upside potential.

Overall, Loblaw scores a Strong Buy consensus rating among analysts based on five Buys. The average Loblaw price target of C$104.59 implies 6.9% upside potential to current levels.