Loblaw Companies (L) AI Stock Analysis

• Market Cap: $59.63B
• Dividend Yield: 1.06%
• Average Volume (3M): 523.71K
• Price to Earnings (P/E): 28.1
• Beta (1Y): 0.47
• Revenue Growth: 2.49%
• EPS Growth: 7.16%
• Country: CA
• Employees: 220,000
• Sector: Consumer Defensive
• Sector Strength: 86
• Industry: Grocery Stores
• EPS (TTM): 7.06
• Shares Outstanding: 300,394,650
• 10 Day Avg. Volume: 552,719
• 30 Day Avg. Volume: 523,713
• PEG Ratio: 3.93
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.95
• Price to Cash Flow (P/CF): 9.20
• P/FCF Ratio: 11.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: C$202.28
• Price Target Upside: 2.89% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 7

Loblaw Companies Limited shows strong financial performance and strategic growth plans, supported by consistent earnings and solid operational efficiency. While the stock is trading at a high valuation, its robust momentum and planned expansion could drive future growth. However, moderate leverage and inflationary pressures present potential risks.

Positive Factors

Sales Growth

Analyst forecasts Loblaw's food sales growth to be higher than the market's expectations due to slightly higher food tonnage growth.

Store Expansion

Management has indicated a larger number of new food stores will be opened in 2025, contributing to sales growth.

Negative Factors

Earnings Outlook

Overall caution is reflected in the industry's earnings outlook as the company cycles past previously robust top-line growth driven by elevated inflation.

Pre-opening Costs

There is concern over the headwinds expected from higher year-over-year pre-opening costs and the ramp-up of two distribution centers.

Loblaw Companies Business Overview & Revenue Model

Company Description

Loblaw Companies Limited is a leading Canadian food retailer and the largest in the country, operating under various store banners such as Loblaws, Zehrs, and Real Canadian Superstore. The company is involved in the retailing sector, focusing on grocery stores, pharmacies, and clothing. In addition to its retail operations, Loblaw offers financial services through its subsidiary, President's Choice Financial, and provides a variety of private-label products under the President's Choice and No Name brands.

How the Company Makes Money

Loblaw Companies Limited generates revenue primarily through its extensive network of retail stores offering food, health and wellness products, apparel, and general merchandise. The company's key revenue streams include sales from its grocery stores, pharmacy operations, and private-label products. Additionally, Loblaw benefits from its financial services offerings, which include credit card services, insurance, and loyalty programs. Significant partnerships with suppliers and manufacturers help Loblaw maintain competitive pricing and product availability, further driving sales and revenue growth.

Loblaw Companies Financial Statement Overview

Summary

Loblaw Companies has demonstrated strong financial performance with consistent revenue growth and operational efficiency. The company has a solid profit margin and cash flow generation, though it carries moderate leverage.

Income Statement

Loblaw Companies has demonstrated solid financial performance with consistent revenue growth and profitability. The revenue growth rate for 2024 is 2.50%, indicating steady growth. The gross profit margin stands at 32.33%, and the net profit margin is 3.56%, reflecting effective cost management and profitability. The EBIT margin is 6.39%, and the EBITDA margin is 11.32%, showcasing strong operational efficiency.

Balance Sheet

The balance sheet shows a stable financial position with a debt-to-equity ratio of 1.73, indicating moderate leverage. The equity ratio is 27.13%, reflecting a solid equity base to support assets. Return on equity (ROE) is 19.57%, demonstrating effective utilization of shareholders' equity to generate profits. However, the company carries a significant amount of debt, which could pose risks in a more volatile market environment.

Cash Flow

Loblaw Companies has exhibited robust cash flow generation, with a free cash flow growth rate of 0.56% and strong operating cash flow. The operating cash flow to net income ratio is 2.67, indicating efficient cash flow utilization relative to profits. The free cash flow to net income ratio is 1.66, highlighting a healthy conversion of net income to free cash flow, supporting ongoing investments and debt servicing.

Breakdown
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
53.92B	61.01B	59.53B	56.50B	53.17B	52.71B
	Gross Profit
17.16B	19.73B	19.04B	17.98B	16.73B	15.99B
	EBIT
3.05B	3.90B	3.70B	3.34B	2.94B	2.37B
	EBITDA
5.96B	6.91B	6.64B	6.17B	5.79B	4.96B
	Net Income Common Stockholders
2.00B	2.17B	2.10B	1.92B	1.88B	1.11B
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
2.11B	2.11B	1.95B	1.93B	2.44B	1.94B
	Total Assets
40.88B	40.88B	38.98B	38.15B	36.61B	35.87B
	Total Debt
19.18B	19.18B	18.17B	17.61B	16.55B	16.61B
	Net Debt
17.72B	17.72B	16.68B	16.00B	14.58B	14.94B
	Total Liabilities
29.61B	29.61B	27.36B	26.69B	24.88B	24.75B
	Stockholders Equity
11.09B	11.09B	11.46B	11.30B	11.57B	10.99B
Cash Flow		Free Cash Flow
3.24B	3.60B	3.58B	3.18B	3.65B	4.03B
	Operating Cash Flow
4.45B	5.80B	5.65B	4.75B	4.83B	5.19B
	Investing Cash Flow
-1.91B	-2.02B	-1.84B	-2.37B	-1.27B	-1.38B
	Financing Cash Flow
-2.95B	-3.82B	-3.93B	-2.75B	-3.25B	-3.28B

Loblaw Companies Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 196.60
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Negative
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:L, the sentiment is Positive. The current price of 196.6 is above the 20-day moving average (MA) of 195.13, above the 50-day MA of 187.45, and above the 200-day MA of 178.64, indicating a bullish trend. The MACD of 3.83 indicates Negative momentum. The RSI at 72.83 is Negative, neither overbought nor oversold. The STOCH value of 94.74 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:L.

Loblaw Companies Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MRU	80 Outperform	C$21.32B	22.52	13.78%	1.42%	1.59%	-1.98%
L	78 Outperform	$59.63B	28.10	19.33%	1.06%	2.49%	7.16%
EMP.A	78 Outperform	C$10.78B	16.38	12.64%	1.70%	1.05%	-6.94%
ATD	77 Outperform	C$65.16B	18.30	18.66%	1.07%	11.62%	-8.08%
DOL	76 Outperform	$41.85B	36.16	152.86%	0.25%	9.30%	16.85%
NWC	69 Neutral	C$2.47B	18.87	18.50%	3.17%	3.28%	1.42%
Sector *	62 Neutral	$20.34B	13.97	-16.14%	3.32%	1.30%	5.01%

Loblaw Companies Corporate Events

Loblaw Implements Automatic Share Purchase Plan for Stock Repurchase

Loblaw Companies Limited has initiated an automatic share purchase plan (ASPP) to facilitate the repurchase of its common shares under its normal course issuer bid (NCIB), which allows for the purchase of up to 5% of its outstanding shares. This move is designed to enable share repurchases during periods when the company is restricted from market activity due to insider trading rules, potentially impacting its stock liquidity and shareholder value.

Loblaw Reports Strong Earnings Growth and Expansion Plans for 2025

Loblaw Companies Limited reported a significant growth in adjusted diluted net earnings per common share for the fourth quarter and fiscal year 2024, driven by strong operational and financial results. The company experienced increased customer engagement through personalized loyalty offers and effective in-store promotions, leading to higher traffic and market share gains in Food Retail. Drug Retail also performed well, with growth in beauty categories despite the exit from certain electronics sales. Over the year, Loblaw expanded its network by opening new stores and clinics and plans further expansions in 2025. The opening of its first T&T Supermarket in the United States marked a major milestone, highlighting Loblaw’s strategic positioning to meet diverse consumer needs.