We report on a growing company that owns and operates 600 grocery stores and 250 drugstores in Quebec and Ontario. As well, it owns a 5.7% stake in Alimentation Couche-Tard, a fast-growing convenience store operator across North America and Europe. In 2015, Metro bought a 75% stake in bakery Première Moisson. The acquisition added 23 stores and three plants in Quebec, and helped increase sales and profits. We view Metro Inc. as a dividend stock to buy for aggressive investors.
METRO INC. (Toronto symbol MRU; www.metro.ca ) operates 600 grocery stores and 250 drugstores in Quebec and Ontario.
In its 2015 fiscal year, which ended September 26, 2015, Metro’s earnings rose 13.6%, to $523.6 million from $460.9 million in 2014. It spent $418.0 million on share buybacks in 2015, which is why earnings per share gained 18.7%, to $2.03 from $1.71.
Overall sales rose 5.5%, to $12.2 billion from $11.6 billion. Same-store sales increased 4.0%. Some of these gains come from Metro’s 75% stake in bakery Première Moisson, which it bought for $101.6 million last year. Première Moisson has 23 stores and three plants in Quebec. Rising food prices are also boosting Metro’s results.
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Dividend stocks: Couche Tard stake adds to earnings
The company has an underappreciated asset in its 5.7% stake in Alimentation Couche-Tard (Toronto symbol ATD.B). (Couche-Tard, which operates convenience stores in North America and Europe, is a recommendation of Stock Pickers Digest, our newsletter for aggressive investing.) In fiscal 2015, Metro’s share of Couche-Tard’s earnings jumped 29.1%, to $64.3 million from $49.8 million in 2014.
The company’s long-term debt of $1.15 billion is a low 12% of its market cap. It also holds cash of $21.5 million.
Metro’s earnings will probably rise to $2.26 a share in 2016, and the stock trades at 17.3 times that estimate. That’s high, but it’s still reasonable in light of the company’s strong growth prospects. The $0.47 dividend yields 1.2%.
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We report on a growing company that owns and operates 600 grocery stores and 250 drugstores in Quebec and Ontario. As well, it owns a 5.7% stake in Alimentation Couche-Tard, a fast-growing convenience store operator across North America and Europe. In 2015, Metro bought a 75% stake in bakery Première Moisson. The acquisition added 23 stores and three plants in Quebec, and helped increase sales and profits. We view Metro Inc. as a dividend stock to buy for aggressive investors.
