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Analysis Of Metro Inc. And Loblaw Companies Limited

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After an analysis of both Metro Inc., and Loblaws Companies Limited, we have come to the conclusion that Metro poses the better investment opportunity. Metro, Inc., is one of the leading retailers and distributors of food and pharmaceutical products in Quebec and Ontario. It currently pays a quarterly dividend of $0.1625 per share, equating to $0.65 per share on an annualized basis. Its dividend yield is only 1.26%, but Metro is consistent with its payout as it hasn’t fallen below 1.20% in the past five years. Although it’s yield is lower than Loblaws, Metro has raised its annual dividend payment for 22 consecutive years. Furthermore, Metro has a dividend-payout target of 20-30% of its net earnings from the previous year which will allow its …show more content…

This indicates that Metro’s sales have increased more in comparison to the year before, which shows the strength of the company in the marketplace. Metro has also recently announced plans to purchase the remaining minority interest of Adonis, a well implanted grocery store in Montreal, and Phoenicia Products, a food supplier, to take their full control and bring more into the Metro family. As the demand for ethnic food is rising, this shows that Metro’s sales growth will continue to increase throughout the next couple of years. It’s larger inventory turnover rate indicates customers are purchasing their products. This increases incentive for investment as greater sales will lead to great return to investors. Metro’s profit margin is also about double the percentage of Loblaws which demonstrates that Metro is better at taking revenue and turning it into profit than Loblaws. This company’s net earnings had a large increase of 12.9% from the previous year. The profit margin is important for shareholders because it shows them that the company is efficient and profitable. In addition, food deflation should ease in the next quarters so this will help grocery retailers, like Metro, to increase their profits and

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