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Case Studies

Balance sheet analysis for Loblaw's last 5 years

Working Capital Position: The current position of the company has actually improved. There is a stronger ability to convert current assets to cover current liabilities than was the case five years ago.
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Loblaw's past 5 years of cash flow

Operating Cash Flow has exceeded Net Income in each of the past five years. This positive cash flow is a reliable indication of profitability. Cash flow shows little sign of a weakening trend.
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A Look at Loblaws

Loblaw Companies has been trying to navigate its way through some rough retailing waters lately. Canada’s dominant supermarket chain has seen share prices eroded and a shiny image tarnished by a series of poor results. It is an unaccustomed position they find themselves. Is Loblaw stock undervalued and thus represents a good investment? The treacherous course is one they have pretty much charted for themselves.

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Loblaw's 5 Year Income Statement

Gross Profit Margin (GPM): After consistently operating at a range of around 7.5% the company slipped to 6 in 2006. The grocery business is known for operating on tight margins so these are not low, however a 1.5% slip is large enough to cause concern.
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Loblaw Conclusion

Summary: All indications are that informed investors would consider this an under valued stock.
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