Metro Vs Loblaws today

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I’m looking into adding one of the other in my portfolio to add some stability and dividend growth.

Loblaws had a very good run since the last 5 years compare to Metro, but I do think Metro is “stealing” the playbook of Loblaws right now. They are opening more and more discounted stores like Super C in Quebec and Food Basics in Ontario. They also have the top two players in pharmacies in Quebec.
Management is top tier and they are focusing on shareholders returns. Same-Stores sales growth is outpacing Loblaws the last five years (outside of 2022) and margins were higher for the last 10 years until this year.
Living in Quebec, I do feel Metro is taking market share and growing fast, but I know it is a Quebec and Ontario play mostly. Right now, Metro screen better than Loblaws at 55 vs 48, but I think the share split is making some numbers funky for Loblaws.

Any comments? Thank you

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Asked on December 2, 2025 2:20 pm
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It's a good question, and a very valid one. Both of these are outstanding companies, but Loblaw has been able to leverage strong free cash flow generation to reinvest back into the business and really amplify margins. Over the last while here, Loblaw has doubled its operating margins which has resulted in larger free cash flow generation which has created a bit of a feedback loop.

Higher margins leads to higher free cash flow, which leads to more capital reinvested into the business, but also leads to more share buybacks which ultimately is a double-pronged way to boost earnings.

Metro is cheaper here, there is no doubt. I believe this is likely due to what you said. The adaptation of the rulebook, while Loblaw HAS the rulebook. Until any sort of disruption is witnessed or at least some market share being taken away, I'd expect Loblaw to trade at a Premium.

I tend to lean towards the one owning the playbook and the one executing in a big way, that being Loblaw. Management has been top notch and they've made all the right moves over the last 5 years or so here.

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Posted by Dan Kent
Answered on December 2, 2025 10:05 pm