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LBLCF - Metro: Favorable Outlook But Shares Fairly Valued
Loblaw Companies Ltd
Investment Thesis
Metro (MTRAF) (TSX:MRU) delivered solid Q2 F2019 result with solid food same store sales growth. We expect the favorable inflationary environment will continue to drive food SSSG in 2019. In addition, the company’s investment in store networks should help drive long-term revenue growth. Moreover, Metro should be able to extract C$75 million of synergies from its Jean Coutu acquisition. Despite the favorable outlook, its shares are currently fairly valued. We think investors may want to wait for a pullback before initiating a position.