Deflation and Competitive Environment Persist for Loblaw; Shares Overvalued
We plan to maintain our CAD $62 fair value estimate as no-moat Loblaw reported second-quarter results that largely tracked our expectations of low-single-digit sales growth and operating margins of 4.2% on average over the next five years.Despite continued industry price deflation of 1.4%, Loblaw's sales increased 3.2% in the second quarter, as it experienced food inflation of 1.2%, aiding a food same-store sales (75% of sales) increase of 1.0% (excluding gas). That said, excluding the favorab...
Loblaw is a Canadian food distributor and provider of general merchandise, drugstore and financial products and services. Traditional food offerings remain at the core of Co.'s business. Co. operates conventional, superstore, and hard discount stores. Co. offers products through control label program with famous brands including President's Choice, no name and Joe Fresh Style. Co. also offers President's Choice Financial services and offers the PC points loyalty program.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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