Metro's Pricing Continues to Slow Amid Moderating Inflation; Shares Overvalued
We do not expect any meaningful change to our CAD 33 fair value estimate for no-moat Metro as fiscal 2016 results tracked near our forecast, leaving the shares overvalued.Revenue for 2016 ended up 4.6%, slightly below our 4.8% projection, as same-store sales growth of 3.7% compared with our 3.9% estimate. Metro’s food inflation of 0.7% slowed from 1.5% last quarter, as inflation continues to moderate amid a competitive market where consumers have become more price sensitive. Key competitor no-m...
Metro is a food retailer and distributor that operates supermarkets, discount stores and drugstores in Canada. Co. operated 343 supermarkets under the Metro and Metro Plus banners, nine stores under the Adonis banner, and 213 discount stores under the Super C and Food Basics banners. Co. also acts as a distributor for medium-surface food stores and convenience stores. Co. also acts as franchisor and distributor for 181 franchised Brunet Plus, Brunet, Brunet Clinique, and Clini Plus drugstores, owned by independent pharmacists; and operated 73 drugstores under the Metro Pharmacy and Drug Basics banners. Co. also supplies non-franchised drugstores and various health centres.
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