Loblaw Companies Limited
| PRICE |
FLOOR |
TARGET |
GAIN |
PAYS |
YIELD |
| 33.45 |
30.00 |
47.00+ |
42% |
0.30 |
0.90 |
Price is as at Mar 10, 2000, Floor is perceived chart support level.
Gain is price to target estimate. Pays is dividend or other income. |
|
A Perspective:
LOBLAW COMPANIES LTD. is a food distribution company with operations across Canada. The Company operates grocery stores under various banners including Loblaws, Provigo, SuperCentre, Zehrs, Save-Easy, Atlantic SuperCentre, OK! Economy and The Real Canadian Superstore. Loblaw Companies is one of the largest private employers in Canada with over 113,000 employees
Loblaw Companies strives....to provide superior returns to its shareholders through a combination of share price appreciation and dividends. To this end, it follows certain fundamental operating principles. It concentrates on food retailing with the objective of providing consumers with the best in one-stop shopping for everyday household needs. It maintains a significant program of reinvestment in and expansion of its existing markets. It is highly selective in acquisitions and continues to invest in products and technology. Loblaw Companies seeks long term, stable growth, taking managed operating risks from a strong balance sheet position.
March 27 Loblaw announced
today...that its Board of Directors has authorized the purchase of up to
13,780,025 of its Common Shares, representing approximately 5% of the
275,600,515 Common Shares outstanding. Loblaw believes that the market price of its Common Shares could be such
that their purchase may be an attractive and appropriate use of corporate
funds in light of potential benefits to remaining shareholders. Loblaw has purchased 696,200 of its Common Shares at an average price of
$34.88 within the past twelve months. It has entered into forward purchase
contracts on 1,778,300 Common Shares at an average price of $34.44.
The year 1999 turned out to be.. a spectacular one
for Loblaw Companies.
For the full year, net earnings per share improved to $1.37, a 29%
increase over last year's $1.06 and earnings before goodwill charges per share
improved to $1.52, a 43% increase over last year's $1.06. Fourth quarter net
earnings per share improved 39% to 53 cents from last year's 38 cents.
Earnings before goodwill charges per share increased 47% in the fourth quarter
to 56 cents compared to last year's 38 cents.
Sales for the fourth quarter increased 38% to $4.6 billion. For the full
year 1999, sales increased $6.3 billion or 50% to $18.8 billion.
Continued capital investment... in stores and support services as well as
the potential to leverage our product reputation and capabilities into other
retail fields makes us optimistic that year 2000 and future earnings growth
rates will be similar to those achieved over the past decade . W.Galen Weston, Chairman, Richard J. Currie, President
The President's Choice team... searched the world to bring unprecedented value in banking to consumers. Thus, the President's Choice Financial™ services offering was born and Canadian Imperial Bank of Commerce was engaged to provide President's Choice Financial products and services offering no fees accounts, higher interest on savings and lower-cost borrowing. Clients also earn PC (President's Choice) points towards free groceries.
Price Action: (click on each item)
Long Term Price Chart
Following a three for one split in 1996, Loblaws began a sustained upward move to $37 in the summer of 1998 and pulled back to $28 that fall from whence it moved up into the spring of '99 to its high of $43. It has corrected back to support at $30 and has consolidated between $32 and $36 until now. Since it has broken its long term uptrend and arguably has built a top formation, I believe the proper interpretation is it continues in its mentioned trading range during the corrective phase currently being experienced in the market generally. When its up trend is resumed, Loblaws could well trade into the high fifties.
Close Up of the last three months
Loblaws is attempting to complete a head & shoulders reversal which measures to $44 upon a break out above $37. However, the last minor rally to 36 failed at that resistance point, and the stock seems vulnerable to support at $32 which should provide a good entry point if attained.
Current Price
Conclusion
The Loblaw Companies features astute management, in my opinion, adhering to a well articulated game plan. When a company is enjoying obvious success and buying back its own shares it is usually a sign of an undervalued security. I am intrigued and impressed with the formulation of 'Presidents Choice Financial services'. It is an example of the willingness to take bold and well conceived initiatives, particularly in the marketing area.
Informative Internet Links : (click on each item)
All about President's Choice Financial services
Quote, Chart & Latest News
The Loblaws Web Site
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ROGERS & PARTNERS SECURITIES INC.,
A Perspective by:
Thomas A. Rogers, CIM, FCSI, CFP.
Investment Advisor: 416-463-6880, 1-800-730-6154
WEB Site,
E-Mail
Disclaimer:The information contained in this report, while obtained from sources we believe to be reliable, is not guaranteed either as to accuracy or completeness. Estimates and projections contained herein that have been prepared by Rogers & Partners Securities Inc. (RPS), and may have been based on conversations with the above mentioned company(s) and assumptions which we believe are reasonable, but are not guaranteed nor in providing them does RPS assume any liability. RPS, its officers, directors, shareholders, employees and companies with which they are associated may have a position in the securities mentioned herein, and may make purchases and/or sales from time to time. As RPS acts for public companies from time to time, it may have a relationship with the above mentioned company(s). Neither the information nor any opinion expressed herein constitutes a solicitation of the purchase or sale of any security. ROGERS & PARTNERS SECURITIES INC. - MEMBER CIPF
The comments and opinions expressed in this analysis that are the result of work done by Thomas A. Rogers may differ from the opinion of RPS Research, and, should not be considered as representative of RPS's belief, opinion or recommendations.
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