Metro Inc

MRU: XTSE (CAN)

Morningstar Rating for Stocks	Fair Value	Economic Moat	Capital Allocation
	CAD 22.00	Vftbw	Qkwrwvr

Metro Earnings: New Distribution Center Ramp-Up Completed, Challenging Consumer Backdrop Persists

Dan Su

Aug 14, 2024

We plan to maintain our CAD 70 per share fair value estimate for no-moat Metro after absorbing its third-quarter results. Sales grew 3.5% amid cooling food price inflation, while adjusted earnings per share were flat as duplication of costs during the distribution capacity ramp-up weighed on profits. Our 2024 projection for 3% sales growth and a 1% decline in adjusted EPS is unchanged, with the new Quebec distribution center now fully operational. Our 10-year forecasts for low-single-digit top-line growth and operating margins averaging 6.5% remain in place, and we view shares as overvalued.

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