Food prices have been one of the key drivers of inflation in Canada. This has been a pain for consumers who have also been forced to battle higher interest rates from the central bank. However, grocery retailers have proven to be extremely dependable for the first half of the 2020s. Today, I want to discuss whether investors should look to buy the country’s largest grocery retailer after its earnings release.
Loblaw Companies (TSX:L) is a Brampton-based food and pharmacy company that is engaged in the grocery, pharmacy, and other smaller retail merchandise. Shares of this Canadian grocery giant have dipped 2% month-over-month as of close on Thursday, July 27. The stock is down 3% so far in 2023.
This company released its second quarter (Q2) fiscal 2023 earnings on July 26. Loblaws delivered total revenue of 6.9% to $13.7 billion. Meanwhile, retail segment sales increased 6.7% year-over-year to $13.4 billion. EBITDA stands for earnings before interest, taxes,
depreciation, and amortization, aiming to give a better picture of a company’s profitability. Loblaws reported adjusted EBITDA of $1.64 billion in Q2 – up 9.4% compared to the previous year. Meanwhile, adjusted net earnings increased 10% to $626 million while adjusted diluted earnings per share (EPS) jumped 14% to $1.94.
Shares of Loblaws currently possess a rock-solid price-to-earnings ratio of 20. Moreover, this grocery retail stock offers a quarterly dividend of $0.446 per share. That represents a modest 1.5% yield. I’m still looking to stack shares of this grocery and pharmacy behemoth in late July.
