1-Star Price
PREMIUM
5-Star Price
PREMIUM
Economic Moat
PREMIUM
Capital Allocation
PREMIUM
No-moat Loblaw is executing well in an environment of emerging inflationary pressures and an ongoing aggressive promotion. We plan to lift our CAD 80 fair value estimate by a mid-single-digit percentage to account for stronger execution, but this will still leave the shares overvalued.
Loblaw is one of Canada’s largest grocery, pharmacy, and general merchandise retailers, operating the most expansive store footprint in Ontario and maintaining sizable presences in provinces like Quebec and British Columbia. Key grocery banners include Loblaws, No Frills, and Maxi, while its pharmaceutical operations are the product of its 2014 acquisition of Shoppers Drug Mart. The firm carries a robust private-label assortment, with top sellers like President’s Choice and No Name. In addition to its retail operations, Loblaw oversees a financial-services business, which provides credit card services and guaranteed investment certificates, and also operates its PC Optimum loyalty program. The firm’s controlling shareholder is George Weston Limited, which owns 52% of the equity.
