Loblaw's (TSX:L) Net Earnings Up By 30%: Should You Invest In This Stock?

Summary

  • In the initial phase of the pandemic, Canadians stockpiled groceries and other essential consumer goods.
  • Loblaw posted revenue of C$ 11,827 million, an increase of 0.6 per cent from the first quarter of 2020.
  • Loblaw is one of the biggest retailers in Canada and since there's a spike in coronavirus cases it is expected to do well this year.

Canadian retailer Loblaw Companies Limited (TSX:L) posted revenue of C$ 11,827 million its first-quarter fiscal 2021 results (ended March 27, 2021), an increase of 0.6 per cent year-over-year. For the same period, the net earnings attributable to common shareholders were C$313 million, an increase of 30.4 per cent YoY.

The net earnings per common share (diluted) were C$0.90 in Q1 FY21, up by C$ 0.24 in the same quarter of the previous year. After the announcement of quarterly earnings, Galen G Weston, Executive Chairman of Loblaw, said that the company's stores are better prepared than ever to serve the needs of the people during the pandemic. Mr Weston added that expanding online solutions and in-store services helped the company post strong financial results. 

The ongoing pandemic and related public health restrictions forced Canadians to stockpile groceries and other essential consumer goods. Since the footfall reduced due to physical distancing measures, the company saw a boom in its online sales as it increased by 133 per cent in comparison to the first quarter of 2020.

©Kalkine Group 2021

Loblaw is one of the biggest retailers in Canada. With the recent spike in coronavirus cases, the momentum of its first quarter may likely continue in the current quarter and the company might exceed its full-year profit expectations.

On that note, let's explore Loblaw's (TSX:L) stock performances and other key highlights of first-quarter results:

Loblaw Companies Limited (TSX:L)


As per TMX, Loblaw's market cap is C$ 23.3 billion and it holds a price-to-earnings (P/E) ratio of 22.3. The retail company also offers a 9.75 per cent return on equity (ROE) and its return on assets (ROA) percentage stands at about three per cent.

One-year chart of stock performance of Loblaw (Source: Refinitiv/Thomson Reuters)

The Loblaw stock grew by about nine per cent in the last three months. The stock climbed up by 8.6 per cent year-to-date (YTD) and surpassed the TSX 300 Composite Index, which went down by a little more than one per cent relatively.

The company distributes a quarterly dividend of C$ 0.335 and it grew at the rate of 6.3 per cent in three years.

In Q1 2021, the operating income was C$ 617 million, up by 14 per cent in comparison to Q1 2020. The adjusted EBITDA increased by 4.5 per cent year-over-year (YoY) to C$ 1,218 million.

The above constitutes a preliminary view and any interest in stocks should be evaluated further from an investment point of view.

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