Loblaw offers good value

Article Excerpt

LOBLAW COS. $39.90 (Toronto symbol L; Shares outstanding: 277.3 million; Market cap: $11.1 billion; SI Rating: Above Average; Dividend yield 2.1%) continues to benefit from its ongoing restructuring plan. The company is fixing its supply networks, improving its distribution centres’ productivity and installing new inventory-information systems. These moves helped increase Loblaw’s earnings by 25.7% in the three months ended March 27, 2010, to $137 million, or $0.49 a share. A year earlier, it earned $109 million, or $0.40 a share. Overall sales rose 3.1%, to $6.9 billion from $6.7 billion. The gain largely came from the 17-store T&T supermarket chain, which Loblaw bought for $225 million in 2009. T&T is Canada’s largest seller of Asian foods. Loblaw is also seeing strong demand for its “Joe Fresh” line of casual clothing and accessories. The stock trades at 16.0 times its likely 2010 earnings of $2.50 a share. That’s very reasonable in light of Loblaw’s leading market share. Loblaw is a buy. buy…