Metro Inc. $32 - Toronto symbol MRU.A

METRO INC. $32 (Toronto symbol MRU.A; Aggressive Growth Portfolio, Consumer sector; Shares outstanding: 115.3 million; Market cap: $3.7 billion; SI Rating: Extra risk) is a major food retailer in Quebec. It operates 385 supermarkets under the Metro, Super C (discount supermarkets) and Marche Richelieu (neighbourhood stores) banners. It also operates 33 Loeb stores in northeastern Ontario. In 2005, Metro expanded further into Ontario with the acquisition of A&P Canada for $1.7 billion. A&P Canada operates 244 food stores throughout Ontario under the A&P, Dominion, Food Basics, The Barn and Ultra Food & Drug banners. In its third fiscal quarter ended July 7, 2007, Metro’s earnings rose 14.7%, to $0.78 a share (total $91.1 million) from $0.68 a share ($78.3 million) a year earlier. These figures exclude one-time items. Sales rose slightly, to $3.341 billion from $3.337 billion. If you disregard the sale of some operations in the year-earlier quarter, sales grew 3.2%. Metro continues to successfully absorb A&P. It recently completed the linkup of A&P’s retail computer systems with its own network, plus all payroll and human resources department systems. These moves helped cut Metro’s costs by $67.5 million in the first nine months of fiscal 2007. Metro should earn $2.60 a share in the current fiscal year, and the stock trades at 12.3 times that figure. The $0.46 dividend yields 1.4%. Metro is a buy.