Growth stocks: Strong competition weighs on Metro’s results

Metro Inc., Toronto symbol MRU.A, is Canada’s third-largest supermarket operator, after Loblaw and Sobeys. Metro has about 600 supermarkets in Quebec and Ontario.

Metro is one of the growth stocks we analyze in our Successful Investor newsletter.

In the three months ended July 2, 2011, the growth stock’s sales rose 0.4%, to $3.58 billion from $3.56 billion a year earlier. Same-store sales rose 0.5%.

The company continues to face strong price competition from larger retailers, such as Wal-Mart, which are selling more groceries. Sales were also held back by lower drug prices, due to the expiry of important drug patents new generic-drug legislation in Ontario and Quebec. However, Metro recently launched a new loyalty card program in Quebec. That’s helping it retain customers.

The growth stock’s earnings rose 4.1% in the quarter, to $124.9 million from $120.0 million. Earnings per share rose 8.0%, to $1.21 from $1.12, on fewer shares outstanding. That just missed the consensus estimate of $1.20 a share.

We updated our advice on Metro and four other companies in our Friday, August 12, 2011, Successful Investor Hotline. You can immediately view this Hotline when you take a 1-month free trial to The Successful Investor today. Click here to learn how you can start profiting The Successful Investor right away.

(Note: If you are a current Successful Investor subscriber, please click here to view Pat’s recommendation. Be sure to log in first.)

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Scott Clayton

Scott is an associate editor at TSI Network. He is the lead reporter and analyst for Dividend Advisor, Power Growth Investor and Canadian Wealth Advisor and a member of the Investment Planning Committee. Scott began his investment and financial career working with Pat McKeough at The Investment Reporter in the 1980s. Subsequently, he worked at the Financial Post Corporation Service for 10 years. He joined TSI Network in 1998. He is a Bachelor of Economics graduate of York University, and he also has an M.B.A. from the Schulich School of Business.

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