Metro operates an essential, recession-resilient retail business that benefits from stable non-discretionary grocery and prescription demand across Canada’s two most populous provinces. The company maintains strong cost discipline, high-return capital allocation via steady share repurchases, and an unbroken track record of annual dividend increases supported by healthy cash generation.
With recent headwinds driven primarily by temporary labour and logistics disruptions rather than structural demand loss, the stock offers an attractive entry point as modernized automated distribution centers ramp up efficiency gains and lift operating leverage into 2027.
The stock trades at 19.8 times the company’s forward earnings forecast. That’s a fair-to-modest discount relative to its five-year historical average, a defensive revenue base, sustained pharmacy segment growth, and an expected rebound in operational efficiencies.
METRO INC (Toronto symbol MRU; ww.metro.ca) operates 1,012 grocery stores and 635 drugstores in Quebec, Ontario and New Brunswick.
Metro continues to benefit from its May 2018 acquisition of Quebec-based drugstore chain Jean Coutu Group. It paid $4.5 billion—75% in cash and 25% in shares—for the operation.
Metro now plans to re-organize its Ontario store network and e-commerce operations. That includes converting 10 stores to its discount Food Basics banner. It will also close one Ontario store and a distribution warehouse.
As well, the company will close a distribution warehouse in Montreal that fulfils orders for its e-commerce operations. Instead, it will get that merchandise from its stores.
Metro expects these actions will cut $15 million from its annual costs by the end of fiscal 2028.
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Metro’s new warehouses will boost earnings longer term
Metro reported stronger-than-expected sales for its latest quarter. That’s despite a strike at a Quebec warehouse, which began on March 30, 2026, and has disrupted the availability of fresh produce at 350 stores in that province.
In its fiscal 2026 third quarter, ended July 4, 2026, sales rose 1.4%, to $6.97 billion from $6.87 billion a year earlier.
Due to extra costs related to the strike, mostly security services, earnings before unusual items fell 20.9%, to $262.6 million from $331.8 million. On fewer shares outstanding, per-share earnings declined 18.4%, to $1.24 from $1.52.
Metro’s outlook remain bright. It recently invested $1 billion to build two new warehouses that use automated equipment to handle fresh and frozen foods. That will cut long-term labour and food spoilage costs. Metro also continues to expand its discount-price stores and Moi loyalty program.
For all of fiscal 2026, the strike will probably cut the company’s earnings by 6% to $4.47 a share. The stock trades at a reasonable 19.8 times that forecast.
Moreover, Metro raised your quarterly dividend by 10.1% with the March 2026 payment. The shares now yield 1.8%.
Recommendation in The Successful Investor: Metro Inc. is a buy.
