Weston’s Outlook is Positive

Article Excerpt

GEORGE WESTON LIMITED $52.66 (Toronto symbol WN; SI Rating: Above average) operates two distinct business divisions: Weston Foods, which includes fresh and frozen bakeries in North America, as well as dairy operations in Ontario; and a 62% interest in Loblaw Companies, Canada’s largest food distributor. In the three months ended June 14, 2008, revenues rose 1.4%, to $7.85 billion from $7.74 billion a year earlier. Earnings per share excluding unusual items fell 7.2%, to $1.29 from $1.39. The performance of Loblaw continues to hurt Weston’s results. Weston’s 62% interest in Loblaw is valued at $5.0 billion, and accounts for 75% of its $6.7 billion market capitalization. Loblaw’s continues to re-model older stores, improve its distribution systems and rejuvenate its private label products. These initiatives should help it maintain its leading market share. Meanwhile, strong price competition from other grocery stores will continue to weigh on Loblaw’s profit margins. The long-term outlook for Weston is positive. However, like Loblaw, Weston’s share price will likely lag…