This supermarket company’s shares recently crossed over their 50-day moving average, a bullish sign. The company will announce third quarter earnings on November 15.
Loblaw Companies Ltd. (L.TO)
From The Successful Investor
Loblaw Companies Ltd. (L.TO; Conservative Growth Portfolio, Consumer sector; TSINetwork Rating: Above Average) operates 1,095 supermarkets across Canada. It also owns the Shoppers Drug Mart chain of 1,330 drugstores.
The company will end its 19-year joint venture with Canadian Imperial Bank of Commerce (Toronto symbol CM) on November 1, 2017.
That business, called President’s Choice Financial, offers no-fee banking, mortgages and other loans. It mainly sells those services over the Internet and telephone. However, Loblaw, will continue to offer customers its no-fee PC Financial MasterCard credit cards, and both home and auto insurance. The company will also continue to manage its PC Plus loyalty program.
In the quarter ended June 17, 2017, the financial services division accounted for just 2% of Loblaw’s overall revenue, but 13% of its earnings.
Revenue at that business rose 5.1% in the quarter, but earnings fell 6.8%. That’s mainly because the company spent more on marketing and improvements to its loyalty plans. That offset the higher loan volumes. As well, in the past 12 months, Loblaw wrote off 4.0% of its credit card loans compared to 4.5% for the year-earlier period.
Loblaw is a buy.
Patrick McKeough, The Successful Investor, www.tsinetwork.ca, 888-292-296, October 2017