Earlier today, Loblaw Companies (TSE:L) (OTC:LBLCF) reported its Q4-2022 and full-year earnings results. The numbers were good enough to make the stock finish 1.8% higher.
In Q4, sales reached C$14 billion, a 9.8% year-over-year increase, just above the C$13.75 billion consensus estimate. Meanwhile, adjusted diluted adjusted earnings per share increased by 15.8% to C$1.76, beating estimates that called for C$1.71 per share. Adjusted net earnings came in at C$575 million, an 11.7% increase.
Next, Loblaw’s free cash flow from its Retail segment reached C$408 million for the quarter, and it used some of this free cash flow to buy back 800,000 shares for a total of C$100 million.
In addition, sales from the Retail Segment increased by 9.7%, and the segment’s adjusted gross margin decreased by 30 basis points year-over-year to 30.6%. Notably, e-commerce revenues saw an 8.3% increase year-over-year despite the absence of COVID lockdowns. Moreover, strong growth was seen in the Financial Services segment, which grew revenues by 15.8% in Q4 to C$417 million.
Full-Year Financial Results, 2023 Outlook
For the full year, Loblaw’s revenue grew by 6.3% to just over C$56.5 billion. Similarly, same-store sales for Food Retail and Drug Retail rose 4.7% and 6.9%, respectively. Contrary to the growth seen in Q4, e-commerce revenues fell 3.8% in 2022. Lastly, adjusted earnings per share increased by an impressive 22% to C$6.82, and Retail free cash flow was just over C$2 billion.
For 2023, Loblaw expects Retail earnings growth to outpace sales growth and adjusted earnings per common share to grow by a low-double-digit percentage.
Is Loblaw Stock a Buy, According to Analysts?
According to analysts, Loblaw stock has a Strong Buy consensus rating based on three Buys and one Hold assigned in the past three months. The average Loblaw stock price target of C$141.62 implies about 19.6% upside potential. Analyst price targets range from a high of C$164.84 to a low of C$132.87.
