EMP-A.TO  Empire Company Ltd Cl A Nv

Exchange

TSX

Sector

Diversified Industries

Industry

Market Cap.

4.72B

Vuru Grade

31.73/100

Current Price

$17.41
+0.06 (+0.35%)

Growth Price

$19.85
Undervalued by 14.03%

Company Metrics

  • P/E 16.76
  • P/S 0.19
  • P/B 1.29
  • EPS -8.14
  • Cash ROIC 4.51%
  • Cash Ratio 0.10
  • Dividend 0.31 / 2.39%
  • Avg. Vol. 471,078.00
  • Shares 271.11M
  • Market Cap. 4.72B

Company Description

Empire Company Limited engages in food retailing, real estate, and investment activities in Canada. The company involves in the distribution of food products. It owns or franchises approximately 1,300 retail grocery stores located in 10 provinces of Canada under retail banners that include Sobeys, IGA extra, Thrifty Foods, IGA, Foodland, FreshCo, and Price Chopper, as well as Lawtons Drug Stores. ... more


Download 10 Years of Financial Statements:
Income Statement   Balance Sheet   Cash Flow

News

There is no news available at this time.
Growth Rate Assumed by Market

We did a reverse valuation to calculate the growth rate the market is assuming for EMP-A.TO to be considered fairly valued at its current market price. It's useful to compare this to the growth rate we're assuming for the Growth Price.

Future Free Cash Flow Growth Rate

This is the annual growth rate we've applied to calculate EMP-A.TO's Free Cash Flow for the next 10 years. To calculate it, we looked at several time periods of the last 10 years. Feel free to adjust it, but we limit the initial growth rate to 20% and slow it down over the years. Otherwise, long-term sustainability issues come into play.

Discount Rate

The discount rate is the annual rate of return an investor requires to take the risk of investing in a single stock. To account for that risk, this should be above 8-10%, as this is the avg. annual rate of return for the S&P500 over the past 100 years.

$17.41 Current Price

$19.85 Growth Price (DCF)

Undervalued by 14.03%


Growth Rate Assumed by Market: -6.35%


Future Free Cash Flow Growth Rate: 5.6%


Discount Rate: 15.0%


Show Free Cash Flow numbers

$15.32 Book Price

Overvalued by 12.02%


Poor Cash Return on Invested Capital over the past 5 years

EMP-A.TO has been unable to consistently generate sufficient returns from its investments in buildings, projects and equipment. This could be due to poor management, lack of an economic moat or the capital intensive nature of the business.

EMP-A.TO has only created $4.51 of cash for every $100 invested.
Figures in CAD. Fiscal year ends in April
20122013201420152016
Free Cash Flow 196.00M 243.90M 197.50M 618.50M 224.80M
divided by
Invested Capital 4.38B 4.75B 9.24B 8.69B 6.11B
Cash ROIC 4.47% 5.14% 2.14% 7.11% 3.68%

Very Poor Return on Equity over the past 5 years

EMP-A.TO has shown an inability to deliver results for shareholders. This could be due to poor management, EMP-A.TO operating in a highly competitive industry, or having a weak business in general.

EMP-A.TO has generated a $5.25 loss for every $100 of Shareholders' Equity.
Figures in CAD. Fiscal year ends in April
20122013201420152016
Net Income 339.40M 393.90M 243.40M 436.90M -2.11B
divided by
Stockholders' Equity 3.40B 3.73B 5.70B 5.98B 3.62B
Return on Equity 9.99% 10.57% 4.27% 7.30% -58.40%

Excellent Business Performance over the past 10 years

EMP-A.TO has been able to maintain profitability in good times and bad. This could mean EMP-A.TO has an extremely strong business or has the ability to scale down costs when needed. This should be a fairly resilient business, but double check for future sustainability by looking at its Risk Factors in the Annual Report.

EMP-A.TO has created positive free cash flow for 9 or more of the past 10 years.
Figures in CAD. Fiscal year ends in April
2007200820092010201120122013201420152016
Free Cash Flow -95.80M 94.10M 227.20M 350.10M 132.60M 196.00M 243.90M 197.50M 618.50M 224.80M

Weak Balance Sheet

EMP-A.TO's financial position is not ideal. The key is to check whether EMP-A.TO is using debt to fuel its growth and the sustainability of that tendency. Highly capital intensive businesses (see Economic Moat) follow this route, which can deeply impact the future prospects of the business.
Figures in CAD. Fiscal year ends in April
2007200820092010201120122013201420152016
Cash 294.90M 191.40M 231.60M 401.00M 616.90M 510.20M 469.70M 429.30M 295.90M 264.70M
Current Assets 1.43B 1.41B 1.52B 1.79B 2.03B 1.89B 1.96B 2.61B 2.28B 2.60B
Total Assets 5.22B 5.71B 5.90B 6.25B 6.56B 6.91B 7.14B 12.24B 11.47B 9.09B
Current Liabilities 1.42B 1.53B 1.71B 2.09B 1.81B 2.02B 1.93B 2.57B 2.48B 2.71B
Total Liabilities 3.09B 3.32B 3.21B 3.30B 3.31B 3.52B 3.41B 6.54B 5.49B 5.47B
Stockholder' Equity 2.14B 2.38B 2.68B 2.95B 3.25B 3.40B 3.73B 5.70B 5.98B 3.62B
Current Ratio 1.01 0.92 0.89 0.86 1.12 0.94 1.02 1.01 0.92 0.96
TL-to-TA 0.59 0.58 0.55 0.53 0.50 0.51 0.48 0.53 0.48 0.60

Low or No Reinvestment of Profits over the past 10 years

EMP-A.TO has either been retaining a small amount of their earnings or has done so inconsistently. A lack of consistency could be due to EMP-A.TO operating at a loss or them having such a strong economic moat they feel comfortable spending profits on growth. Be wary of future prospects and if applicable, inspect the moat's sustainability.
Figures in CAD. Fiscal year ends in April
2007200820092010201120122013201420152016
Retained Earnings 1.94B 2.21B 2.41B 2.65B 2.94B 3.08B 3.41B 3.59B 3.86B 1.54B
Retained Earnings Growth - 13.82% 8.98% 10.24% 11.01% 4.67% 10.60% 5.21% 7.64% -60.01%

Highly Competitive Industry over the past 10 years

It's likely that EMP-A.TO is in an industry with low barriers to entry, spurring high competition. If Gross Margins are at least satisfactory, it's likely EMP-A.TO invests heavily in R&D and Sales, General & Administrative expenses.

Only $0.85 of every $100 of Revenue have been profit, on average over the past 10 years.
Figures in CAD. Fiscal year ends in April
2007200820092010201120122013201420152016
Net Income 210.10M 315.80M 265.90M 301.90M 369.50M 339.40M 393.90M 243.40M 436.90M -2.11B
divided by
Revenue 13.37B 14.07B 15.02B 15.52B 16.03B 16.33B 17.71B 21.06B 24.11B 24.69B
Net Profit Margin 1.57% 2.25% 1.77% 1.95% 2.31% 2.08% 2.22% 1.16% 1.81% -8.56%

Weak Pricing Power over the past 10 years

EMP-A.TO is likely in a highly competitive industry, due to low barriers to entry. It's because of this, that EMP-A.TO has been unable to raise prices and increase their profitability. This puts them in a poor position if inflation becomes an issue, as they would struggle to pass higher costs onto consumers.

Only $14.90 of every $100 worth of sales have been Gross Profit, on average over the past 10 years.
Figures in CAD. Fiscal year ends in April
2007200820092010201120122013201420152016
Gross Profit 642.70M 742.70M 754.00M 788.00M 829.70M 4.11B 4.30B 5.12B 6.15B 6.03B
divided by
Revenue 13.37B 14.07B 15.02B 15.52B 16.03B 16.33B 17.71B 21.06B 24.11B 24.69B
Gross Margin 4.81% 5.28% 5.02% 5.08% 5.18% 25.18% 24.28% 24.30% 25.49% 24.43%

High Capital Intensity over the past 10 years

EMP-A.TO spends large amounts of capital buying new equipment or investing in new facilities to stay competitive. Over the long term, those costs may have to be fuelled by debt. Look at the growth of Shareholders' Equity to see if this strategy is having a positive or negative impact.

175.12% of Profits are being spent on Capital Expenditures, like Property, Plant, & Equipment, required to run the business.
Figures in CAD. Fiscal year ends in April
2007200820092010201120122013201420152016
Capital Expenditure 545.20M 549.40M 431.00M 434.00M 554.00M 618.60M 544.20M 589.90M 542.00M 672.00M
divided by
Net Income 210.10M 315.80M 265.90M 301.90M 369.50M 339.40M 393.90M 243.40M 436.90M -2.11B
Capital Expenditure Ratio 259.50% 173.97% 162.09% 143.76% 149.93% 182.26% 138.16% 242.36% 124.06% -31.78%

Very Strong Dividend History over the past 10 years

EMP-A.TO has consistently distributed a dividend for at least the past 10 years. Such a long dividend history suggests EMP-A.TO is very established in its market and that its dividend distribution is likely to continue for a significant period of time.
Figures in CAD. Fiscal year ends in April
2007200820092010201120122013201420152016
Dividend Paid 39.50M 43.20M 46.10M 50.70M 54.40M 61.10M 65.20M 83.30M 99.70M 109.40M
divided by
Shares Outstanding 65.70M 65.70M 65.80M 68.50M 68.20M 68.00M 68.10M 80.20M 92.40M 274.00M
Dividend Paid Per Share 0.60 0.65 0.70 0.73 0.79 0.89 0.95 1.03 1.07 0.40
Price at Year End - - - - - 58.76 71.79 87.21 26.10 15.62
Dividend Yield - - - - - 1.52% 1.32% 1.18% 4.10% 2.54%

History of Stock Buybacks over the past 10 years

EMP-A.TO has some history of delivering increased value for shareholders in the form of stock buybacks. These have helped improve financial metrics and increase each shareholders' relative ownership stake in the company, due to fewer shares outstanding and holding the same number of shares.
Figures in CAD. Fiscal year ends in April
2007200820092010201120122013201420152016
Shares Outstanding 65.70M 65.70M 65.80M 68.50M 68.20M 68.00M 68.10M 80.20M 92.40M 274.00M
Stock Bought Back - - -0.15% -3.94% 0.44% 0.29% -0.15% -15.09% -13.20% -66.28%
Share your thoughts about EMP-A.TO

Sign Up or Log In to start contributing!


Discussion

Nothing here yet. Be the first to post!