Reliable Growth and Consumer Strength in Food, Pharmacy, and Retail – MRU & CTC.A

Section 1: Introduction

Inflation Report Coverage:

• Inflation report highlights how inflation impacts sectors differently, favoring value and defensive sectors like Energy, Materials, Consumer Staples, Healthcare, Utilities, select Financials, and REITs with inflation-indexed leases, while rate-sensitive sectors like Consumer Discretionary and high-growth Tech typically underperform.
• The report focuses on companies with proven business models, steady financials, high free cash flow, and solid ROE that can pass on costs to customers and protect margins. The aim is to identify stocks that can outperform inflation via capital gains and dividends, supporting diversified sectoral exposure.

Stocks Covered:

• Metro Inc. (TSX: MRU) posted healthy Q3 2025 results with sales up 3.3% and gross profit rising 4.2%. Net earnings grew by 9% and operating cash flow surged 14.6%, supported by margin gains and cost discipline. Strength in food and pharmacy, new store openings, and online sales growth underpin performance, while dividends, buybacks, and supply chain efficiencies position Metro for steady growth and long-term shareholder value.
• Canadian Tire Corporation Ltd. (TSX: CTC.A) delivered resilient Q2 2025 results with retail sales up 3.2% and gross margin improving 5.4%, supported by decent CTR and seasonal demand. Normalized EPS of CAD 3.57 showed earnings stability despite transformation costs, while ROIC improved to 10.3%. Cash from operations grew by 2.2%, funding a healthy CAD 1.775 dividend and CAD 250 mn in share buybacks. Ongoing execution of the True North strategy, expansion of Triangle Rewards with RBC and WestJet, and the acquisition of HBC’s iconic brands position Canadian Tire for sustained retail growth and long-term shareholder value.

Section 2: Company Overview

Metro Inc. (TSX: MRU) is one of the largest grocery retailers in Canada. With its 2018 acquisition of Jean Coutu, it also boasts a meaningful drugstore footprint. Noteworthy grocery banners include Metro, Metro Plus, Super C, and Food Basics, while its pharmacies primarily operate under the Jean Coutu and Brunet trademarks. It utilizes an array of business models, but it most frequently acts as either a retailer, operating individual stores, or a franchiser, licensing its trademarks and supplying merchandise to franchisees. The firm also acts as a distributor, leveraging its supply chain capabilities to service smaller neighborhood grocery stores. The preponderance of its operations is in Quebec, which houses over 70% of its owned and franchised food and drug outlets.

Kalkine’s Inflation Report covers the Investment Highlights, Key Financial Metrics, Risks, Technical Analysis along with the Valuation, Target Price, and Recommendation on the stock.

Section3:  Financial Highlights

Section 4:  Key Metrics

Below chart depicts the change in Gross Profit, Net Earnings, Cash Flows from Operating Activities and Closing Cash and Cash Equivalents of the Company for Q3 2024 and Q3 2025.

Section 5:  Stock Recommendation Summary

Valuation Methodology: EV to Sales Multiple Based Relative Valuation (Illustrative):

The stock has witnessed a downside of ~0.14% and an upside of ~3.90% over the last 1 week and 6 months respectively. Moreover, it is trading above the average 52-week high price of CAD 109.20 and 52-week low price of CAD 81.01, providing an opportunity to ride the trend.

One-Year Technical Price Chart (as of September 11, 2025). Source: REFINITIV, Analysis: Kalkine Group

Section 2: Company Overview

Canadian Tire Corporation Ltd (TSX: CTC.A) is a group of companies that includes a Retail segment, a Financial Services division and CT REIT. Our retail business is led by Canadian Tire, which was founded in 1922 and provides Canadians with products for life in Canada across its Living, Playing, Fixing, Automotive and Seasonal & Gardening divisions. Party City, PartSource and Gas+ are key parts of the Canadian Tire network. The Retail segment also includes Mark's, a leading source for casual and industrial wear; Pro Hockey Life, a hockey specialty store catering to elite players; and SportChek, Hockey Experts, Sports Experts and Atmosphere, which offer the best active wear brands.

Kalkine’s Inflation Report covers the Investment Highlights, Key Financial Metrics, Risks, Technical Analysis along with the Valuation, Target Price, and Recommendation on the stock.

Section3:  Financial Highlights

Section 4:  Key Metrics

Below chart depicts the change in Revenue, Cash Flows from Operating Activities, Gross Margin and Cash Flow from Investing Activities are based on Q2 2024 and Q2 2025.

Section 5:  Stock Recommendation Summary

Valuation Methodology: EV to Sales Multiple Based Relative Valuation (Illustrative):

The stock has witnessed an upside of ~1.83% and a downside of ~4.29% over the last 1 week and 3 months respectively. Moreover, it is trading above the average 52-week high price of CAD 194.39 and 52-week low price of CAD 139.50, providing an opportunity to ride the trend.

One-Year Technical Price Chart (as of September 11, 2025). Source: REFINITIV, Analysis: Kalkine Group

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is September 11, 2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Dividend Yield may vary as per the stock price movement. 

Note 5: Kalkine reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 25-30 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest.

Resistance: A level at which the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest.

Stop-loss: In general, it is a level to protect further losses in case of any unfavourable movement in the stock prices.