Own Loblaw Stock? This Is the 1 Thing to Watch Now

Loblaw (TSX:L) has been delivering solid results all year, but investors now have their eye on one thing above all else: the stock split. On August 19, the company officially completed a four-for-one split, tripling the number of outstanding shares and lowering the price per share. That doesn’t change the underlying business, of course, but it does open the door to a broader base of investors, including retail buyers and employees in the Canadian stock’s share ownership program. If you already own Loblaw, this move could help improve trading volume and long-term appeal, but what comes next is just as important.

What happened?

Loblaw stock surged over 30% in the last year, making it one of the better-performing defensive stocks on the TSX. With grocery inflation easing and interest rates expected to stabilize, many expected consumer staples to cool off. Instead, Loblaw posted a 5.2% revenue increase in the second quarter, driven by higher traffic, larger basket sizes, and increased unit sales. Same-store sales at its food division rose 3.5%, and drug retail came in even stronger with 4.1% growth. And it wasn’t just revenue. Net income jumped by more than 56% to $714 million, while adjusted earnings per share (EPS) increased by 11.6%.

Loblaw’s success isn’t only about numbers. It’s also about execution. The Canadian stock opened 10 new stores and 12 pharmacy clinics in the second quarter, bringing the year-to-date total to 43. That expansion isn’t slowing down either. Loblaw is still on track to open 80 new stores and 100 new clinics in 2025. And with consumers looking for affordable options, Loblaw’s discount banners like No Frills and Real Canadian Superstore are getting more foot traffic than ever. At the same time, the PC Optimum loyalty program continues to drive engagement, pushing shoppers toward higher-margin items and more frequent visits.

Considerations

One concern investors may have is valuation. After the recent run-up, the stock trades at a forward price-to-earnings (P/E) ratio of about 24, a premium compared to peers. But Loblaw’s profitability helps justify the price. The Canadian stock posted an operating margin of over 8% in the trailing 12 months and a return on equity of above 20%. That’s hard to match in Canadian retail. And with stable free cash flow and nearly $2 billion in cash on hand, Loblaw has room to keep buying back shares and investing in growth.

The stock split changes how the Canadian stock is perceived, not how it performs. But it does matter. Historically, companies that split shares tend to outperform in the months that follow, not because the fundamentals suddenly improve, but because more investors can afford to get in. That’s especially true for a well-known brand like Loblaw. As more Canadians look to buy into what they already know and trust, the lower share price could act as a psychological nudge.

Bottom line

The bigger picture is that Loblaw is executing well in a challenging market. It’s gaining share, expanding its footprint, and proving resilient against economic headwinds. Its pharmacy business, particularly in specialty drugs, is growing quickly. And its e-commerce business rose more than 17% in the last quarter, suggesting it’s not just a brick-and-mortar story anymore. Even with margin pressures and competition heating up, Loblaw is in a strong position to keep delivering. And right now, investors can bring in around $66 annually from dividends alone from a $7,000 investment.

So, yes, the stock split is the thing to watch right now. But it’s also a reminder that Loblaw is thinking long term. It wants to be more accessible, more competitive, and more appealing to everyday Canadians. If the fundamentals keep up with the sentiment, this Canadian stock could still have a lot more room to run.