Is Loblaw Stock a Buy After Its Split?

Loblaw Companies (TSX: L) recently completed a four-for-one stock split, giving investors three extra shares for every one they held. While this move doesn’t increase a company’s total value, it does make its shares more appealing to small investors who like lower entry prices. The timing of this stock split isn’t random either. Loblaw made this decision as its earnings picked up, store traffic grew, and expansion plans stayed on track.

In this article, I’ll discuss what else could be behind the split, what’s driving Loblaw’s growth, and whether now’s the time to consider it a buy.

Loblaw’s growth is backed by real financial strength

For a little background, Loblaw isn’t just Canada’s largest food and pharmacy retailer but also a business with over 2,800 stores and some of the most recognizable brands in Canadian households, like President’s Choice, no name, and Joe Fresh. After climbing 20% over the last year, Loblaw stock trades at $53.46 per share following the split, with a market cap of $63.4 billion. And it also offers a quarterly dividend payout that currently translates into a 1.1% annualized yield.

Loblaw moved ahead with a split as it continues to deliver strong results, solid margins, and increased foot traffic. In its second quarter of 2025, the company posted a 5.2% YoY (year-over-year) increase in its revenue to $14.7 billion with the help of favourable pricing and higher volume. In the food retail segment, its same-store sales jumped 3.5% YoY, with more items per basket and more customers walking in. Similarly, its drug retail business saw a 4.1% same-store sales increase from a year ago, driven by specialty prescriptions and growing demand for pharmacy services.

More importantly, on the profitability front, Loblaw’s adjusted net profit climbed by 8.6% YoY to $721 million as its net profit margin ticked up to 4.9% due to a mix of better operational efficiency and higher margin product sales.

More stores, more clinics, and a greener future

While some retailers are playing defence in 2025 due to softer consumer spending, Loblaw is on the offensive. In just the second quarter, it opened 10 new stores and 12 new pharmacy clinics, bringing its year-to-date total to 20 new stores and 23 clinics. That’s part of its broader plan to open about 80 stores and 100 clinics this year alone.

Interestingly, the company is also pushing ahead on the logistics front, with its new East Gwillimbury distribution centre now ramping up. On top of that, Loblaw is investing a net $1.9 billion in capital this year, with a big portion of that going toward modernizing stores and technology, which should boost its long-term growth prospects.

A post-split price, but pre-split potential

What makes Loblaw’s split really interesting is that it didn’t happen out of desperation or to boost short-term interest. In fact, it happened when the business was already firing on multiple cylinders — growing earnings, expanding stores, and taking new long-term growth initiatives.

For small investors like you and me, the lower share price post-split doesn’t change the fundamentals, but it could make the stock more accessible. And with its adjusted net earnings expected to grow in the high single-digits for the full year, its outlook remains strong. All these points point to a top Canadian stock that’s not only performing well today but setting itself up for stronger returns tomorrow.