George Weston Earnings: Value Focus and Strong Execution Drive Steady Profit Expansion; Shares Rich

We plan to raise our CAD 185 fair value estimate for no-moat George Weston by a mid-single-digit percentage after digesting better-than-expected 2024 results. Shares look overvalued despite our planned valuation increase. The firm's 2024 sales of CAD 62 billion matched our estimates, while adjusted EBITDA of CAD 7.4 billion was 5.7% higher than our forecast (CAD 7.0 billion). In the coming years, we maintain our view that, amid normalizing food inflation and rising value preference among shoppers, a low-single-digit annual sales growth rate is realistic for main subsidiary no-moat Loblaw (over 90% of total sales). The other subsidiary, Choice Properties, may see a similar trajectory given its high exposure to tenants associated with Loblaw, but diversification into industrial assets could brighten its growth outlook.