A strengthened balance sheet has enabled Metcash to resume dividend payments, with the board taregting a 60% payout ratio.

I expect around 14c in 2018, increasing to 15c in 2019

Metcash is the worst positioned supermarket player in an industry facing significant competitive pressures. Having less scale, it's margins will be most impacted as Aldi, Lidl, Costco (as well as Coles & Woolies) vie for Market share and are willing and able to offer much lower prices. 

The recent loss of a major customer (Drakes, see here), and substantial writedowns of intangibles (see here) are the latest indicators of this. According to AFR, Drake will cost Metcash about $18 million and dent group earnings in 2020 by about 6 per cent. Analysts are worried more customers could leave the network.

Hardware seems to be holding in its own, but is <20% of total group earnings (EBIT).

Given the high fixed cost structure of the business, even a small change to operating margins can have a material impact on profit. For example, all else being equal, had you dropped the FY17 Food Operating margin by 0.1%, total group EBIT would have been 3% lower.

Sales have essentially been flat for the past five years and EBIT has is around 30% lower than it was in 2012.

There is potential with Metcash as a deep value play -- sentiment can drive prices to unreasonably low levels (such as in mid-2015). But for me, the current price does not provide nearly enough of a margin of saefty to be considred at current prices.

See my forecast page for my estimate of value