Weis Markets (NYSE: WMK)
Quality Value Investing Research Report | $WMK Updated Coverage | September 2024
Premium (paying) subscribers can access the Quality Value Investing (QVI) Glossary of Investing Terms and Metric Targets and Research Report Format Guide when referencing this research report. Unless noted, all data presented is sourced from Charles Schwab & Co. as of the market close on September 3, 2024, and intended for illustration only.
In this updated coverage research report, we’ll reexamine the QVI Stock Picks Real-Time consumer staples sector holding, Weis Markets WMK 0.00%↑, to see if it continues to meet Quality Value Investing’s criteria based on our checklist analysis of the business’s current wealth and the share price’s present value.
Weis Markets | Current Wealth
Value Proposition
Weis Markets, Inc. is a dividend-paying small-cap stock in the consumer staples sector’s food retail industry. It was added to the QVI Real-Time Stock Picks on March 22, 2018, at a $34.00 cost basis per share, adjusted for dividends.
Weis Markets engages in the retail sale of food through a chain of supermarkets in Pennsylvania and surrounding states. The company was founded in 1912 and is headquartered in Sunbury, Pennsylvania USA.
Economic Moat
Morningstar doesn’t assign Weis Markets a moat rating. QVI gives Weis Markets a moat rating of none as a crowded retail grocery space player.
QVI’s Value Proposition Elevator Pitch for WMK:
Weis Markets processes its own milk and famous ice cream and supports local farmers. By utilizing its centrally-located distribution centers and transportation fleet, the company self-distributes approximately 67% of the products sold in its stores.
QVI’s value proposition rating for Weis Markets: Neutral.
Returns on Management
Revenue Growth and Net Profit Margin
Per the table below, Weis Markets’ trailing three-year annualized revenue growth was mid-single-digit positive, underperforming the S&P 500 topline growth of 18.6%. Moreover, the company’s revenue growth of -1.0% trailed the broader market’s 4.6% for the most recently reported twelve months.
Further down the income statement, Weis Markets had a low-single-digit positive net profit margin, from a 24.6% gross margin, typical of a food retailer, and was underperforming the S&P 500’s 11.0% net from a 40.8% gross.
Returns on Equity and Invested Capital
Weis Markets’ senior management produced a single-digit return on equity, or ROE, below QVI’s targeted threshold and the S&P 500’s ROE of 18.5%.
Stock buyback programs often elevate ROE. However, the company has no recent record of share repurchases.
Weis Markets’ return on invested capital, or ROIC, was below QVI’s threshold and the broader market’s 22.5% return. In addition, the company’s ROIC didn’t exceed its weighted average cost of capital, or WACC, demonstrating that its senior executives are currently inadequate capital allocators. (Source of WACC: GuruFocus)
QVI’s business fundamentals rating for Weis Markets: Bearish.
Next, we’ll look at the company’s returns on management table, its enterprise downsize risks, the stock price’s present value, share price downside risks, and the investment thesis, each exclusive to Quality Value Investing’s premium (paying) subscribers.