Ingles Markets, Incorporated (IMKTA) operates a chain of supermarkets in the southeast United States. It offers several food products and non-food products. The company operates around 189 supermarkets and nine supermarkets.
Despite sky-rocketing inflation and declining consumer confidence, U.S. retail sales managed to rise by 1% in June. This supported the retail giant IMKTA to register stable returns despite the market volatility.
IMKTA has gained 60.3% over the past year to close the last trading session at $94.95. Moreover, it has gained 10% year-to-date and 7.1% over the past month.
Moreover, on June 27, 2022, IMKTA declared a cash dividend of $0.165 per share on all its Class-A Common Stock and $0.15 per share on all its Class-B Common Stock, which got paid on July 14, 2022.
On May 5, 2022, Robert P. Ingle II, Chairman of the Board, said, “We continue to work hard to provide affordable products and selection to our customers during these challenging times.”
Here is what could shape IMKTA’s performance in the near term:
Solid Financials
IMKTA’s net sales for the second quarter ended March 26, 2022, came in at $1.38 billion, up 16.3% year-over-year. Its net income came in at $68.64 million, up 31.5% year-over-year, while its EPS came in at $3.61, up 39.9% year-over-year.
Furthermore, its gross profit came in at $348.56 million, up 12.3% year-over-year. Also, its income from operations came in at $95.09 million, up 28% year-over-year.
Good Valuations
IMKTA’s trailing-12-month EV/EBITDA of 4.57x is 65.2% lower than the industry average of 13.15x. Moreover, its trailing-12-month EV/S of 0.42x is 77.6% lower than the industry average of 1.86x, while its trailing-12-month P/S of 0.34x is also lower than the industry average of 1.23x.
Strong Profitability Ratios
IMKTA’s trailing-12-month ROCE, ROTC, and ROTA of 28.32%, 14.26%, and 13.11% are significantly higher than the industry averages of 12.61%, 6.43%, and 4.87%, respectively. Also, its trailing-12-month asset turnover ratio of 2.65% is 228.2% higher than the industry average of 0.81%.
POWR Ratings Reflect Promising Outlook
IMKTA has an overall rating of A, which equates to Strong Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
It has an A grade for Quality, consistent with its higher-than-industry profitability ratios.
The stock has a B grade for Value and Stability, in sync with its lower-than-industry valuation multiples and 24-month beta of 0.54, respectively.
In the 38-stock Grocery/Big Box Retailers industry, IMKTA is ranked #2. The industry is rated A.
Click here for the additional POWR Ratings for IMKTA (Growth, Momentum, and Sentiment).
View all the top stocks in the Grocery/Big Box Retailers industry here.
Bottom Line
IMKTA demonstrated solid growth in the last reported quarter. And analysts expect its EPS to grow 14.5% per annum for the next five years. Moreover, given its attractive valuations and profitability, IMKTA, which is rated Strong Buy in our POWR Ratings system, could be an ideal investment option now.
How Does Ingles Markets, Incorporated (IMKTA) Stack Up Against its Peers?
While IMKTA has an overall POWR Rating of A, one might consider looking at its industry peers, Natural Grocers by Vitamin Cottage, Inc. (NGVC) and Weis Markets, Inc. (WMK), which have an overall A (Strong Buy) rating, and Sprouts Farmers Market, Inc. (SFM), which has an overall B (Buy) rating.
IMKTA shares were trading at $95.16 per share on Thursday afternoon, up $0.21 (+0.22%). Year-to-date, IMKTA has gained 10.84%, versus a -14.23% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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