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Category: Stock Market and SpartanNash
Date: 7 November 2019 Stock Price: $13.83 We take a look at the 3rd quarter earnings release of their 2019 fiscal year of SpartanNash a grocery distribution company that also distributes groceries to US military bases.
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About SpartanNash
SpartanNash (Nasdaq: SPTN) is a Fortune 400 company whose core businesses include distributing grocery products to a diverse group of independent and chain retailers, its corporate-owned retail stores and U.S. military commissaries and exchanges; as well as premier fresh produce distribution and fresh food processing. SpartanNash serves customer locations in all 50 states and the District of Columbia, Europe, Cuba, Puerto Rico, Bahrain, Djibouti and Egypt. SpartanNash currently operates 160 supermarkets, primarily under the banners of Family Fare, Martin's Super Markets, D&W Fresh Market, VG's Grocery, Dan's Supermarket and Family Fresh Market. Through its MDV military division, SpartanNash is a leading distributor of grocery products to U.S. military commissaries.
Overview of SpartanNash's 3rd quarter 2019 earnings report
The data below refers to the most recent quarter unless specified otherwise
- Total revenue: $1.995 billion (up from $1.895 billion from the same quarter of the previous year)
- Revenues increased by 5.2% over the last 12 months
- Total operating expenses: $1.706 billion (down from $1.630 billion for the same quarter of the previous year)
- Cost of revenues increased by 4.67% over the last 12 months
- Net loss: $6.814 million (down from $17.7 million for the same quarter of the previous year)
- Diluted earnings per share: -$0.19 (down from $0.49 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 36.326 million (up from 35.940 million for the same quarter of the previous year)
- Cash and cash equivalents: $19.949 million
- Cash and cash equivalents per share: $0.55
- Cash and cash equivalents makes up 4.6% of SpartanNash's market capital
- Cash and cash equivalents makes up 4.1% of SpartanNash's total assets
- Accounts receivable: $374.287 million
- Accounts receivable makes up 16% of the SpartanNash's total assets.
- Inventories: $594.676million
- Inventories makes up 25.4% of SpartanNash's total assets
- Stockholders equity for SpartanNash: $689.296 million
- Stockholders equity per share: $18.97
- SpartanNash is trading at 0.72 times its stockholders equity. It is odd to see firms trading at below their stockholders equity per share. Most firms tend to trade at levels 2 to 4 times their stated stockholders equity.
SpartanNash's management commentary on their 3rd quarter 2019 earnings and guidance
SpartanNash Company (the "Company") (Nasdaq: SPTN) today reported financial results for the 12-week third quarter and 40-week period ended October 5, 2019.
"We are encouraged to have delivered third quarter profitability and sales growth in-line with the guidance we provided in August," said Dennis Eidson, Interim President and Chief Executive Officer. "Our results were driven by a solid increase in net sales, representing our fourteenth consecutive quarter of growth and we are pleased with the return to positive retail comparable store sales. Our team is focused on driving improvements in operational execution and positioning the Company to realize profitable growth as we deliver value to our shareholders."
Outlook
The Company is reaffirming its net sales and profitability outlook previously provided on August 14, 2019, and has now estimated Transition Costs which were not previously quantified. These costs are expected to range from $9.0 to $9.7 million in adjusted EBITDA(2) and $6.6 to $7.1 million in adjusted earnings from continuing operations(3), or $0.18 to $0.20 per diluted share.
The image below shows the latest fiscal guidance provided by SpartanNash
"We are encouraged to have delivered third quarter profitability and sales growth in-line with the guidance we provided in August," said Dennis Eidson, Interim President and Chief Executive Officer. "Our results were driven by a solid increase in net sales, representing our fourteenth consecutive quarter of growth and we are pleased with the return to positive retail comparable store sales. Our team is focused on driving improvements in operational execution and positioning the Company to realize profitable growth as we deliver value to our shareholders."
Outlook
The Company is reaffirming its net sales and profitability outlook previously provided on August 14, 2019, and has now estimated Transition Costs which were not previously quantified. These costs are expected to range from $9.0 to $9.7 million in adjusted EBITDA(2) and $6.6 to $7.1 million in adjusted earnings from continuing operations(3), or $0.18 to $0.20 per diluted share.
The image below shows the latest fiscal guidance provided by SpartanNash
The Company's fiscal 2019 reported earnings guidance reflects an effective tax rate benefit of 17.0% to 20.0% and the adjusted earnings guidance reflects an effective tax rate expense of 18.0% to 18.5%. The Company expects capital expenditures for fiscal year 2019 to be in the range of $80.0 million to $89.0 million, with depreciation and amortization of $88.0 million to $89.0 million. Interest expense is expected to range from $34.5 million to $35.0 million.
The Fresh Kitchen will cease production during the fourth quarter of fiscal 2019 and the Company anticipates a disposition of the facility and related assets as early as the first quarter of fiscal 2020.
The Board of Directors has begun a formal process to identify the Company's next Chief Executive Officer. Spencer Stuart, a leading executive search and leadership consulting firm, has been retained as an advisor in the process.
The Fresh Kitchen will cease production during the fourth quarter of fiscal 2019 and the Company anticipates a disposition of the facility and related assets as early as the first quarter of fiscal 2020.
The Board of Directors has begun a formal process to identify the Company's next Chief Executive Officer. Spencer Stuart, a leading executive search and leadership consulting firm, has been retained as an advisor in the process.
SpartanNash (NASDAQ: SPTN) stock price history
The image below, obtained from Google, shows the stock price history of SpartanNash (NASDAQ:SPTN) for the last 5 years. And its not been a good time for SpartanNash stockholders unfortunately. 5 years ago SpartanNash was trading at around $23.30 a stock and its currently trading at $13.83. Thats a negative return of -40.6% suffered by SpartanNash over the last 5 years. SpartanNash is also trading at a lot closer to its 52 week low of $8.82 than it is to its 52 week high o $23 which is a clear indication that the short term sentiment and momentum towards SpartanNash is negative.
Recent coverage of SpartanNash
The extract below shows recent coverage of SpartanNash as obtained from TheStreet.com and as published on 5 November 2019
In trading on Tuesday, shares of SpartanNash Co. (SPTN - Get Report) crossed above their 200 day moving average of $14.23, changing hands as high as $14.36 per share. SpartanNash Co. shares are currently trading up about 3.7% on the day. The chart below shows the one year performance of SPTN shares
In trading on Tuesday, shares of SpartanNash Co. (SPTN - Get Report) crossed above their 200 day moving average of $14.23, changing hands as high as $14.36 per share. SpartanNash Co. shares are currently trading up about 3.7% on the day. The chart below shows the one year performance of SPTN shares
SpartanNash (NASDAQ: SPTN) latest stock valuation
So based on SpartanNash's latest earnings report and their fiscal guidance provided what are SpartanNash stock worth? While it is hard to value loss making companies, there are a few variables than can be used to provide a valuation for the stock of SpartanNash. As a base one would say that the stockholders equity per share would be a good start, as that shows the value a company is worth if it sells all its assets, pay all its debts and liabilities and distributes the rest to stockholders.
SpartanNash's stockholders equity per share is currently sitting at $18.97. And based on the earnings guidance provided for the full fiscal year we have a target (full value) price for SpartanNash of $21.30 (up slightly from our 2nd quarter 2019 earnings review of SpartanNash). We therefore believe that SpartanNash is undervalued at its current price and we expect the stock price of SpartanNash to continue trending upwards in coming weeks and months to levels closer to our target (full value) price.
SpartanNash's stockholders equity per share is currently sitting at $18.97. And based on the earnings guidance provided for the full fiscal year we have a target (full value) price for SpartanNash of $21.30 (up slightly from our 2nd quarter 2019 earnings review of SpartanNash). We therefore believe that SpartanNash is undervalued at its current price and we expect the stock price of SpartanNash to continue trending upwards in coming weeks and months to levels closer to our target (full value) price.
Next earnings release of SpartanNash
It is expected that SpartanNash will release their 4th quarter and full fiscal 2019 results in ealy February 2020