We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Zacks Industry Outlook Highlights Walmart, The Kroger, and Companhia Brasileira de Distribuicao
Read MoreHide Full Article
For Immediate Release
Chicago, IL – March 17, 2022 – Today, Zacks Equity Research discusses Walmart Inc. (WMT - Free Report) , The Kroger Co. (KR - Free Report) and Companhia Brasileira de Distribuicao
Players in the Zacks Retail – Supermarkets industry are benefiting from their continued efforts to enhance store and online operations. Companies have been committed to improving delivery and payment options alongside strengthening assortments. These investments, high COVID-related costs and supply-chain costs however come at the cost of margins.
Nonetheless, improving store traffic and online demand, along with robust efforts to bolster omnichannel operations keep Walmart Inc., The Kroger Co., and Companhia Brasileira de Distribuicao well-positioned.
About the Industry
The Zacks Retail – Supermarkets industry includes supermarket retailers, which offer grocery, health and beauty aids, household chemicals, electronics, stationery, automotive accessories, hardware and paint, sporting goods, fabrics and crafts, entertainment products, home furnishings and much more. Players in this industry operate through various formats such as supermarkets, multi-department stores, retail stores, discount stores, supercenters, hypermarkets and warehouse clubs.
Nevertheless, food retail accounts for a chunk of their business. The industry has undergone a significant transformation over the years, with e-commerce playing a strong role. Given consumers' rising preference for online shopping, industry participants have been enhancing pickup and delivery services as well as offering easy payment options.
3 Trends Shaping the Future of the Supermarkets Industry
Solid Omnichannel Efforts: Supermarket retailers have been going all the way to strengthen operations – both stores and online. To this end, they have been focused on store improvisation, merchandise enhancement, prudent pricing strategy and efforts to replenish assortments.
Additionally, companies have been pushing the edge out of the envelope to bolster online operations. In fact, pandemic-led social distancing has taken online shopping to another level – causing industry players to constantly step up their efforts in this arena through meaningful buyouts, alliances, and improved delivery and payment systems. In this regard, companies have been benefiting from their same-day delivery, buy online and pick-up in-store, curbside pickup as well as contactless payment options.
Despite improvement in store traffic with things getting back to normal and people stepping out, online shopping remains popular. Companies' concerted efforts to unite store and online operations to offer customers a solid omnichannel experience certainly keep them well placed for growth.
Spike in Demand to Stay: Supermarket companies have been benefitting from high demand (especially online) for essentials due to the pandemic-induced elevated at-home consumption. Incidentally, higher dine at-home and work from home practices have boosted demand for staple products, especially groceries, cleaning supplies, and medicines.
Although demand has moderated from the initial spike, it remains higher than the pre-pandemic levels. In fact, even with things opening up and curbs being lifted, the pent-up demand trend is likely to stay in the near term, as a number of Americans still prefer to work and cook at home. This indeed calls for supermarket players to continue making investments toward innovative offerings and merchandising to make the most of such trends.
Pressure on Margins: Supermarket players are facing margin pressure owing to elevated COVID-related costs. These include additional employee payments and benefits along with costs associated with upgraded safety and sanitization to protect the health of customers and team members. Apart from this, companies' constant technological investments to bolster online operations, elevated supply-chain and wage expenses pose a threat to margins. Continued price investments and other promotion activities also come at the cost of margins.
Zacks Industry Rank Indicates Solid Prospects
The Zacks Retail – Supermarkets industry is housed within the broader Zacks Retail – Wholesale sector. The industry currently carries a Zacks Industry Rank #28, which places it in the top 11% of more than 250 Zacks industries.
The group's Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually becoming more confident about this group's earnings growth potential. Since the beginning of November 2021, the industry's consensus earnings estimate for 2022 has increased 4.4%.
Let's look at the industry's performance and current valuation.
Industry Versus Broader Market
The Zacks Retail – Supermarkets industry has outperformed the S&P 500 as well as the broader Zacks Retail – Wholesale sector over the past year.
The industry has gained 12.2% over this period compared with the S&P 500's growth of 5.1%. Meanwhile, the broader sector has declined 25.5% in the said time frame.
Industry's Current Valuation
On the basis of forward 12-month price-to-earnings (P/E), which is commonly used for valuing consumer staples stocks, the industry is currently trading at 19.92X compared with the S&P 500's 18.43X and the sector's 21.27X.
Over the last five years, the industry has traded as high as 24.48X and as low as 16.15X, with the median being at 20.21X.
3 Supermarket Stocks to Keep a Close Eye On
The Kroger Co.: The company's digital business remains one of its key growth drivers. The Kroger Co. has been focusing on a no-contact delivery option, low-contact pick-up service and ship-to-home orders. Apart from this, the company's "Restock Kroger" program involving investments in the omni-channel platform, identifying margin-rich alternative profit streams, merchandise optimization, and lowering of expenses has been gaining traction.
A dominant position among the nation's largest grocery retailers enables The Kroger Co. to boost market share with the expansion of plant-based products, digital coupons, order online pick up in-store and smart shopping lists.
Further, the company's Customer 1st strategy enriches consumers' shopping experience and convinces them to return to stores. KR has seen upward estimate revisions for its current fiscal year's bottom line over the past 30 days by 6.7%. This Cincinnati-based retailer has an estimated long-term earnings growth rate of 9.9% as well as a trailing four-quarter earnings surprise of 18%, on average. This Zacks Rank #1 (Strong Buy) stock has surged 37.3% in the past six months. You can see the complete list of today's Zacks #1 Rank stocks here.
Companhia Brasileira: This Zacks Rank #2 (Buy) company is gaining on its digital transformation efforts in the face of consumers' increased preference for online shopping. Certainly, its delivery models, including same-day delivery — Express and Click & Collect, Traditional or next-day delivery, and Last Mile or next-hour delivery — James Delivery and Open Platform, have been working well. Apart from this, Companhia Brasileira's focus on store expansion is noteworthy. The Zacks Consensus Estimate for its current fiscal-year bottom line has risen considerably over the past 30 days.
Notably, this Brazilian retailer of food, clothing, home appliances, electronics, and other products has an estimated long-term earnings growth rate of 31.9%. Shares of CBD have declined 13.5% in the past six months.
Walmart:The supermarket giant has been benefiting from its robust omnichannel efforts and last-mile delivery capabilities. With more customers and members returning to stores and clubs, demand seems to be strong. Walmart has been gaining from its sturdy comp sales record, which in turn is driven by its constant expansion efforts and splendid e-commerce performance. The company has been focused on store remodeling in an attempt to upgrade them with advanced in-store and digital innovations.
From fiscal 2021 beginning till fiscal 2022 end, the company's digital sales, as a percentage of sales, increased from 6% to 13%. Walmart has been taking several e-commerce initiatives, including buyouts, alliances, and improved delivery and payment systems.
Additionally, Walmart is making aggressive efforts to expand in the booming online grocery space, which has long been a major contributor to e-commerce sales. The consensus mark for this omnichannel retailer's current fiscal year earnings has jumped 0.6% in the past 30 days. This Zacks Rank #3 (Hold) stock has climbed 0.8% in the past six months.
Why Haven't You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared+40.3%, +48.2%, +67.6%, +94.4%, and+95.3%. Today you can access their live picks without cost or obligation.
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Zacks Industry Outlook Highlights Walmart, The Kroger, and Companhia Brasileira de Distribuicao
For Immediate Release
Chicago, IL – March 17, 2022 – Today, Zacks Equity Research discusses Walmart Inc. (WMT - Free Report) , The Kroger Co. (KR - Free Report) and Companhia Brasileira de Distribuicao
Industry: Supermarkets
Link: https://www.zacks.com/commentary/1882682/3-supermarket-stocks-worth-watching-on-omnichannel-strength
Players in the Zacks Retail – Supermarkets industry are benefiting from their continued efforts to enhance store and online operations. Companies have been committed to improving delivery and payment options alongside strengthening assortments. These investments, high COVID-related costs and supply-chain costs however come at the cost of margins.
Nonetheless, improving store traffic and online demand, along with robust efforts to bolster omnichannel operations keep Walmart Inc., The Kroger Co., and Companhia Brasileira de Distribuicao well-positioned.
About the Industry
The Zacks Retail – Supermarkets industry includes supermarket retailers, which offer grocery, health and beauty aids, household chemicals, electronics, stationery, automotive accessories, hardware and paint, sporting goods, fabrics and crafts, entertainment products, home furnishings and much more. Players in this industry operate through various formats such as supermarkets, multi-department stores, retail stores, discount stores, supercenters, hypermarkets and warehouse clubs.
Nevertheless, food retail accounts for a chunk of their business. The industry has undergone a significant transformation over the years, with e-commerce playing a strong role. Given consumers' rising preference for online shopping, industry participants have been enhancing pickup and delivery services as well as offering easy payment options.
3 Trends Shaping the Future of the Supermarkets Industry
Solid Omnichannel Efforts: Supermarket retailers have been going all the way to strengthen operations – both stores and online. To this end, they have been focused on store improvisation, merchandise enhancement, prudent pricing strategy and efforts to replenish assortments.
Additionally, companies have been pushing the edge out of the envelope to bolster online operations. In fact, pandemic-led social distancing has taken online shopping to another level – causing industry players to constantly step up their efforts in this arena through meaningful buyouts, alliances, and improved delivery and payment systems. In this regard, companies have been benefiting from their same-day delivery, buy online and pick-up in-store, curbside pickup as well as contactless payment options.
Despite improvement in store traffic with things getting back to normal and people stepping out, online shopping remains popular. Companies' concerted efforts to unite store and online operations to offer customers a solid omnichannel experience certainly keep them well placed for growth.
Spike in Demand to Stay: Supermarket companies have been benefitting from high demand (especially online) for essentials due to the pandemic-induced elevated at-home consumption. Incidentally, higher dine at-home and work from home practices have boosted demand for staple products, especially groceries, cleaning supplies, and medicines.
Although demand has moderated from the initial spike, it remains higher than the pre-pandemic levels. In fact, even with things opening up and curbs being lifted, the pent-up demand trend is likely to stay in the near term, as a number of Americans still prefer to work and cook at home. This indeed calls for supermarket players to continue making investments toward innovative offerings and merchandising to make the most of such trends.
Pressure on Margins: Supermarket players are facing margin pressure owing to elevated COVID-related costs. These include additional employee payments and benefits along with costs associated with upgraded safety and sanitization to protect the health of customers and team members. Apart from this, companies' constant technological investments to bolster online operations, elevated supply-chain and wage expenses pose a threat to margins. Continued price investments and other promotion activities also come at the cost of margins.
Zacks Industry Rank Indicates Solid Prospects
The Zacks Retail – Supermarkets industry is housed within the broader Zacks Retail – Wholesale sector. The industry currently carries a Zacks Industry Rank #28, which places it in the top 11% of more than 250 Zacks industries.
The group's Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1. Looking at the aggregate earnings estimate revisions, it appears that analysts are gradually becoming more confident about this group's earnings growth potential. Since the beginning of November 2021, the industry's consensus earnings estimate for 2022 has increased 4.4%.
Let's look at the industry's performance and current valuation.
Industry Versus Broader Market
The Zacks Retail – Supermarkets industry has outperformed the S&P 500 as well as the broader Zacks Retail – Wholesale sector over the past year.
The industry has gained 12.2% over this period compared with the S&P 500's growth of 5.1%. Meanwhile, the broader sector has declined 25.5% in the said time frame.
Industry's Current Valuation
On the basis of forward 12-month price-to-earnings (P/E), which is commonly used for valuing consumer staples stocks, the industry is currently trading at 19.92X compared with the S&P 500's 18.43X and the sector's 21.27X.
Over the last five years, the industry has traded as high as 24.48X and as low as 16.15X, with the median being at 20.21X.
3 Supermarket Stocks to Keep a Close Eye On
The Kroger Co.: The company's digital business remains one of its key growth drivers. The Kroger Co. has been focusing on a no-contact delivery option, low-contact pick-up service and ship-to-home orders. Apart from this, the company's "Restock Kroger" program involving investments in the omni-channel platform, identifying margin-rich alternative profit streams, merchandise optimization, and lowering of expenses has been gaining traction.
A dominant position among the nation's largest grocery retailers enables The Kroger Co. to boost market share with the expansion of plant-based products, digital coupons, order online pick up in-store and smart shopping lists.
Further, the company's Customer 1st strategy enriches consumers' shopping experience and convinces them to return to stores. KR has seen upward estimate revisions for its current fiscal year's bottom line over the past 30 days by 6.7%. This Cincinnati-based retailer has an estimated long-term earnings growth rate of 9.9% as well as a trailing four-quarter earnings surprise of 18%, on average. This Zacks Rank #1 (Strong Buy) stock has surged 37.3% in the past six months. You can see the complete list of today's Zacks #1 Rank stocks here.
Companhia Brasileira: This Zacks Rank #2 (Buy) company is gaining on its digital transformation efforts in the face of consumers' increased preference for online shopping. Certainly, its delivery models, including same-day delivery — Express and Click & Collect, Traditional or next-day delivery, and Last Mile or next-hour delivery — James Delivery and Open Platform, have been working well. Apart from this, Companhia Brasileira's focus on store expansion is noteworthy. The Zacks Consensus Estimate for its current fiscal-year bottom line has risen considerably over the past 30 days.
Notably, this Brazilian retailer of food, clothing, home appliances, electronics, and other products has an estimated long-term earnings growth rate of 31.9%. Shares of CBD have declined 13.5% in the past six months.
Walmart:The supermarket giant has been benefiting from its robust omnichannel efforts and last-mile delivery capabilities. With more customers and members returning to stores and clubs, demand seems to be strong. Walmart has been gaining from its sturdy comp sales record, which in turn is driven by its constant expansion efforts and splendid e-commerce performance. The company has been focused on store remodeling in an attempt to upgrade them with advanced in-store and digital innovations.
From fiscal 2021 beginning till fiscal 2022 end, the company's digital sales, as a percentage of sales, increased from 6% to 13%. Walmart has been taking several e-commerce initiatives, including buyouts, alliances, and improved delivery and payment systems.
Additionally, Walmart is making aggressive efforts to expand in the booming online grocery space, which has long been a major contributor to e-commerce sales. The consensus mark for this omnichannel retailer's current fiscal year earnings has jumped 0.6% in the past 30 days. This Zacks Rank #3 (Hold) stock has climbed 0.8% in the past six months.
Why Haven't You Looked at Zacks' Top Stocks?
Our 5 best-performing strategies have blown away the S&P's impressive +28.8% gain in 2021. Amazingly, they soared+40.3%, +48.2%, +67.6%, +94.4%, and+95.3%. Today you can access their live picks without cost or obligation.
See Stocks Free >>
Join us on Facebook: https://www.facebook.com/ZacksInvestmentResearch/
Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
https://www.zacks.com
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.