9:51 16/01/2017 Re: Investors Chronicle tip
Think you are correct this came as an update from the FT to me as a subscriber.
20:39 15/01/2017 Re: Investors Chronicle tip
Was this not just an update in light of the Christmas trading......i.e saying no change from when it was tipped at the beginning of last year? PE
11:14 15/01/2017 More discounters recalls
HomeBargins is having to recall a whole range of frozen foods. They were cheap because they were packed in premises not registered or inspected by food standards. Apparently last month Aldi had to recall its prawns. Not good for the discounters. How long before the tide really does turn?
19:35 13/01/2017 Investors Chronicle tip
Investors Chronicle re tipped Sainsbury's today. Perhaps this helped with the share price and to counter negative broker sentiment.
13:51 12/01/2017 Re: Decided to sell
Jds - "When will this sector be trendy?" Lupo - "At some stage the discounters will come a cropper with a horse-meat type scandal. Low prices come at a cost... Eventually, shoppers will find that the price difference doesn't make up for the lack of choice, range and quality at the likes of Sainsbury's." Not sure the Germans are any more likely than the big domestic players to suffer such a scandal. They are huge, experienced and very successful operators, in Germany and many countries worldwide - dismiss them as fly-by-night interlopers at your peril! But equally, their format - no frills, low service level, low prices, limited range - will always have a finite appeal, as we can already see. The question is, at what level of market share do they hit up against this limit? Probably higher than currently, but difficult to quantify. "Sainsbury's cashflow will knock down debt enabling them to, at least, sustain the divi and maybe pay a special. Before Lidl and Aldi came on strong, I had high hopes of Sainsbury's reaching saturation, going ex growth, cutting back massively on capex and becoming a cash co w. Once Argos is firmly bedded down, that could yet happen." Yes, Lupo, couldn't agree more. As per my post just before, generating substantial free cash could transform the stock and/or sector IMHO as an investment proposition, into the defensive cash cow that food retail perhaps always should have been. But much remains to be proved on whether SBRY and/or peers can sustain the current lower capex / strong FCF profile. And it will always be highly competitive, with periodic winners and losers. So I'm not sure it'll ever be "trendy" - or, indeed, should be? Doesn't mean reasonable total returns cannot still be generated - relative to risk, of course.
13:34 12/01/2017 Re: Beating Expectations
"Bill -- doesn't the P/E only have any real meaning when measured against growth rates? I guess you could have a P/E of 40 and look cheap if your earnings are growing at 80%.... I can't see how that works in SBRY favour, when the earnings have declined for the last 3 years and are set to do so again this year." Games - yes, up to a point. One key challenge for SBRY is proving that current year earnings are a sustainable "low" from which they can edge up going forward. I say edge up... any better growth than this looks unrealistically ambitious, at least for now. What valuation to put on this? I fully agree with your earlier post - 15x P/E is too racy for this sector, on any "normalised" EPS. But it's not just down to growth, and equally unwise to hang your hat on any one valuation metric. It's also about quality of earnings and cash conversion. Very poor FCF conversion was the ugly hallmark of SBRY and peers for years, yet this has changed significantly - at the current SP, the FCF yield was 7.5% last year, around a 50% premium to the market average. If they can sustain anything near this going forward (and again, I say "if"), then a 12x P/E rating (and divi yield somewhere close to 5%) looks perfectly reasonable (some would say, distinctly undemanding) to me. "However I'm not sure this warrants all the euphoria behind the sentiment shift. Also after Christmas will people still flock to Argos?" Businesses like Argos make most of their annual profits over the Xmas period - and likely always will. Only time will tell whether they can continue to prosper - all you can say is they are doing pretty well as of now, and delivered well at the key time of year. So bodes well? "In fact the figures look pretty grim and hats off to getting Argos moving but don't you think Argos will drag down the overall margin- I dunno, they haven't told us yet?" And I'm not sure this matters - different businesses, different margins, any "group" margin may change with a shift in the business mix without necessarily having any impact on the value of the individual parts. The key will be, can they maintain - and perhaps even grow - the separate margin levels in the distinct units? This is what I - and the market IMHO - will be looking for.
12:50 12/01/2017 Re: Decided to sell
The dividends have been good but the future is Argos and some growth.
11:44 12/01/2017 Re: Decided to sell
The share price hasn't been trendy since the early 80's! There were a few false dawns but apart from maxwells and Ferratti a worse performing share since the inception of the ftse 100 you will struggle to find. In fact in 1984 the company was easily in the top 10 companies, it's now at 77! Yes I think there is an element of the company being out of fashion. For sure some sectors at some times build up a positive or negative perception of them. I sense, although this may be change, that the negative perception of the sector is lifting bit. It doesn't help that share price wise that seems much for true of mrw and tsco than sbry. However it's worth noting that the negative fashion of Sainsbury's does not mean that the pessimism was wrong. Margins at the company have been under pressure for 30 years, and with rising inflation and pressure to keep prices down I only see this getting worse. I do believe though that discounters will only over take a certain share of the market, and it does appear that (mainly fuelled by debt) consumer confidence is running high. Let's see, I hope for the best, I am used to being disappointed.
10:02 12/01/2017 Re: Decided to sell
I think the discounters are already getting very tarnished. Quality will win over in the long term. Aldi and Lidl customers have to fight through cardboard boxes and wait to pay and have to check their car is still in one piece before drivin off. Shopping should be a pleasure!
9:53 12/01/2017 Re: Decided to sell
Jds - "When will this sector be trendy?" Good question, m8. Here's a few thoughts, although more in favour of Sainsbury's than the sector as a whole. At some stage the discounters will come a cropper with a horse-meat type scandal. Low prices come at a cost. Already, althougfh my missus does a spot of selective shopping at Lidl, we avoid Aldi like the plague after unsatisfactory product experiences. Eventually, shoppers will find that the price difference doesn't make up for the lack of choice, range and quality at the likes of Sainsbury's. Sainsbury's cashflow will knock down debt enabling them to, at least, sustain the divi and maybe pay a special. Before Lidl and Aldi came on strong, I had high hopes of Sainsbury's reaching saturation, going ex growth, cutting back massively on capex and becoming a cash co w. Once Argos is firmly bedded down, that could yet happen. Ever optimistic me, but I think that it's realistic and worth waiting for.
8:53 12/01/2017 Re: Decided to sell
Hmmm share price down! Nice call. For years many of us I have identified Sainsbury as the supermarket stock with the most upside. Assets worth pounds of the share price, takeovers from the middle east, Argos distribution network, and own brand foods tasting better than Tesco, Asda and Morrison?s (though Tesco beef slices are very tasty ? no really they are!) I told a family member to sell their Sainsbury?s only to be told that they sold ages ago for 280p. Unless Argos becomes the next Amazon and my credit card bill said it certainly was for me this Christmas with prices and stock levels to beat Amazon. This stock is going nowhere. When will this sector be trendy?
21:26 11/01/2017 Re: Beating Expectations
Doug, But if you had tried to access them before 8.15am as I did ( and you obviously didn't) then you would know they weren't there then. They may have been released at 7am, as I know they were cos I accessed them via the BBC, but were NOT on II. Yet again Doug you jump to conclusions and get them wrong. (remember continuation votes and their constitutional necessity on another board) PE
15:44 11/01/2017 Decided to sell
I was wrong with my timing on selling Shell :D but I think the retail sector is a clearer likely-to-fall sector. Either the supermarkets keep prices low and reduce margins/earnings, or they pass-on the caused-by-Brexit price increases to the customer and lose market share.... either way IMO it's a likely lose/lose. Out at 273.4 this morning, and so showing a (small) profit over the 3-ish years of ownership. Dividends of course have also been good over that period, so no regrets. GLA
15:23 11/01/2017 Re: Beating Expectations
This was a trading statement and companies are not allowed to disclose earning, only at the half time and full year. There is nothing suspicious or negative about this. In the same way a company will not disclose margins.
15:04 11/01/2017 Re: Beating Expectations
""SBRY - FV 290p (18% upside). With resilient earnings performance and decent strong balance sheet, a P/E more like 12x (forecast div yield 4.0%) would hardly be demanding."" Bill -- doesn't the P/E only have any real meaning when measured against growth rates? I guess you could have a P/E of 40 and look cheap if your earnings are growing at 80%. I can't see how that works in SBRY favour, when the earnings have declined for the last 3 years and are set to do so again this year. More worrying is that SBRY put out a statement indicating some sales figures, but nothing about earnings. The sales figures on a like for like basis for the supermarket fell 2.5%. OK the excitement has been on execution of Argos saving the decline in the core grocery business - you can't knock that in itself. However I'm not sure this warrants all the euphoria behind the sentiment shift. Also after Christmas will people still flock to Argos? In fact I think this is already dawning on some given that most of the gains this morning have evaporated - MRW is down 1.91% as I type, Tesco is down 2.00% and SBRY has paired back to a gain of 1.93%. In fact the figures look pretty grim and hats off to getting Argos moving but don't you think Argos will drag down the overall margin- I dunno, they haven't told us yet? Games