Sligro share Price and Value "smoking products are low yielding" ? % or $ ?

Sligro 2023 Annual Report: "Als gevolg van de afbouw van de rookwarenomzet vanaf 1 juli 2024 stroomt er veel (laag renderende) omzet uit," 

"As a result of the phasing out of tobacco products sales from July 1, 2024, a lot of (low-yielding) sales will be lost,"

Contrast this to Murphy USA which has had tremendous growth in net profit over the past decade:

https://finance.yahoo.com/news/q3-2023-murphy-usa-inc-095550499.html Conference call:

"In total, these efforts grew food and beverage sales and contribution dollars for the quarter by 6.1% and 5.7%, respectively. Our nicotine business continues to outperform, gaining share in all key categories. while strong tobacco performance makes it relatively more difficult to shift our merchandise mix as a percentage. And remember, we take dollar signs to the bank, not percentage signs. The steady growth in contribution margin dollars supports ratable growth in our merchandise business. "

SECTOR: [PASS]  Sligro is in retail and foodservice and neither a technology nor financial Company, and therefore this methodology is applicable. 

SALES: [PASS] The investor must select companies of "adequate size". This includes companies with annual sales greater than €260 million. Sligro's sales of €2 859 million, based on 2023 sales, pass this test.

CURRENT RATIO: [FAIL] The current ratio must be greater than or equal to 2. Companies that meet this criterion are typically financially secure and defensive. Sligro's current ratio $590m/$712m of 0.8 fails the test.

LONG-TERM DEBT IN RELATION TO NET CURRENT ASSETS: [FAIL] For industrial companies, long-term debt must not exceed net current assets (current assets minus current liabilities). Companies that do not meet this criterion lack the financial stability that this methodology likes to see. The long-term debt for Sligro is €53 million (excluding lease obligations), while the net current assets are -€122 million. Sligro fails this test.

LONG-TERM EPS GROWTH: [FAIL] Companies must increase their EPS by at least 30% over a ten-year period and EPS must not have been negative for any year within the last 5 years. Companies with this type of growth tend to be financially secure and have proven themselves over time. Sligro EPS grew by 0% over the past years and fails this test.

Earnings Yield:  [FAIL] [PASS]  The Earnings/Price (inverse P/E) %, based on the lesser of the current Earnings Yield or the Yield using average earnings over the last 3 fiscal years, must be "acceptable", which this methodology states is greater than 6,5%. Stocks with higher earnings yields are more defensive by nature. Sligro's E/P of  2,2% (using last years Earnings) fails this test.

Graham Number value: [FAIL] The Price/Book ratio must also be reasonable. That is the Graham number value must be greater than the market price. Sligro has a Graham number of √(15 x €0,5 EPS x 1,5 x €10,5 Book Value) = €11

Dividend= €0,3 ? /€13.6 = 2%

Van Sligro 19 februari 2024 

Beste John,

 

Wij kijken naar de integrale bijdrage van tabak in €, dus niet alleen naar de brutomarge (in € per collo door de hoge collo waarde nog best ok) maar ook alle kosten en risico’s die er mee gemoeid zijn.

 

Wij beoordelen dus voornamelijk op € al hoort daar ook een zeer laag % bij….

 

In de zelfbediening verdwijnt het koperspubliek überhaupt want dat zijn voornamelijk retailers die als wederverkoper bij ons inkopen en zij mogen niet meer verkopen vanaf 1 juli as.

 

In de bezorging loont het in € onder aan de streep ook niet om dit te blijven doen, gezien de kostbare infrastructuur en diefstalgevoeligheid wat extra maatregelen en kosten vraagt.

 

Los daarvan is tabak voor ons echt en serviceproduct aangezien wij ons in de kern richten op Food en aan Food gerelateerde Non-Food artikelen en diensten.

Nu is er door de wetgeving een meer gelijk speelveld voor de spelers in de markt en daarmee voor ons een passend moment om hieruit te stappen.

In BE zijn wij bewust nooit met tabaksverkoop gestart en nu gaan we er in NL dus ook mee stoppen.

 

Groet

Rob van der Sluijs