Though we’re not even at its mid-point, it’s already been a topsy-turvy 2018 for the supermarket. After trading between £2.15 and £2.30 for the first 2 and a half months, the stock then nose-dived off the back of its full year results, eventually hitting a 19 month nadir of £2.04 by the end of March.
However, since then the stock has come on leaps and bounds. A ‘Buy’ rating from Bernstein and a positive report from Kantar Worldpanel, which said that the firm’s sales had increased by 2.4% for the 12 weeks to 4th April, helped lift the stock from its lows and then some, propelling Morrisons to a current trading price, and near 8 month peak, of £2.46. And that’s even with the news that Sainsbury's (LON:SBRY) and Asda are set to merge, a move that could pose a serious problem for the UK’s 4th place supermarket.
So, what was wrong with those aforementioned annual results? Well, in reality, not that much. Group like-for-like sales (excluding fuel and VAT) rose a healthy 2.8%, against the 1.9% increase the year previous, while total revenue shot up 5.8% to hit £17.3 billion.
Pre-tax profit was also strong, seeing a 16.9% surge to £380 million, allowing both a 12% bump to its full-year dividend to 6.1p per share and a special dividend of 4p per share. Yet investors just weren’t receptive to this supermarket sweep, instead focusing on a negligible dip in margins and a 2.1% drop in reported operating profit to £458 million.
In terms of Thursday’s Q1 figures, investors will be looking for growth to reflect those Kantar numbers from the start of April. If anything, they may want something a bit more robust, given the impending shifts in the supermarket landscape.
WM Morrison Supermarkets PLC (LON:MRW) has a consensus rating of ‘Hold’ alongside an average target price of £2.28.
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