Market-wise Britain’s fourth favourite supermarket – based on Kantar Worldpanel’s sales figures at least – has been a bit all over the place in 2017. Morrisons has found itself ranging between £2.30 and £2.50 for most of the year, with a brief foray to a 3-and-a-half year high of £2.54 towards the end of August. The company now sits at the lower end of that bracket, at a current trading price of £2.27.
The reason for the supermarket’s recent fall was its half year statement back in mid-September. Not that the figures were bad – far from it. For the 6 months to the end of July Morrisons posted a 3% rise in group like-for-like sales (excluding fuel and VAT) alongside a 4.8% surge in turnover to £8.42 billion.
Underlying pre-tax profit, meanwhile, was up a better than expected 12.7% to £177 million, with underlying earnings rising 14.9% to 5.79p per share. Morrisons even hiked its interim dividend by 5.1%, taking it to 1.66p per share. Yet investors, for some reason, weren’t impressed, sending the stock nearly 4.5% lower on the day of the results.
Morrisons will hope it has better luck with Thursday’s third quarter update. With the cost of food and (non-alcoholic) drink jumping 3.1% in September, analysts are looking for the supermarket to post a 2%-plus rise in like-for-likes for the period. That would mark the 4th consecutive quarter of comparable sales growth, continuing the robust recovery seen by Morrisons since David Potts took over in March 2015.
WM Morrison Supermarkets PLC (LON:MRW) has a consensus rating of ‘Hold’ with an average target price of £2.27.
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