These are tough times to be in the grocery business. With intensifying competition from newer entrants like Aldi and Lidl, steady pressure from Walmart (WMT), and growing online sales, it's hard for everybody, and it's even harder for organic/natural-focused grocers like Natural Grocers (NGVC) and Sprouts (SFM) as "regular" grocers increase their organic assortment and continue to pressure pricing.
Natural Grocers shares have fallen 40% since my last update,
and the company is now largely uncovered (two analysts currently have
published estimates). While the company has not done quite as well as
I'd hoped six months ago in terms of boosting margins, it looks like a
tough macro and a negative sentiment toward the sector has more to do
with the underperformance. I do see the shares as undervalued now, but
the grocery space is getting more and more challenging, and Natural
Grocers has relatively less room for swallowing higher COGS than its
peers/rivals.
Read the full article here:
Better Execution At Natural Grocers Counterbalanced By A Tougher Operating Environment
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