J Sainsbury plc (LON: SBRY), which trades as Sainsbury’s, is a prominent supermarket chain and the second largest in the United Kingdom, currently holding a 15.2% share (according to Kantar) of the grocery market in Great Britain.
Established in 1869 by John James Sainsbury, the company has been a key player in the UK retail industry. While it was the largest UK retailer of groceries for most of the 20th century, it has since maintained its position as a leading supermarket chain in the UK.
Sainsbury’s operates under the umbrella of J Sainsbury plc, which is divided into three main divisions: Sainsbury’s Supermarkets Ltd, Sainsbury’s Bank, and Argos. Notably, the largest overall shareholder is the Qatar Investment Authority, via Qatar Holdings, which has an approximately 15% stake in the company. Simon Roberts currently serves as the Chief Executive Officer.
The company’s shares are listed on the London Stock Exchange under the ticker SBRY, and the stock is part of the FTSE 100 Index.
YOUR CAPITAL IS AT RISK
Sainsbury EPS and Revenue Breakdown 2020-2023
| Sainsbury | Annual EPS | Annual Revenue |
|---|---|---|
| 2019/2020 | 6.7p | £28.99billion |
| 2021/2022 | 29.8p | £29.90 billion |
| 2022/2023 | 9p | £31.49 billion |
Sainsbury Share Price & Dividend Yield
The Sainsbury share price (SBRY.L) experienced a strong rise between October 2023 and January, but it has since fallen off, initially giving up those gains and more on the back of poor Christmas sales and then the market reaction to the company’s cost-saving strategy. However, more recently, it has begun to push higher once again, although whether the bullish momentum can be sustained is another question. As of April 11, 2024, the stock trades at 262p, well below its January 2024 highs of over 300p.
Sainsbury’s pays dividends, with the current dividend yield at a healthy 4.33%.
UK Supermarket Industry Comparison
Sainsbury Share Price Forecast
Overall, the analyst view on Sainsbury is split with four assigning the stock a Buy rating, two assigning it a Hold rating and one a Sell rating.
In late March, UBS upgraded Sainsbury to Buy from Neutral with a price target of 295p, up from 275p. The bank said the market does not fully reflect SBRY’s mid-term margin and cash return potential. It also noted that the stock pullback has provided a good entry point.
Meanwhile, Morgan Stanley raised Sainsbury to Equal Weight from Underweight in February, assigning the stock a 290p price target. The investment bank believes volume growth will be a key theme for European retailers this year. Furthermore, they explain that as price inflation moderates, they expect sales growth to become more reliant on volumes and retailers in the “sweet spot” to be rewarded by the market.
In December, Goldman Sachs raised Sainsbury to Buy from Neutral with a new price target of 350p, up from 305p. Goldman anticipates a “rational” UK food market with low single-digit inflation and volume growth. They note that Sainsbury’s positioning has strengthened throughout the year. Goldman’s price analysis indicates that SBRY has closed the price gap versus low-cost supermarket Aldi.
Our View: It’s been a tough year for Sainsbury’s shareholders so far, down 13% (as of April 11, 2024). However, the current share price, following the pullback, may seem attractive to many investors, while the supermarket giant will also be considered a slightly safer stock given its market position and dividend payments.
Shares Suitability
Sainsbury’s is a well-established supermarket chain with a strong presence in the UK grocery market. As such, it could offer steady growth potential as a long-term investment.
Sainsbury’s operates in a competitive sector with tight margins. The grocery market is also susceptible to economic fluctuations that can impact consumer spending. As a result, Sainsbury’s maybe a stock to consider if you have a moderate risk tolerance and are comfortable with some potential volatility.
Sainsbury’s has a history of paying dividends to shareholders. While not the highest yielder, it can provide a source of income for investors seeking regular payouts.
Given the more recent dip in the SBRY share price, many may consider it undervalued, providing an opportunity for capital appreciation in the long run. However, careful research and analysis are needed to assess the company’s true value.
