Weis Markets, Inc. (WMK) Bundle
Understanding Weis Markets, Inc. (WMK) Revenue Streams
Understanding Weis Markets, Inc.’s Revenue Streams
In 2024, the total net sales for Weis Markets, Inc. reached $1.2 billion for the thirteen weeks ended September 28, 2024, reflecting an increase of 2.2% from $1.16 billion for the same period in 2023. For the thirty-nine weeks ended September 28, 2024, total net sales amounted to $3.55 billion, up by 1.8% from $3.48 billion in 2023.
Breakdown of Primary Revenue Sources
The revenue sources for Weis Markets are primarily categorized into four segments:
- Grocery: $968.6 million (81.7%) in Q3 2024, compared to $960.1 million (82.7%) in Q3 2023.
- Pharmacy: $155.2 million (13.1%) in Q3 2024, compared to $133.3 million (11.5%) in Q3 2023.
- Fuel: $60.9 million (5.1%) in Q3 2024, compared to $64.5 million (5.6%) in Q3 2023.
- Manufacturing: $1.6 million (0.1%) in Q3 2024, compared to $2.4 million (0.2%) in Q3 2023.
Total net sales for the thirteen weeks ended September 28, 2024, were $1.186 billion, while for the thirty-nine weeks, the total was $3.547 billion.
Year-over-Year Revenue Growth Rate
The year-over-year revenue growth rates are as follows:
-
13 Weeks Ended:
- 2024 vs 2023: 2.2%
-
39 Weeks Ended:
- 2024 vs 2023: 1.8%
Comparable store sales for the thirteen weeks ended September 28, 2024, increased by 2.5% (including fuel) and 3.0% (excluding fuel) compared to the same period in the previous year.
Contribution of Different Business Segments to Overall Revenue
The following table illustrates the contribution of each business segment to the overall revenue for both the thirteen and thirty-nine weeks ended September 28, 2024:
| Segment | Q3 2024 Revenue (in millions) | Q3 2023 Revenue (in millions) | 39 Weeks 2024 Revenue (in millions) | 39 Weeks 2023 Revenue (in millions) |
|---|---|---|---|---|
| Grocery | $968.6 | $960.1 | $2,917.0 | $2,915.4 |
| Pharmacy | $155.2 | $133.3 | $446.7 | $380.9 |
| Fuel | $60.9 | $64.5 | $178.6 | $179.8 |
| Manufacturing | $1.6 | $2.4 | $4.3 | $7.8 |
| Total | $1,186.2 | $1,160.3 | $3,546.6 | $3,484.0 |
Analysis of Significant Changes in Revenue Streams
Notably, the pharmacy segment saw a significant increase in revenue, rising from $133.3 million in Q3 2023 to $155.2 million in Q3 2024, indicating a growth of 16.4%. Conversely, fuel revenue decreased from $64.5 million in Q3 2023 to $60.9 million in Q3 2024, a decline of 5.0%.
A Deep Dive into Weis Markets, Inc. (WMK) Profitability
A Deep Dive into Weis Markets, Inc.'s Profitability
Gross Profit Margin:
For the thirteen weeks ended September 28, 2024, the gross profit on sales was $291,140 thousand, representing a gross profit margin of 24.5%. This is a slight decrease from 24.6% in the same period of 2023. In the thirty-nine weeks ended September 28, 2024, gross profit increased to $876,874 thousand, with a margin of 24.7%, down from 25.0% in the prior year.
Operating Profit Margin:
Operating income for the thirteen weeks ended September 28, 2024, was $29,558 thousand, resulting in an operating margin of 2.5%, compared to 2.6% for the same period in 2023. For the thirty-nine weeks, operating income dropped to $89,409 thousand, yielding a margin of 2.5%, down from 3.1% in the previous year.
Net Profit Margin:
Net income for the thirteen weeks ended September 28, 2024, was $25,840 thousand, translating to a net profit margin of 2.2%, up from 2.0% in the same period of 2023. For the thirty-nine weeks, net income was $75,263 thousand, with a margin of 2.1%, down from 2.4% the prior year.
Trends in Profitability Over Time
The profitability metrics indicate a mixed performance trend. Gross profit showed a slight increase in absolute terms, but margins decreased slightly, reflecting cost pressures. Operating income and margins have both decreased year-over-year, indicating challenges in maintaining operational efficiency amid rising costs.
Comparison of Profitability Ratios with Industry Averages
Industry averages for grocery retailers suggest a gross margin of approximately 25% to 30%. The operating margin typically ranges from 2% to 5% for similar companies. The net profit margin for the industry averages around 1% to 3%.
Weis Markets' profitability margins are on the lower end of these ranges, indicating potential areas for improvement in cost management and operational efficiencies.
Analysis of Operational Efficiency
The operating, general and administrative expenses for the thirteen weeks ended September 28, 2024, were $261,582 thousand, representing 22.1% of net sales. This is consistent with the 22.1% percentage from the same period in 2023. For the thirty-nine weeks, these expenses totaled $787,465 thousand, or 22.2% of net sales, compared to 21.9% in the previous year.
Employee expenses accounted for approximately 60.4% of total operating expenses, with direct store labor increasing by 0.2% as a percentage of sales compared to the previous year. This increase highlights the need for effective cost management strategies to enhance profitability amid rising labor costs.
| Metrics | Q3 2024 | Q3 2023 | 39 Weeks 2024 | 39 Weeks 2023 |
|---|---|---|---|---|
| Gross Profit ($000) | 291,140 | 285,723 | 876,874 | 870,558 |
| Gross Margin (%) | 24.5% | 24.6% | 24.7% | 25.0% |
| Operating Income ($000) | 29,558 | 29,673 | 89,409 | 107,914 |
| Operating Margin (%) | 2.5% | 2.6% | 2.5% | 3.1% |
| Net Income ($000) | 25,840 | 23,226 | 75,263 | 83,305 |
| Net Margin (%) | 2.2% | 2.0% | 2.1% | 2.4% |
Debt vs. Equity: How Weis Markets, Inc. (WMK) Finances Its Growth
Debt vs. Equity: How Weis Markets, Inc. Finances Its Growth
As of September 28, 2024, Weis Markets, Inc. reported a total debt of $30 million under its revolving credit agreement, which is secured with letters of credit totaling $16.8 million. The company has not had any outstanding obligations under this credit agreement since the second quarter of 2018.
The company’s debt-to-equity ratio stood at 0.02 as of September 28, 2024, indicating a conservative approach to leveraging its capital structure. This ratio is significantly below the industry average of approximately 0.5, suggesting a lower reliance on debt financing relative to equity.
In terms of recent debt activity, Weis Markets entered into a revolving credit agreement with Wells Fargo Bank, last amended on September 29, 2023. The agreement provides for an unsecured facility with an aggregate principal amount not to exceed $30 million, maturing on October 1, 2027.
Credit ratings assigned to the company reflect stability, with no significant downgrades noted in the recent period. The interest expense related to long-term debt was $8,000 for the thirteen weeks ended September 28, 2024, unchanged from the same period in the prior year.
Weis Markets balances its financing strategy by maintaining minimal debt while leveraging equity funding for growth. The company's total equity as of September 28, 2024, was reported at $1.42 billion, reflecting a strong capital base to support operational and strategic initiatives.
| Financial Metric | Value |
|---|---|
| Total Debt | $30 million |
| Letters of Credit | $16.8 million |
| Debt-to-Equity Ratio | 0.02 |
| Industry Average Debt-to-Equity Ratio | 0.5 |
| Long-term Debt Interest Expense (Q3 2024) | $8,000 |
| Total Equity (as of September 28, 2024) | $1.42 billion |
Assessing Weis Markets, Inc. (WMK) Liquidity
Assessing Weis Markets, Inc.'s Liquidity
Current and Quick Ratios
As of September 28, 2024, Weis Markets, Inc. reported a current ratio of 1.25, indicating a healthy liquidity position. The quick ratio, which excludes inventory, stands at 0.83, suggesting that the company might face challenges in covering its short-term liabilities without relying on inventory sales.
Analysis of Working Capital Trends
The working capital for Weis Markets, as of the latest reporting period, was approximately $130 million on September 28, 2024. This represents an increase from $120 million reported on September 30, 2023, indicating an improvement in the company's operational efficiency and liquidity management.
Cash Flow Statements Overview
The cash flow statement for the thirty-nine weeks ended September 28, 2024, shows the following trends:
| Cash Flow Activity | 2024 (in thousands) | 2023 (in thousands) | Change (in thousands) |
|---|---|---|---|
| Net cash provided by operating activities | $100,324 | $43,125 | $57,199 |
| Net cash used in investing activities | ($107,347) | ($109,394) | $2,047 |
| Net cash used in financing activities | ($27,436) | ($27,436) | $0 |
Potential Liquidity Concerns or Strengths
Despite a solid operating cash flow, the company shows potential liquidity concerns with a quick ratio below 1. This indicates that while the company can generate cash from operations, it may struggle to meet immediate obligations without liquidating inventory. Additionally, the company's reliance on a revolving credit facility of $30 million allows for flexibility but also indicates a level of dependency on external financing for liquidity management as of September 28, 2024.
Is Weis Markets, Inc. (WMK) Overvalued or Undervalued?
Valuation Analysis
To determine whether Weis Markets, Inc. is overvalued or undervalued, we will examine key valuation ratios, stock price trends, dividend yield, and the consensus from analysts.
Price-to-Earnings (P/E) Ratio
The P/E ratio is a vital measure for evaluating a company's valuation relative to its earnings. As of the latest financial data:
- P/E Ratio: 15.6
Price-to-Book (P/B) Ratio
The P/B ratio offers insight into how the market values the company's equity compared to its book value:
- P/B Ratio: 1.8
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
This ratio helps assess the valuation of the company relative to its earnings before interest, taxes, depreciation, and amortization:
- EV/EBITDA Ratio: 9.4
Stock Price Trends
The stock price trend over the last 12 months provides context for valuation:
- 12-Month High: $50.25
- 12-Month Low: $38.10
- Current Stock Price: $46.75
Dividend Yield and Payout Ratios
Dividends are a crucial factor for many investors:
- Dividend Yield: 2.2%
- Payout Ratio: 36.4%
Analyst Consensus
Analysts' opinions on the stock provide insight into market sentiment:
- Consensus Rating: Hold
- Number of Analysts: 8
| Valuation Metric | Value |
|---|---|
| P/E Ratio | 15.6 |
| P/B Ratio | 1.8 |
| EV/EBITDA Ratio | 9.4 |
| 12-Month High | $50.25 |
| 12-Month Low | $38.10 |
| Current Stock Price | $46.75 |
| Dividend Yield | 2.2% |
| Payout Ratio | 36.4% |
| Consensus Rating | Hold |
| Number of Analysts | 8 |
Key Risks Facing Weis Markets, Inc. (WMK)
Key Risks Facing Weis Markets, Inc.
Weis Markets, Inc. faces a variety of internal and external risks that could impact its financial health. Below is a detailed breakdown of these risks.
Industry Competition
Competition within the grocery retail sector remains fierce. The company competes not only with regional grocery chains but also with large national players that possess greater financial resources. This competitive pressure could lead to pricing wars, impacting profit margins. For instance, the gross profit margin for the thirteen weeks ended September 28, 2024, was 24.5%, down from 24.6% in the same period in 2023.
Regulatory Changes
The company is subject to various regulations, including health and safety standards, labor laws, and environmental regulations. Changes in these regulations could lead to increased compliance costs. The effective income tax rate was 27.2% for the thirty-nine weeks ended September 28, 2024, slightly higher than 27.1% in the previous year, indicating potential regulatory pressures affecting taxation.
Market Conditions
Fluctuations in market conditions, including inflation, can significantly affect operational costs. The company anticipates overall product costs to increase due to inflationary trends in the food retail industry. For the thirteen weeks ended September 28, 2024, total net sales increased by 2.2% to $1.2 billion, driven in part by retail price inflation.
Operational Risks
Operational risks include supply chain disruptions and labor shortages, which can impact inventory levels and customer service. Employee expenses comprise approximately 60.4% of the total operating expenses, and any increase in wages or benefits could further strain profitability.
Financial Risks
The company has a revolving credit agreement with a maximum principal amount of $30 million and an additional discretionary amount of $70 million. The availability under this agreement was $13.2 million as of September 28, 2024. Any inability to access this credit could hinder operational flexibility.
Strategic Risks
Strategic risks include the potential failure to adapt to changing consumer preferences and technological advancements. The company must continuously innovate to meet customer demands while managing costs effectively. In the thirty-nine weeks ended September 28, 2024, the company reported net income of $75.263 million, down from $83.305 million in the previous year.
Mitigation Strategies
The company has implemented several strategies to mitigate these risks, including diversifying its product offerings and investing in technology to enhance operational efficiency. The depreciation and amortization expense was $83.909 million for the first thirty-nine weeks of 2024, indicating ongoing investment in assets to support growth.
| Risk Factor | Details | Financial Impact |
|---|---|---|
| Industry Competition | Increased competition leading to potential price wars. | Gross profit margin decreased to 24.5%. |
| Regulatory Changes | Changes in compliance regulations affecting costs. | Effective tax rate at 27.2%. |
| Market Conditions | Inflation impacting product costs. | Total net sales increased by 2.2% to $1.2 billion. |
| Operational Risks | Supply chain disruptions and labor shortages. | Employee expenses comprise 60.4% of total operating expenses. |
| Financial Risks | Dependence on credit facilities for operational flexibility. | Availability under credit agreement at $13.2 million. |
| Strategic Risks | Failure to adapt to consumer preferences. | Net income reduced to $75.263 million. |
| Mitigation Strategies | Diversifying product offerings and investing in technology. | Depreciation and amortization at $83.909 million. |
Future Growth Prospects for Weis Markets, Inc. (WMK)
Future Growth Prospects for Weis Markets, Inc.
Analysis of Key Growth Drivers
Weis Markets, Inc. is poised for growth driven by several key factors:
- Product Innovations: The company continues to enhance its product offerings, focusing on organic and locally sourced products to meet changing consumer preferences.
- Market Expansions: The company plans to expand its market presence by opening new store locations and enhancing existing ones. As of September 28, 2024, the company operated 197 stores, which is an increase from 193 stores in the previous year.
- Acquisitions: Potential acquisitions in strategically important regions could bolster market share and operational capabilities.
Future Revenue Growth Projections and Earnings Estimates
Revenue growth is projected to continue, with estimates suggesting a rise of approximately 2.0% to 3.0% in comparable store sales for the fiscal year 2024. For the thirteen weeks ended September 28, 2024, total net sales reached $1.186 billion, reflecting a 2.2% increase from $1.160 billion in the same period of 2023. For the thirty-nine weeks ended September 28, 2024, net sales were $3.547 billion, up 1.8% from $3.484 billion in the prior year.
Strategic Initiatives or Partnerships
Weis Markets has initiated several strategic partnerships aimed at enhancing customer experience and operational efficiency:
- Technological Investments: The company is investing in technology upgrades, including a new enterprise resource planning system, to streamline operations and improve inventory management.
- Collaborations with Local Suppliers: Strengthening ties with local suppliers to expand fresh product offerings and reduce supply chain costs.
Competitive Advantages
Several competitive advantages position the company favorably for future growth:
- Strong Brand Loyalty: Weis Markets has cultivated a loyal customer base through consistent quality and community engagement.
- Strategic Location of Stores: Many stores are strategically located in high-traffic areas, enhancing accessibility and customer footfall.
- Cost Management: Effective cost control measures have maintained profitability despite rising operational costs, with gross profit margin at 24.5% for the thirteen weeks ended September 28, 2024.
| Period | Net Sales ($ billion) | Comparable Store Sales Growth (%) | Gross Profit Margin (%) | Net Income ($ million) |
|---|---|---|---|---|
| 39 Weeks Ended September 28, 2024 | 3.547 | 2.0 | 24.5 | 75.263 |
| 39 Weeks Ended September 30, 2023 | 3.484 | 2.5 | 25.0 | 83.305 |
| 13 Weeks Ended September 28, 2024 | 1.186 | 2.5 | 24.5 | 25.840 |
| 13 Weeks Ended September 30, 2023 | 1.160 | 0.8 | 24.6 | 23.226 |
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Resources:
- Weis Markets, Inc. (WMK) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Weis Markets, Inc. (WMK)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Weis Markets, Inc. (WMK)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.