I more often do long, in-depth analysis of companies I am interested in and have a large margin of safety in Its current state so I may do that for this company, but for now, this a brief analysis.
Village supermarket is a northeast regional mega-supermarket with 29 locations being around 60,000 sq ft or around half the size of a target.
Its stores feature specialty departments, such as an on-site bakery, an expanded delicatessen; and various natural and organic foods, ethnic and international foods, prepared foods, and pharmacies. The company operates a chain of twenty-nine ShopRite supermarkets, five Fairway Markets, and three Gourmet Garage specialty markets located in New Jersey, New York, Pennsylvania, and Maryland.
Due to their competitive moat or competitive advantage because their offering, their business is extremely durable and has grown in line with inflation/GDP over the past 15 years. This makes their current 4% dividend yield very attractive for someone seeking lower risk dividends. The only downside side is that ever since 2013, their dividend has stayed at $1 with a current share price of $23.77, but before that they were significantly raising it by over 40% every year from 2007 – 2013.
It is trading at roughly 15-16 times FCF giving room for dividend increasing, though given of the years of stagnation (even with its small cash surplus), this is unlikely to happen unless management has a sudden change of heart or an activist firm gets involved.
I think that currently it is slightly above what I would want to pay and I think i better price would be around $19 or a $280MM valuation though i think that because some people on here are in for the long long term with dividends, this may suite your investment needs and you may decide to just DCA in the long-term.
What are your thoughts?
Edit: Also another thing to add, is that there is much less volatility than the broader market with a beta of only 0.16 making the dividend even safer than expected.
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