Shares of businesses dealing with consumer essentials perform steadily regardless of economic cycles. Therefore, despite the uncertain economic conditions, it could be wise to invest in quality consumer stocks Jerónimo Martins, SGPS, S.A. (JRONY), Woolworths Holdings Limited (WLWHY), and Marui Group Co., Ltd. (MAURY).
While cooling inflation is good news for consumer essential companies, rising retail sales should benefit them. In May, retail sales increased 0.3% sequentially. According to the National Retail Federation, retail sales will grow between 4% and 6% in 2023.
Investors’ interest in consumer-essential stocks is evident from the iShares U.S. Consumer Goods ETF’s (IYK) 8.7% returns over the past nine months.
Let’s delve deeper into the fundamentals of the featured stocks.
Jerónimo Martins, SGPS, S.A. (JRONY)
Headquartered in Lisbon, Portugal, JRONY operates in the food distribution and specialized retail sectors in Portugal, Poland, and Colombia. The company operates through Portugal Retail; Portugal Cash & Carry; Poland Retail; Colombia Retail; and Others, Eliminations and Adjustments segments.
JRONY’s forward Price/Sales multiple of 0.54 is 48.1% lower than the industry average of 1.04. Its forward EV/Sales multiple of 0.61 is 62.9% lower than the industry average of 1.64.
JRONY’s trailing-12-month ROCE of 26.71% is 162.6% higher than the industry average of 10.17%. Its trailing-12-month asset turnover ratio of 2.39 is 164.9% higher than the industry average of 0.90.
JRONY’s net sales and services came in at €6.80 billion ($7.45 billion) for the first quarter of 2023, representing a 23.4% year-over-year growth. Its EBITDA increased 20.1% from the prior-year quarter to €446 million ($488.54 million). Its net profit attributable to JRONY increased 59.1% year-over-year to €140 million ($153.35 million), while EPS increased 59.1% from the prior-year quarter to €0.22.
The consensus revenue estimate of $35.05 billion for the year ending December 2024 represents an 8.9% increase year-over-year. Its EPS is expected to grow at 16.1% year-over-year to $2.95 for the same period. JRONY’s shares have gained 33.9% over the past nine months to close the last trading session at $56.23.
JRONY’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
JRONY has an A grade for Stability and a B for Growth and Quality. Within the A-rated Grocery/Big Box Retailers industry, it is ranked #9 out of 38 stocks. Click here for the additional POWR Ratings for Value, Momentum, and Sentiment for JRONY.
Woolworths Holdings Limited (WLWHY)
Based in Cape Town, South Africa, WLWHY operates a chain of retail stores in sub-Saharan Africa, Australia, and New Zealand. It operates through seven segments: Woolworths Fashion; Beauty and Home; Woolworths Food; Woolworths Financial Services; David Jones; Country Road Group; and Treasury.
WLWHY’s forward EV/EBIT multiple of 10.99 is 15.7% lower than the industry average of 13.03. Its forward EV/EBITDA multiple of 7.59 is 19.3% lower than the industry average of 9.41.
WLWHY’s trailing-12-month ROCE of 36.99% is 268.6% higher than the industry average of 10.03%. Its trailing-12-month ROTA of 12.37% is 102.9% higher than the industry average of 6.10%.
WLWHY’s revenue increased 12.1% year-over-year to ZAR35.86 billion ($2.01 billion) in the fiscal six months ended December 25, 2022. Its profit for the period increased 70% year-over-year to ZAR2.74 billion ($153.13 million). Also, its earnings per share increased 44.4% year-over-year to 215.8 African cents.
Analysts expect WLWHY’s revenue to increase 6.7% year-over-year to $4.28 billion for the year ending June 2024. The stock has gained 21.5% over the past month to close the last trading session at $3.87.
WLWHY’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
It is ranked #8 in the Grocery/Big Box Retailers industry. It has a B grade for Value, Stability, and Quality. Click here to see additional WLWHY ratings for Growth, Sentiment, and Momentum.
Marui Group Co., Ltd. (MAURY)
Headquartered in Tokyo, Japan, MAURY is engaged in the retailing and FinTech businesses in Japan. The company participates in renting and managing commercial properties, purchasing and selling clothes and accessories, space production, advertising, fashion distribution, general building management, etc.
MAURY’s forward Price/Sales multiple of 1.96 is 10% lower than the industry average of 2.17.
MAURY’s trailing-12-month CAPEX/Sales of 4.45% is 132.4% higher than the 1.92% industry average. Its trailing-12-month gross profit margin of 88.01% is 49.4% higher than the 58.91% industry average.
MAURY’s revenue increased 4.1% year-over-year to ¥217.85 billion ($1.51 billion) in the year ended March 31, 2023. Its profit attributable to owners of the parent increased 20.7% year-over-year to ¥21.47 billion ($150 million). Also, its EPS increased 27.5% year-over-year to ¥109.37.
Street expects MAURY’s revenue to increase marginally year-over-year to $1.61 billion for the year ending March 2024. The stock has gained 13.2% over the past three months to close the last trading session at $34.10.
MAURY has an overall B rating, equating to a Buy in our POWR Ratings system. It has a B grade for Growth, Stability, and Quality. It is ranked #15 in the same industry.
Beyond what is stated above, we’ve also rated MAURY for Value, Sentiment, and Momentum. Get all MAURY ratings here.
What To Do Next?
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JRONY shares were trading at $56.23 per share on Wednesday morning, up $0.60 (+1.08%). Year-to-date, JRONY has gained 32.73%, versus a 14.76% rise in the benchmark S&P 500 index during the same period.
About the Author: Rashmi Kumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master's degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
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