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Yesterday, Village Super Market (NASDAQ:VLGEA) reported 4Q 2007 results.

4Q 2007

  • Sales up 2.6% to $269.26 million from $262.46 million in 4Q 2006
  • Cost of sales $195.94 million from $192.09 million in 4Q 2006
  • Gross margin 27.2% from 26.8% in 4Q 2006
  • SSS up 2.6%
  • Net income up 26% to $6.33 million ($0.96 per share) from $5.02 million ($0.77 per share) in 4Q 2006
  • Profit margin 2.35% from 1.91% in 4Q 2006
  • Diluted share count 6,595,833
  • This is another great quarter from Village Super Market. Margins continue to expand and net income is growing like crazy when you consider how slow the company's expansion pace is. Sales are growing at a slower pace than in recent quarters, but I'm not too concerned because management is building a new store and undergoing efforts that should help boost revenue over the next 2-3 years or so. This is a cautious management team and won't rush into anything, but that has led to consistent growth and a very strong financial situation for the company. This is such a boring company and boring management team it will definitely take some time for the stock to get noticed by Wall Street. I say this is a boring company and management team because management opens stores at a pretty slow rate (which doesn't really matter because the business is producing strong cash flow), the company doesn't even have its own web site, and a company operating 23 supermarkets that are nothing special isn't something that will get an analyst's attention.

    I remain very confident in Village Super Market's future and current situation. The stock has gone up recently and currently sits above $52.00, but even so, I think the stock is undervalued. The P/E stands at 16.6, which is a very reasonable multiple considering the company's 20% or so growth rate, strong balance sheet, and healthy cash flow production. Not to mention the consistently raised and consistent dividend. Management is very experienced and taking on some new projects for the company which will make things interesting over the next couple years. Things look as good as ever for this business and I look forward to seeing how the company evolves over the long run.

    Disclosure: Author has a long position in VLGEA

    Source: Village Super Market Reports Another Stellar Quarter