Rohan

Winn-Dixie Stores Remains Cheaply Valued

Aswo makes an excellent point, replete with logic, numbers, and cold hard facts.

Wait, I mean the exact opposite of that.

WMT was supposed to be the end of grocers several years ago. Last I checked, KR and SWY are doing just fine (the former's stock has roughly doubled in the past three years, while the latter's up 50%). Revenues continue to grow and earnings have magically been delivered as well.

WINN is valued at a ridiculously low multiple of sales (0.1x) compared to its peers at about 4x that, and its EBITDA margins of around 1% are about a fifth those it earned ON ITS CURRENT STORE BASE just a few years ago. It's still comping positive same store sales numbers year over year, exceeding its own goals on almost every front (EBITDA, remodel performance, penetration of private label, etc.), though it does need to get its transaction counts into growth territory. Competition is no idle threat, to be sure - Publix too is formidable - but anyone who still believes the grocery business is a commodity one rather than a convenience one ought to do more research. WINN's stores are decently located, the management team appears fully competent, and there's no reason the company can't get back to decent operating metrics in a few years time. If so, and that seems at least a decent proposition given performance of late, these shares will be dramatically higher.

Mark is right, WINN is cheap.