2025 started at a moderate to slow rate, with high market volatility projected in the coming weeks and months. The opening economic outlook also projects a slow, just above 2% economic growth for the year, and the core inflation has yet to return to the Federal Reserve’s 2% target. Also, after multiple rate cuts in 2024, the Fed is unlikely to be able to cut its policy rate target below a 3.75%–4% range.
According to the U.S. Bureau of Labor Statistics report, after remaining constant for four months, the Consumer Price Index for All Urban Consumers increased 0.4% in December and 0.3% in November on a monthly basis.
Besides, factors like tariff uncertainties, lingering inflation concerns, Trump 2.0 policy news, and stretched stock valuations, would likely weigh on stock prices, stirring the market and investors’ actions. To subdue market uncertainty, investing in defensive stocks could be prudent for stability. Defensive stocks perform well despite the surrounding economic downturns and market turmoil.
In such circumstances, Weis Markets, Inc. (WMK), engaged in the retail sale of food through a chain of supermarkets in Pennsylvania and surrounding states, stands at the forefront of the retail industry, offering stability, the appeal of regular dividends, and emerging as a suitable defensive stock for investment.
Functional for over a century, the Mid-Atlantic food retailer operates with a strong presence of 198 stores located in Pennsylvania, Maryland, Delaware, New Jersey, New York, West Virginia, and Virginia. In the last reported quarter, the company posted impressive revenue growth, consistent with its previous performances.
During 2024, WMK completed three store acquisitions, including two stores in Franklin County and one at Carlisle Road, Newville. The strategic acquisitions expand its presence in different parts and cater to a broader customer base. Further, in September 2024, WMK began the construction of a six-pump Gas N’ Go Fuel center in Linglestown, allowing customers to shop for groceries and fill up their tanks.
Also, WMK continued to reward its shareholders through regular quarterly dividends. On October 31, 2024, the company’s Board of Directors declared a quarterly cash dividend of $0.34 per share to shareholders, paid on November 26, 2024, to holders of record as of November 12, 2024.
WMK’s stock performance is also a reflection of its solid standings. Shares of WMK have surged 0.5% over the past three months to close the last trading session at $64.27. The stock also soared 5.4% over the past year.
Let’s look at factors that could influence WMK’s performance in the upcoming months.
Robust Financials
WMK’s net sales increased 2.2% year-over-year to $1.19 billion during the third quarter that ended September 28, 2024. Its gross profit on sales grew 1.9% from the year-ago value to $291.14 million. The company’s income before provision for income taxes was $35.78 million, indicating a growth of 12.3% from the prior year’s quarter.
In addition, the company’s net income came in at $25.84 million, up 11.3% year-over-year, while WMK’s EPS of $0.96 reflects an 11.6% increase from the year-ago value.
Also, as of September 28, 2024, the company’s total assets stood at $2.07 billion, compared to $2.04 billion as of December 30, 2023.
Solid Historical Growth
WMK’s revenue has increased at a CAGR of 4.7% over the past three years. The company’s tangible book value has grown at a CAGR of 5.9% over the same timeframe, while its total assets and levered free cash flow have improved at CAGRs of 3.4% and 14%, respectively.
Discounted Valuation
In terms of trailing-12-month EV/Sales, WMK is currently trading at 0.32x, 80.8% lower than the industry average of 1.67x. The stock’s trailing-12-month EV/EBITDA and Price/Sales of 6.64x and 0.36x are considerably lower than the industry averages of 11.05x and 1.17x, respectively.
Additionally, the stock’s forward EV/EBIT and Price/Book of 12.84x and 1.22x are 11.4% and 49.4% lower than the industry averages of 14.48x and 2.40x, respectively.
POWR Ratings Reflect Optimism
WMK’s solid fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, translating to a Strong Buy in our proprietary system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. WMK has a B grade for Value, which is in sync with its lower valuation.
In addition, with a five-year beta of 0.47, the stock has earned a grade of B for Stability.
WMK is ranked #5 in the 35-stock A-rated Grocery/Big Box Retailers industry.
Beyond what I have stated above, we have also given WMK grades for Sentiment, Growth, Momentum, and Quality. Get access to all the WMK ratings here.
Bottom Line
The U.S. economy is undergoing a turbulent phase, encompassing escalating tariff threats, an increasingly volatile global landscape, and risks emerging from fiscal/monetary policies, urging investors to turn to defensive stocks for stability and regular earnings in the form of dividends.
Weis Markets is an accurate match in this category, matching the expectations of stable cash flows and quarterly dividend payouts. The company also reported better-than-expected earnings for the third quarter of fiscal 2024, solidifying its financial prospects further with its firm industry footing, strategic initiatives, and expanding storefront position for bright long-term prospects.
Given WMK’s solid financials, accelerating profitability, reliable dividends, and promising growth outlook, this stock could be an ideal buy now.
How Does Weis Markets, Inc. (WMK) Stack Up Against Its Peers?
While WMK has an overall POWR Rating of A, investors could also check out these other stocks within the A-rated Grocery/Big Box Retailers industry with A (Strong Buy) or B (Buy) ratings: Village Super Market, Inc. (VLGEA), RYOHIN KEIKAKU CO., LTD. (RYKKY), and Marks & Spencer Group Plc (MAKSY).
For exploring more A and B-rated grocery stocks, click here.
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WMK shares were trading at $66.16 per share on Monday afternoon, up $1.89 (+2.94%). Year-to-date, WMK has declined -2.30%, versus a 1.90% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
Is Weis Markets a Defensive Stock to Buy Amid Market Volatility? StockNews.com
