The stock market has had a turbulent start to 2025, and uncertainty is weighing on investors. Inflation, which many had hoped was cooling off, is showing signs of resurgence. The Federal Reserve’s decision to hold interest rates steady in January only added to speculation about where the economy is headed next. On top of that, new tariff threats from the Trump administration have stirred fears of a trade war, shaking consumer confidence.
In such an environment, defensive stocks that tend to perform well regardless of market conditions are gaining traction among investors seeking stability. For instance, Weis Markets, Inc. (WMK), a century-old regional grocery retailer, has demonstrated resilience through consistent revenue growth and a commitment to customer-focused strategies. Its success can be attributed to initiatives such as the Weis Rewards loyalty program, strategic price investments, and disciplined cost management.
Shares of WMK have gained 6.4% over the past month and 17.7% over the past year, closing the last trading session at $69.51.
Let’s look at factors that could influence WMK’s performance in the near term:
Recent Developments
WMK is actively expanding its retail presence through strategic acquisitions and store enhancements. On December 16, 2024, the company announced an agreement to acquire certain assets of Saylor’s Market in Newville, PA, marking its third acquisition of the year. The store will undergo a brief transition period before reopening under the Weis Markets banner in early 2025. This follows the company’s October acquisition of two stores in Franklin County, which were successfully converted and reopened by November 1.
Additionally, Weis Markets is enhancing customer experience by incorporating new in-store offerings. On November 4, the company opened the area’s first Starbucks inside its Bellefonte, PA, store. As part of its commitment to community support, it celebrated the opening by donating $1,000 to Faith Center, a nonprofit organization supporting local food banks and pet pantries.
Further, in September 2024, WMK began building a six-pump Gas N’ Go Fuel center in Linglestown, where customers can shop for groceries and fill up their tanks.
Strong Financials
WMK’s net sales for the fiscal third quarter (ended September 28, 2024) increased 2.2% year-over-year to $1.19 billion, as shoppers turned to the big-box retailer throughout the holiday season and the company’s comparable store sales, excluding fuel, grew by 3% year-over-year. Its gross profit increased by 1.9% year-over-year to $291.14 million.
However, the company’s income from operations amounted to $29.56 million, slightly below the year-ago value of $29.67 billion. Despite this, its net income rose 11.3% from the prior-year quarter to $25.84 million, while its earnings per share came in at $0.96, up 11.6% year-over-year.
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.
Sound Historical Growth
Over the past five years, WMK’s revenue and EBITDA increased at a CAGR of 6.1% and 5.9%, respectively. Its EPS grew at an 8.9% CAGR during the period. Moreover, the company’s levered FCF rose at a 14.7% CAGR over the same time frame.
Discounted Valuation
In terms of trailing 12-month P/E, WMK is trading at 19.53x, 6.7% lower than the industry average of 20.92x. Likewise, its trailing 12-month EV/Sales multiple of 0.35 is 78.5% lower than the industry average of 1.63x. In addition, the stock’s trailing 12-month EV/EBITDA of 7.25x is 31.2% lower than the 10.53x industry average. Also, its trailing 12-month Price/Sales multiple of 0.39 compares to the industry average of 1.17.
High Profitability
WMK’s trailing-12-month Return on Total Assets (ROTA) of 4.63% is 14% higher than the 4.06% industry average. Also, the stock’s trailing-12-month asset turnover ratio of 2.38x compares to the industry average of 0.87x.
POWR Ratings Exhibit Solid Prospects
WMK’s robust fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, translating to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by accounting for 118 distinct factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. WMK has an A grade for Stability, consistent with its 60-month beta of 0.47. The stock’s B grade for Value is justified by its discounted valuation. It also earns a B for Quality, reflecting its higher profitability metrics compared to industry standards.
Within the A-rated Grocery/Big Box Retailers industry, WMK is ranked #6 out of the 35 stocks.
Beyond what we’ve stated above, we have also rated the stock for Growth, Momentum. and Sentiment. Get all WMK ratings here.
Bottom Line
As economic uncertainty continues, defensive stocks like WMK offer stability, consistent cash flows, and reliable dividend income. On November 26, 2024, reflecting its ongoing commitment to shareholders, the company paid a quarterly dividend of $0.34 per share. Moreover, WMK’s strong financial footing, expansion efforts, and ability to navigate market volatility make it a resilient choice for investors seeking long-term security.
Further, the stock is currently trading at a discounted valuation, which makes it an attractive option for investors seeking value in the grocery retail sector. Thus, now could be an opportune moment to consider adding WMK to one’s holdings.
How Does Weis Markets, Inc. (WMK) Stack Up Against Its Peers?
While WMK has an overall grade of A, equating to a Strong Buy rating, you may also check out these other stocks within the Grocery/Big Box Retailers industry: Village Super Market, Inc. (VLGEA), Marks and Spencer Group plc (MAKSY), and DFI Retail Group Holdings Limited (DFIHY), carrying A (Strong Buy) ratings.
To explore more Grocery/Big Box Retailers stocks, click here.
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WMK shares were trading at $71.04 per share on Tuesday afternoon, up $0.78 (+1.11%). Year-to-date, WMK has gained 4.90%, versus a 3.14% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
Is Weis Markets a Defensive Stock to Buy Amid Market Volatility? StockNews.com
