Financial Trading Blog
Stock of the day 08/01/2016 – WM Morrison Supermarkets PLC
To say 2015 wasn’t the best year for the largely northern supermarket is putting it mildly; not only did the stock see its price fall from £1.83 to £1.48 across the 12 months, it also fell out of the FTSE 100 after 14 years, making it one of the biggest, or at least most consistent, casualties of the supermarket price war.
The company’s half year report back at the start of September acts as a rather succinct summary of all that is wrong with the supermarket at the moment. Morrisons saw a 2.7% drop in its like-for-like sales, a slump that led to a whopping 47% plunge in the company’s half year profits. Forced into a corner, the supermarket revealed it would be selling 11 of its flagship stores and, in an even more drastic move, 140 of its ‘M’ local convenience stores (at a cost of £130 million to the company, £4 million more than it main in half year profit).
(Source: IT-Finance.com 08/01/2016)
This left the stock languishing at the £1.50 mark by mid-September only for news that the company would be implementing the living wage to lift Morrisons back towards £1.80 by the start of October (in what was an incredibly odd reaction from investors). However, the stock couldn’t hold onto that 2 month high for long, and on the eve of tis third quarter trading statement at the beginning of November Morrisons was trading back at £1.75.
Those results only intensified its nascent fall; the reveal of a worse than expected 2.6% fall in like-for-like sales saw Morrison drop by around 9% in the week after the announcement, a fall that, following a brief pause, continued into December, leaving the stock at a 2015 low of £1.39. Since then it has managed to bounce back slightly, a late December surge, and a steady start to 2016, leaving Morrisons at a current trading price of £1.52 (IT-Finance.com, 08/01/2016).
Looking ahead to the company’s Christmas trading statement and there will be a lot of pressure on CEO David Potts, his predecessor Dalton Phillips stepping down in the aftermath of last year’s 3.1% Xmas sales slump. That does mean, however, that Potts has a rather low bar to clear when Morrisons reveals its figures next Tuesday.
WM Morrison Supermarkets PLC has a consensus rating of ‘Hold’ with an average target price of £1.76.
It's easy to open an account
- Fill in our simple online application form
- Fund your account
- Start trading the global markets instantly!
SEARCH FOR AN ARTICLE:
Enter a keyword and search for all relevant articlesMARKET ANALYSIS
RECENT POSTS
DISCLAIMER
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 64% of retail investors lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money. For professional clients, spread betting and CFD trading can also result in losses larger than your initial stake or deposit.
Spreadex Ltd is authorised and regulated by the Financial Conduct Authority, provides an execution only service and does not provide advice in any way. Nothing within this update should be deemed to constitute the provision of investment advice, recommendations, any other professional advice in any way, or a record of our trading prices. This update does not constitute or form part of an offer of, or solicitation for a transaction in any financial instrument, nor shall it or the fact of its distribution form the basis of, or be relied on in connection with, any contract therefore. Any persons placing trades based on their interpretation of the comments or information within this update does so entirely at their own risk.
No representation, warranty, or undertaking, express or limited, is given as to the accuracy or completeness of the information or opinions contained within this update by Spreadex Ltd or any of its employees and no liability is accepted by such persons for the accuracy or completeness of any such information or opinions. As such, no reliance may be placed for any purpose on the information and opinions contained within this update.
The information contained within this update is the intellectual property of Spreadex Ltd and is protected by UK and International copyright laws. All rights reserved. Users may however freely download, distribute and reproduce extracts of the contents, subject always to accrediting Spreadex Ltd as the source and providing a hyperlink to www.spreadex.com.
