Financial Trading Blog
Stock of the day 03/06/2016 – J Sainsbury PLC
After a bit of a wobble at the start of the year (with the supermarket’s better than expected Christmas sales failing to outweigh the general turmoil that plagued January) 2016 soon began to turn around for Sainsbury’s.
The second half of February saw the supermarket surge to £2.65, while a rise across the first half of March (all the way to £2.80) was cemented with its fourth quarter results. That update saw Sainsbury’s post its first sales increase in 2 years, with like-for-like sales jumping 0.1%. Things only got better in April, the confirmation of Sainsbury’s acquisition of Home Retail Group (i.e. Argos and Habitat) causing the stock to hit a 20 month high of £2.98.
(Source: IT-Finance.com 03/06/2016)
Yet soon after this peak Sainsbury’s began to suffer. The stock trickled lower at the start of May, before plunging from £2.88 to £2.52 in the space of a week as investors reacted violently to the supermarket’s full year figures. On the surface things looked good for Sainsbury’s, the company swinging from a £72 million loss to £548 million in pre-tax profit in the space of 12 months. However, underlying annual profits dropped by nearly 14% to £587 million with like-for-like sales sliding 0.9%, both numbers far outshining that headline increase in pre-tax profit.
From its post full year-update nadir the stock did manage to pick itself up as May came to a close, hitting £2.70 by the end of the month. However, there was another ugly surprise around the corner for Sainsbury’s investors. At the start of June the latest Kantar supermarket figures revealed the company’s sales had fallen 1.2% for the 12 weeks to May 22nd (its worst performance in nearly 12 months), inspired by its decision to ditch ‘buy one get on free’ offers earlier in the year. This sparked a 4.5% dive from the stock, leaving Sainsbury’s at a current trading price of £2.57 (IT-Finance.com, 03/06/2016).
Given that drop in sales it is unlikely that next Wednesday’s first quarter update will provide Sainsbury’s much to celebrate, especially with the CMA also recently announcing a review into the supermarket’s acquisition of Home Retail Group.
J Sainsbury PLC has a consensus rating of ‘Hold’ with an average target price of £2.57.
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.
