Ingles Markets Incorporated (IMKTA) Stock

Hurricane Helene significantly impacted Ingles Markets' operations from late September forward, causing $35 million in impairments and temporary store closures. The fiscal Q4 results showed weakness from the impairments and two days of lost sales already, but the main sales impact is likely to be recorded in Ingles Markets' Q1. Only three of Ingles Markets' 198 stores remain closed in late December, and the company's distribution center already returned to full operations two weeks after the hurricane.

ASHEVILLE, N.C.--(BUSINESS WIRE)---- $IMKTA--Ingles Markets, Incorporated (NASDAQ: IMKTA) today reported results for the three and twelve months ended September 28, 2024. Robert P. Ingle II, Chairman of the Board, stated, “After Hurricane Helene impacted our communities, I am proud of how not only our associates came together, but our entire region. We are truly thankful for all the volunteers and the outpouring of support for our region.” Impact of Hurricane Helene On September 27, 2024, Hurricane Helene.

Ingles Markets has reported revenue declines in H1/FY2024 as food inflation and gas prices have shown very low year-over-year inflation. The operating margin has also continued to fall back into a historical long-term average at quite a rapid pace. Real estate assets on IMKTA's balance sheet provide potential for shareholder value through a sale-and-leaseback or acquisition, but I believe such transactions to be unlikely.

Ingles Markets reports merchandising activities financed by vendors and a decrease in net debt/EBITDA ratio. The company's expansion plan, growth in the prepared food market, loyalty programs, and apps could bring new sales growth. The apps promoted in Google Play and the Apple Store could also enhance the shopping experience of clients.

Ingles Markets' H2/FY2023 results show solid performance, as margins have been sustained at a great level with mostly stable revenues. After my previous write-up, the stock has remained relatively flat despite earnings above my expectations. The stock still seems to have a great undervaluation, as my DCF model estimates a very good amount of upside.

Ingles Markets is a United States-based company operating supermarkets as well as pharmacies and fuel stations. The company has maintained minimally growing revenues with steady margin, although the company's operating margin is currently above a sustainable level. Ingles Markets is a low-risk stock, as supermarket revenues are highly recession-proof.

IMKTA is a regional grocer that has seen a new level of operating quality since the pandemic. The company won't be growing store count at all, but you don't need that in order to make money from the stock right now.