The decline over the past weeks has brought the price of Jerónimo Martins, SGPS, S.A. shares back to an important technical support level at 18.3 EUR. This represents an opportunity to take advantage of these prices levels.
Summary
● The company has strong fundamentals. More than 70% of companies have a lower mix of growth, profitability, debt and visibility.
● The company presents an interesting fundamental situation from a short-term investment perspective.
● The company has a good ESG score relative to its sector, according to Refinitiv.
Strengths
● The company shows low valuation levels, with an enterprise value at 0.54 times its sales.
● Over the last twelve months, the sales forecast has been frequently revised upwards.
● Analysts have consistently raised their revenue expectations for the company, which provides good prospects for the current and next years in terms of revenue growth.
● For the past year, analysts covering the stock have been revising their EPS expectations upwards in a significant manner.
● For the last few months, EPS revisions have remained quite promising. Analysts now anticipate higher profitability levels than before.
● Over the past four months, analysts' average price target has been revised upwards significantly.
Weaknesses
● As a percentage of sales and without taking into account depreciation and amortization, the company has relatively low margins.
● The company does not generate enough profits, which is an alarming weak point.
● The company appears highly valued given the size of its balance sheet.
Jerónimo Martins, SGPS, S.A. is a Group that holds assets in the food sector, mostly in distribution, with market leadership positions in Poland and Portugal. In 2023, the Group recorded sales of 30.6 billion euros and an EBITDA of 2.2 billion euros. The Group had a total of 134,379 employees and ended 2023 with a market capitalisation of 14.5 billion euros on the Euronext Lisbon stock exchange.
In Poland, Biedronka, representing 70% of Group sales and 85% of its EBITDA, is a chain of food stores and the undisputed leader in food retail and in 2023 it continued to increase its market share. Also in Poland, Hebe focuses on the specialised retail of health and beauty products, managing a considerable assortment of products at competitive prices and an in-store consultation service. At the end of 2023 Hebe opened two stores in Czechia, aimed at putting a face to the brand's presence in this country, where growth will be driven through e-commerce.
In Portugal, the Group has a leadership position in food distribution. It operates the banners Pingo Doce and Recheio, which are market leaders in the supermarket and cash & carry formats, respectively. Pingo Doce is a supermarket chain that has a restaurant area in most of its stores. It has two central kitchens that supply not only these restaurants, but also its in-store takeaway operation. Recheio operates a chain of cash & carry stores and has strengthened its business model with a specialised food service operation, underpinned by dedicated platforms, which essentially serve HoReCa customers with a delivery service. Recheio continues also to expand a network of traditional retail partners under the Amanhecer banner. Jerónimo Martins Agro-Alimentar currently operates in four distinct areas: dairy, livestock farming, aquaculture, and fruit and vegetables. The Group also operates two specialised chains, the Jeronymo coffee shops and kiosks and the Hussel chocolate and confectionery chain.
In Colombia, Ara is a chain of proximity food stores, mostly set up in residential neighbourhoods, offering quality at the best price and combining competitiveness with promotional opportunities in key categories for the Colombian consumer. Also in Colombia, Bodega del Canasto operates as a mini cash & carry, aiming for the traditional market (B2B), offering customised Private Brands and industry brands solution.
JERÓNIMO MARTINS, SGPS, S.A. 
