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Is Sainsbury’s worth its heavily discounted share price?

The Fund Manager

Poor old Sainsbury’s. Its share price is currently lower than at any time over the last 25 years and appears to be in free-fall.

But how can this be? Surely Sainsbury’s is a defensive dividend payer with a long record of unbroken dividend payments and a core supermarket business which is about as dependable as they come?

Well, perhaps not. The big UK supermarkets have had problems ever since the financial crisis made consumers far more cost conscious than they were before. The market effectively fell into the laps of Aldi and Lidl, and Sainsbury’s has been playing catch up ever since.

To build greater economies of scale, Sainsbury’s proposed a merger with ASDA in 2018 and the market briefly became optimistic about the company’s prospects. But that deal was eventually blocked by the Competition and Markets authority and Sainsbury’s shares are now about 40% below where they were last summer.

As a dividend-focused value investor that sort of decline sparks my interest, so in this month’s Master Investor magazine I decided to look at whether Sainsbury’s is finally good value or not.

Read the full article here.

The Fund Manager, zLead Article, zNewsletter

About John Kingham

John Kingham

John Kingham is the editor of UK Value Investor, the investment newsletter for defensive value investors. With a professional background in software analysis, John's approach to high yield, low risk investing is based on the Benjamin Graham tradition of being systematic and fact-based, rather than speculative. John is also the author of The Defensive Value Investor: A Complete Step-By-Step Guide to Building a High Yield, Low Risk Share Portfolio. His website can be found at: www.ukvalueinvestor.com.

Articles by John Kingham

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