Can WM Morrison Supermarkets PLC’s Stock Price Outperform Tesco PLC, J Sainsbury plc, Next plc And Sports Direct International Plc After Results?

Is WM Morrison Supermarkets PLC (LON:MRW) (LSE:MRW.L) a more appealing stock than Tesco PLC (LON:TSCO) (LSE:TSCO.L), J Sainsbury plc (LON:SBRY) (LSE:SBRY.L), Next plc (LON:NXT) (LSE:NXT.L) and Sports Direct International Plc (LON:SPD) (LSE:SPD.L)?

WM Morrison Supermarkets PLC
WM Morrison Supermarkets PLC

The stock price of WM Morrison Supermarkets PLC (LON:MRW) (LSE:MRW.L) has fallen 5% at the time of writing after its 2016 results were released to investors. LFL sales excluding fuel and excluding VAT were up 1.7%, which means they have been positive in all 4 quarters and up 2.5% in Q4.

Morrisons’ turnover was 1.2% higher at £16.3 billion despite store closures. Underlying PBT was 11.6% higher at £337 million, which is at the upper end of the £330 – £340 million guidance range. This represents a rise of 39% against last year’s figures when restructuring costs are included for 2015. Underlying earnings per share moved 39.8% higher to 10.86p, while a final dividend of 3.85p per share has been announced. This means full year total dividends are 8.6% higher at 5.43p per share.

Morrisons remains confident it can continue to turn its fortunes around. Last year was its first year of positive LFL sales growth and underlying PBT growth since 2011/12. It has been able to reduce debt, maintain strong FCF and has made progress with its strategy in my opinion. I like the company’s focus on reducing costs, with further cost saving opportunities beyond the £1 billion already achieved having been identified during 2016.

In the last year, the Morrisons stock price has risen 15%. That’s ahead of other retail stocks such as Tesco PLC (LON:TSCO) (LSE:TSCO.L), J Sainsbury plc (LON:SBRY) (LSE:SBRY.L), Next plc (LON:NXT) (LSE:NXT.L) and Sports Direct International Plc (LON:SPD) (LSE:SPD.L). Sainsbury’s shares are 2% lower, Tesco’s stock price has sunk 5%, Sports Direct is down 26% and Next’s shares have lost 40% of their value.

In my opinion, Morrisons has investment appeal for the long run. I think its stock price could continue to perform well on a relative basis, owing to its growth strategy and the successful execution of its plan which has been a feature of the last year. Although the UK economy may experience a difficult year, I feel Morrisons’ stock price could be a relatively good performer in future.

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