Home Add to Favorite Contact Submit  
             22 January, 2021

Category:  Articles » Finances » Stocks-Mutual-Funds


A Financial Analysis of Pantry Incorporated

         Views: 1245
2007-01-31 22:42:44     
Article by Dennis Biray

I truly believe that there are gems found in every sector and industry, regardless of the economic situation. Relative to the grocery store industry, while giants such as Safeway and Kroger hold a large market share in terms of capitalization over the industry, I have found a smaller, middle capitalization stock which has support to be understood as undervalued. This company, Pantry Incorporated (PTRY), after examining its fundamentals and technical features, regardless of recent news, has the capacity, as it has illustrated over the past few years, to continue its momentum and allow investors to claim strong capital gains.

I mentioned that Pantry is still a strong buy regardless of its recent news. Unfortunately, during this previous week, Pantry reported its quarterly earnings. Falling significantly short on its quarterly EPS estimates, Pantry increased cautionary emotions among investors when it claimed that its guidance for 2007 will be slightly lower than first understood. While some investors may claim this piece of news is very pessimistic, regarding the share price Pantry currently trades at, there should not be too much commotion activated among investors. Stating that the tail end of the year’s EPS should sit around 2.75, at Pantry’s current price, the company would maintain a forward looking P/E ratio of about 17 which is significantly below the multiple of both the industry of 22 and near the multiples of large cap rivals of Kroger at 16 and Safeway at 18. While of course investors and shareholders are always looking for growth in a company and having an EPS estimate which is 25% lower than the current reading is not favorable, as an investor, it is important to understand that the economy is slowing declining in terms of growth and most all companies will begin to feel the impact on their respective earnings.

During such times, it is vital for investors to look for value stocks, rather than growth, in defensive areas to maintain a strong and positive portfolio. In addition, because Pantry takes control over numerous convenience stores which supply inelastic goods such as tobacco, alcohol, and grocery items, investing in Pantry may be a wise decision for the next few months when uncertainty is placed on the final outcome of the US economy.

While I mentioned that Pantry is undervalued relative to the industry, it is also important to note that this company has only recently begun trading publicly and has strong growth potential relative to its share price. Examining more closely on the basis of figures, Capital IQ has suggested over the next five years at predetermined growth rate that Pantry, at its current share price, has a PEG ratio of 0.96. Comparing this number to the 1.82 PEG ratio found at both Safeway and Kroger adds extra emphasis that this company is still growing and has the potential, at its current price, to become even more undervalued. Taking a closer look at more unconventional multiple valuations, Pantry has done extraordinary well in reference to sales and revenue as illustrated with its astonishing 0.21 P/S ratio and 0.35 EV/R ratio over the past twelve months. Comparing these numbers to Kroger’s 0.27 and 0.35 respective numbers or even Safeway’s 0.39 and 0.53 respective numbers, Pantry, even as a middle capitalization stock seems to be performing quite well relative to the industry giants. In addition, Pantry also has been producing cash at excellent rates with an EBITDA, a proxy of cash flow, of near 280 million over the past twelve months and a solid profit margin of near 2%. Furthermore, Pantry’s ROE of about 30% is substantially higher than Kroger’s 23% and Safeway’s 14% which again signals that Pantry is taking appropriate measures with the funds it is receiving. Such analysis also acquiesces with the strong current ratio of 1.4 which Pantry holds, which is the only company out of Kroger and Safeway to post more current assets than current liabilities. Overall, when compared to the rest of the industry and the selected leaders, Pantry has lots of potential to improve relative to share price and possibly can continue its strong rally held from the previous six years.

In addition to the numbers, as stated prior, Pantry has grown relative to share price in dramatic fashion since its IPO debut in 1999 and has the strong technical support to advise further growth. Growing over 66% over the past two years and more than 150% over the past three years, Pantry, currently trading near 50 is below the simple moving average for the past 50 days, signaling strong growth potential. In addition, during the most recent quarterly report when the lackluster earnings picture worried some buyers, on high volume, the share price only fell marginally which signals some fairly bullish sentiment from shareholders. Thus, after examining the US economy, the fundamentals, and the technical outlook for Pantry, there is strong evidence to support that this company has all the right pieces to provide shareholders with the opportunity to take in a nice wealth of capital gains.

Specialized in: Dennis Biray - Investing - Sports - Stocks
URL: http://www.biraynetworks.co.nr
Print article      Bookmark this page
Related Articles 
Electronic stock trading online (Popularity: ): When you trade online you must have a trading plan. It should include profit and loss targets. Losing trades are normal but trying to make up the money by placing more trades after you have hit you loss target is a huge mistake. This will keep traders from revenge trading and running their accounts into the ground on any losing day. The same is true when you have a winning ...
Stocks to Buy Before Inflation Hits (Popularity: ): As the economy is finally looking like it's emerging from the depths of one of the biggest recessions in a generation, there are other concerns many investors may now have. The government had to pump trillions of dollars into the economy to prevent a Depression from occurring. Because of this, inflation is all but a guarantee.Inflation is not always a bad thing. In fact, any growing economy will have and ...
Mutual Funds Investing Ideas (Popularity: ): Are you someone who is worried about where to invest your hard-earned money? Do you need ideas for investing? If you ask me, I would suggest Mutual Funds - for they give better returns than banks and are considerably less risky than stocks. For investing in mutual funds, consider the following points:1. The first point before investing is to clearly identify what you need. Is it big returns or safety? ...
Mutual Funds (Popularity: ): A mutual fund is a company that pools investors' money to make multiple types of investments, known as the portfolio. Stocks, bonds, and money market funds are all examples of the types of investments that may make up a mutual fund. The mutual fund is managed by a professional investment manager who buys and sells securities for the most effective growth of the fund. As a mutual fund investor, you ...
Managed Mutual Funds - "Pay Me to Underperform" (Popularity: ): There is no shortage of ways to invest your money to earn a return: real estate, bonds, T-bills, CD's, casinos, and so on. In this article, though, we have decided to invest in the best performing asset class throughout history: common stocks of publicly traded businesses.The first question most investors ask is: where should I put my money? There are thousands of U.S. traded stocks alone, not to mention the ...

Related Business 
Investica Ltd (Popularity: ): Economic analysis and forecasts service to financial organisations. Specialise in country risk analysis, financial research and forex markets.
Krispynotes Technical Analysis Solutions Pvt. Ltd. (Popularity: ): Share market Education, technical analysis course, Financial market education, technical analysis, Technical analysis education, Technical analysis Commodities, full astrological chart reading, financial market guide, financial market book, technical analysis guide, technical analysis book, financial astrological chart reading.
Company Profiles and Conferences (Popularity: ): Company profiles and conferences, a subsidiary of Bharat Book Bureau is a unique platform that provides you with complete and detailed information on different companies. Most of our company profiles gives you access to performance analysis, sector and industry classifications, competitor analysis, SWOT analysis, employee information, financial deals, revenue analysis, business summaries, management structure, PESTLE analysis, major products and services, mergers and acquisitions, product information and financial statistics and ratios.
J.P. Morgan and Co. Incorporated (Popularity: ): A leading global financial firm that meets critical financial needs for business enterprises, governments, and individuals.
Agape Distribution (Popularity: ): A faith-based food pantry that strives to meet the needs of hungry people. Information on donating food, food pantry operations, and an agency store comprised of donated products.
Pantry Shelf Food Corp. (Popularity: ): Imports and distributes non-perishable food products sold predominently under the Pantry Shelf brand.
SystemWare Incorporated (Popularity: ): ATE signal analysis, device control, testing, waveform collection, data storage, playback and analysis of data collected from test systems.
Contingency Analysis (Popularity: ): Consultant in financial risk management, contingency analysis and financial engineering.
Dharmik Market Timing (Popularity: ): We offer you a clean-cut analysis and graphic pictures of worldwide known financial products. The stages and methods for creating such an analysis are complex. Step by step we created a system that encompasses the three ways of predicting stock market evolution. In this way nothing remains subjective or misunderstood. The one using this analysis doesn’t have to study astrology or technical analysis (although some basic information would be useful). ...
Technical analysis of financial market instruments (Popularity: ): Technical analysis of currencies, bonds, and indices. Portfolio analysis and management.