Sainsbury’s Earnings – Here’s What to Expect

Sainsbury’s (LON: SBRY) will post its preliminary 2022-2023 results on Thursday, April 27, and given Tesco’s recent release, investors will be focused on the supermarket chain’s outlook for the year.

Tesco, the UK’s largest supermarket chain, told investors it expects to deliver “a broadly flat level of retail adjusted operating profit in 2023/24.”

According to Kantar data, Tesco has the largest grocery market share at 26.9%, with Sainsbury’s second at 14.8%…

However, in recent months, Sainsbury’s has ranked as the third cheapest supermarket (behind Aldi and Lidl) after previously trailing Tesco. This may help boost its recent sales as consumers trade down due to persistently high inflation, especially in the food sector. 

Source: Which

Our tracking of consumer demand in a more expensive supermarket in Ocado suggests consumers are looking for cheaper alternatives.

In its third quarter trading statement for the 16 weeks to January 7, 2023, SBRY said that while it remained cautious on the consumer backdrop, it expected underlying profit before tax for the year to March 2023 to be towards the upper end of the guidance range of £630 million to £690 million.  

Furthermore, the UK’s second-largest supermarket chain expects to generate retail free cash flow of around £600 million. 

The analyst consensus estimate for SBRY’s underlying profit before tax is £676 million, with earnings per share estimated to come in at 21.6p. 

Sainsbury’s shares are up more than 28% in 2023, with the stock boosted by news earlier this year that Costcutter owner Bestway upped its stake in the supermarket chain, although it stated it is not considering an offer for the company. 

Meanwhile, ahead of the upcoming results, Barclays analyst James Anstead upped his price target on the stock to 295p from 285p, reiterating an Overweight rating on the stock, with Morgan Stanley’s Izabel Dobreva increasing her firm’s price target on SBRY to 237p from 228p, keeping it at Underweight.

Overall, out of five analysts, two have a Buy rating, two have a Hold rating, and one has a Sell rating on the stock, according to TipRanks.

By Sam Boughedda