SpartanNash Company

SpartanNash Company (NASDAQ: SPTN) is a Fortune 400 company in the United States that distributes fresh produce, grocery, and pharmaceutical items to a wide group of independent and chain retailers, as well as its corporate-owned retail shops, military commissaries, and exchanges.

Key Highlights

• The company reported a 6.95% decline in net sales to USD 2.66 billion in Q1FY21 (ended April 24, 2021) compared to USD 2.86 billion in Q1FY20 (ended April 18, 2020).
• As of April 24, 2021, the company had cash and cash equivalents of USD 23.29 million and total debt of USD 527.06 million, making a significantly leveraged balance sheet.
• The company had a debt-to-equity ratio of 0.70x as of Q1FY21.
• SPTN operates at very thin net margins, clocking in at 0.7% in Q1FY21 and 0.5% in Q1FY20. Pressure on earnings is expected to continue in the near to medium term.
• As announced on July 14, 2021, SPTN intends to open a new micro fulfillment center in Caledonia, Michigan, to serve online grocery shoppers.
• Stock trading between its crucial long-term as well as short-term support levels of 50-day and 200-day SMA levels.
• SPTN share price increased 11.03% year to date (YTD).

Technical Price Chart (as of July 29, 2021). Analysis by Kalkine

Conclusion: Considering the decline in topline in Q1FY21, expected continued low profitability, significant leverage, we opine that current valuation does not justify the business fundamentals and recommend an “Expensive” rating on the stock at the closing price of USD 19.33, traded flat, as of July 29, 2021. 

*The reference data in this report has been partly sourced from REFINITIV.