Sainsbury’s is a ‘buy’ despite profit fall

11th November 2015


As Sainsbury’s reports its Q2 results Helal Miah, investment research analyst at The Share Centre, explains what they mean for investors…

There is an air of optimism around this morning for Sainsbury’s investors as it reported that first half profits fell less than consensus expectations. This has been helped by the company’s reduced promotional activity and cost saving strategy, which is ahead of plans according to CEO Mike Coupe. Investors should acknowledge that the group has been somewhat hurt by food deflation, but we believe its balance sheet puts Sainsbury’s in a stronger position over peers to defend its market share.

The company also said today that the interim dividend had been cut by 20% on the same period last year. This was however in line with its long term policy of paying 30% of the prior year’s full-year dividend as an interim dividend.

We continue to recommend Sainsbury’s as a ‘buy’ for contrarian investors, as the company leverages its range of shopping channels, diversifies its products and services and focuses on flexibility and convenience. This is where the group has advantages over the likes of Aldi and Lidl.


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